Guest contributor, JC Matthews
Insurtech: Rapid Underwriting
The End of the 3 Month Life Insurance Application
Fintech, or financial technology solutions have dominated the finance industry, yet insurtech is late to the party. Insurtech describes financial innovation technology solutions for the insurance industry. These new fintech insurance technological advances expedite the insurance process saving you time and money.
You’ll probably agree that the current life insurance underwriting process is too long, entirely frustrating, and doesn’t meet your expectations of the life insurance buying process, either online or offline.
Insurtech is the Streamlined Life Insurance Solution
Finally, there is a process that eliminates the 75 days it typically takes to get life insurance.
By taking this one simple step, you will decrease your underwriting time by 80% to 90%.
And today I am going to show you exactly what that insurtech action is and how you can easily use it to make your insurance purchasing process simple and faster.
Why The Life Insurance Application Process Takes So Long
There is only one word to use when explaining why your life insurance application is taking so long to get an approval and that is Underwriting.
Life Insurance Underwriting is a process used to determine if a life insurance company will cover you.
This process consists of several different sections each with its particular set of guidelines that you must meet before you can be approved:
Medical Information Report (MIB)
A solid understanding of your medical history is going to be an important part of the decision-making.
Your report from the Medical Information Bureau (MIB) will be used to determine the reasons you have visited doctors offices in the past.
A medical exam is needed to determine your current level of health.
In most cases, a medical exam will be the determining factor for your final rate and whether you can even be insured or not .
Prescription Drug History (Intelliscript)
Whenever you get a prescription drug filled it is recorded and sent to Intelliscript.
This data is used by the insurance company to see your prior and current medications.
Medical Records (APS)
Your medical records, also known as Attending Physician Statements or (APS) give the underwriter more data to back up your Exam results, MIB Report, and Prescription Report.
Next the underwriter uses these records to see your doctor’s recommendations as well as any previous treatments.
Driving History (MVR)
Yes, your driving history matters.
Insurance companies need to know if you take risks while driving.
The underwriter investigates whether you have a DUI, DWI, or received an unusual number of speeding tickets.
In other words, before writing the insurance policy, they need to know if you are a reckless driver.
Do you like to go skydiving, hoverboarding, offroading, hunting, do you find risk taking fun?
Insurance carriers want to know how you live on a daily basis.
They need to see how that will affect your length of life, or if they need to charge you more for taking on the risk.
The medical history of your family is important.
Insurance companies want to understand if your family has a history of anything that can come up later in your life and cause you to pass away while you are insured.
Does your family have a history of heart disease or diabetes or dementia? The insurance carriers want to know.
Financial History / Income
Generally you will only see this section if you’re purchasing much larger policies; however it depends on the company.
Usually, insurance companies will cover you up to 3 times your annual income if you aren’t working and up to 30 times your annual income if you are working.
Here’s How Much Life Insurance Coverage You Can Expect
- If you are making $50,000 a year, you could get covered for up to $1.5 Million.
- If you are looking for $2,000,000 or more, you will be hit with a personal financial review and phone interview.
The Time-Consuming Underwriting Summary
There are several reports and lots of data points that a life insurance underwriter must go through before they can determine your eligibility for insurance.
On top of that, they are reviewing this information manually, so, it takes more time.
If you have ever gone through this insurance-buying process then you can safely blame underwriting for your long wait.
The good news is that underwriting is currently going through a much-needed upgrade.
Fintech Finally Gets Unicorns
If you just said “What are Fintech and Unicorns?” it’s okay, I said the same thing when I first learned about them.
In short, Fintech companies become unicorns when these startup companies are valued at greater than $1 billion. The term was coined in 2013 by venture capitalist Aileen Lee, choosing the unicorn to represent the rarity of such successful ventures.
Now, let’s be honest, life insurance is a dull and morbid subject , and because of that, the young minds that were needed to take it to the next level were lacking. Insurtech is a late arrival to the fintech scene.
In fact, two different studies, one by McKinsey & Co and one by LIMRA showed that the average age of a life insurance agent in 2014 was between 56 and 59 years old. Not the most spritely group!
Contrast the aging insurance agents with the average age of a tech entrepreneur at approximately 30 years years old, according to a recent Harvard Business Review article. This descrepancy between the insurance industry folks and the youthful startup entrepreneurs helps explain the lack of insurtech startups today.
Yet, thanks to the booming startup economy many entrepreneurs are attempting to create their own unicorns. And, the insurtech industry is beginning to come into it’s own. Metromile is one auto insurtech company that charges based upon how much you drive-a new concept.
The new insurtech investments lead to several companies creating the technology behind this real-time underwriting and will save you both time and money in the immediate future.
The Insurtech Answer…Underwriting in Real-Time
Applying for life insurance online or asking your agent to put you with a carrier that offers real-time underwriting is the answer to all of your problems.
Several new insurance upstarts or insurtech companies have created proprietary algorithms that allow for this real-time underwriting.
Today, insurtech startups have created software that can do all of the underwriting in a fraction of the time.
One of these upstarts puts it like this:
“Instead of requiring a medical exam to finalize coