Significant growth in demand for no-medical-exam life insurance policies and strong insurance purchasing from people age 18-44 are among the highlights found in The 2022 Policygenius Life Insurance Trend Report, which the New York-based company recently released.
The report focuses on major shifts in the life insurance industry. Overall, despite market volatility brought on by COVID-19 and a significant uptick in death claims, the report shows life insurance pricing remains stable.
The report draws on Policygenius’ internal data as one of the largest term life insurance distribution platforms in the U.S., with more than $120 billion in face amount placed in force, as well as insights from other industry thought leaders.
Growth in no-medical-exam life insurance
The COVID-19 pandemic has accelerated changes in consumer shopping habits, with shoppers demanding convenience and more no-medical-exam policies that allow consumers to apply for term life insurance using digital health information.
According to Kartik Sakthivel, vice president and chief information officer at LIMRA, nine in 10 insurance executives surveyed in 2020 reported that their customers “have an increased appetite for the digital shopping experience,” a trend that continued into 2021.
Internal Policygenius data corroborates this trend. From October to December 2021, roughly 56% of life insurance applications submitted through Policygenius were for no-medical-exam policies, compared to 26% in January to March 2021.
“To keep up with our customer demand, we went from having three no-medical-exam life insurance options in early 2020 to seven in 2021, with more on the horizon for 2022,” Eloise Spinello, associate director of account management at Policygenius, said. “More insurers are adjusting to demand by offering no-medical-exam options that account for all health classes as well, rather than reserving these options for only the healthiest applicants.”
In addition to providing convenience, accelerated underwriting policies can be more affordable options for shoppers. Policygenius Life Insurance Price Index data from the last year shows that no-medical-exam term insurance policies are competitively priced compared to term policies requiring a full medical exam — and some applicants even paid less for no-medical-exam term coverage. For example, 25-year-old females buying $250,000 in coverage paid 1.6% less in 2021 for no-medical-exam term policies than they did for traditional policies.
Strong demand from younger age groups
According to Mark Friedlander, director of corporate communications at the Insurance Information Institute, 2020 life insurance sales “were largely driven by younger age groups” and there was a year-over-year increase of 7.9% in life insurance sales for policyholders 44 and under from 2019 to 2020, the last year for which he has complete data.
In terms of the amount of coverage purchased through Policygenius in 2021, people 18-44 bought the vast majority (84%) of policies exceeding $1 million in coverage, and 81% of policies from $750,001 to $1 million. Older Gen Xers and Baby Boomers — people age 45 to 64 — bought only 16% of policies over $1 million in coverage, and those 65 and up didn’t buy any of these policies.
Compared to other demographics, Gen Xers and Baby Boomers also bought less coverage overall through Policygenius in 2021: 85% of policies bought by people over 65 and 87% of the policies bought by people age 45 to 64 were for under $250,000.
Stability in life insurance pricing
The life insurance industry saw a significant increase in death claims due to COVID-19 in 2020. “Death benefits paid in 2020 jumped to $87.5 billion, up 15% from $76 billion in 2019, the largest increase in nearly 25 years,” according to Friedlander.
One carrier on the Policygenius platform saw a similar rise in death claims in 2020 — and an even bigger increase in 2021. Legal & General America, the parent organization of the Banner Life and William Penn life insurance companies, saw a 12% increase in death claims, measured by dollars paid, from 2019 to 2020. Death claims rose again last year, increasing 17% from 2020 to 2021.
Despite this increase, as well as inflation, life insurance prices stayed consistent throughout 2021, with only nominal changes. Based on Policygenius data from April 2020 to April 2021, older smokers saw a surge in life insurance pricing, but pricing adjustments in May 2021 and the following months brought prices back to April 2020 levels. Consumers will likely continue to see price stability as insurers gather long-term data on COVID-19’s impact on mortality rates.
“Unpredictable global events have made the past year challenging, but insurers have adapted quickly and there are still plenty of affordable options for consumers,” Jennifer Fitzgerald, CEO and co-founder of Policygenius, said. “Since we founded Policygenius in 2014, we’ve seen significant technological advancements in the industry and we anticipate that securing financial protection will only become easier as insurers continue to embrace digitization.”
To read the full Policygenius 2022 Life Insurance Trend Report, click here.
I no medical exam actually a good thing for the industry? It seems like it would hurt the broker and help the call center life insurance companies.
Hello,
Why do you think it harms the broker?
Thanks!
Long term probably not good for the carrier & for the consumer rate rise. Exams sometimes find things online data bases won't in terms of unknown disease & drug use.
But the speed to issue & placement rate may offset that. I know all the data sources are not cheap that are being used & many carriers are giving up a decent share to the reinsurers that developed some of the algorithms, etc
There are tons of options for an independent agent to sell a no-exam or accelerated UW policy. Too many for me to list here.
You can sell these in person face to face, or over the phone. Same as a fully underwritten policy.
Im curious what your background is in life insurance. Did you just start recently?
I recently spoke to a regional director at a major mutual about this.
It told him "I know for a fact cases are getting by in Accelerated UW at rate classes they would not with full UW".
He said the company was well aware of that and planned for it.
– Cost savings on the front end are significant. He claimed its a 95%+ savings on the cost of UW and issuing a policy. Dont forget most of these are being delivered online via pdf as well.
– They are increasing investigations during the 2 year contestability period.
– They are doing random "audits" of the UW on accelerated policies.
Meaning… that fine print you signed off on, lets them go back and pull Medical Records for an audit. This does not affect the issued policy. It just gives the carrier an idea of how accurate their accelerated UW system is performing, and allows them to make adjustments as needed.
In my experience using the systems, they are pretty accurate. Ive had a handful of cases get 1 class better than they could have with normal UW. But we are talking preferred classes, not substandard.
These days, if a person has a serious health condition, 98% of the time they are on meds for it. So the rx check is very comprehensive for most people.
Agree. But there is a ton of people that don't go to Drs, smoke, chew, do other drugs, lie about weight. Those are the ones I think will be a longer term issue. Not for death in 1st 2 years, but later on.
I don't believe the 95% savings on UW up front. I have seen the costs of the 3-6 data tools being used. Only way there is 95% savings is if they are using AI & eliminating the actual UW looking at the case. Eventually, I think there will be.
I just see that the algorithm companies said the same about PC insurance, but I don't see any better profit ratios or combined ratios yet from the algorithms. People still get in not at fault accidents, hit in parking lot, hit deer, etc.
I hope the regional guy is right, I just think there will be some increased life rates in future for the issues not being disclosed/unknown that were seen in saliva/exams in the past
Well, 95% savings for the ones that are approved using the accelerated program. Only 50% of their new biz is being submitted through that program. And around 60% of submissions are approved without full UW.
So just 30% of all new biz is actually seeing that 95% savings.
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And yes, using AI to eliminate an actual person looking at the case is exactly what many of them are doing.
In my personal experience, around 50%-60% id say are approved without a human ever looking at them. Another 20% are approved after a question or two is asked… often RX or MIB didnt match… the system often lets you know what the issue is so all the underwriter has to do is read the answer and sign off on it. Then around 10%-20% are kicked to full UW. Those are usually medical conditions not properly disclosed, or meds that have multiple uses, etc.
Ive had multiple policies over the past few months that were approved literally minutes after the client submitted part2 of the app. These are fully UW rates/policies. Underwritten in minutes. One client literally did not believe me and kept asking if I was sure they didnt have to do anything else… even after they had signed for delivery and had the pdf of the contract they were still asking me… LOL.
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Ive had the same thoughts about the long term aspects. However, many of those are getting underwritten anyway. Most tobacco users who try to "get it past" end up buying the policy anyway. UW doenst usually make a big deal about no dr visits if your not a senior. Most hard drugs leave your system in a few days and dont show up in a urine test. And there have always been agents who write multiple policies with multiple carriers to stay under paramed limits so the client can get away with lying about their weight.
I think they have enough historical claims experience to see how much those things affect it.
And I think that is also a big reason why they are doing the random audits of policies and pulling medical records… that will give them hard stats on how many people lied about build/tobacco/drugs/etc..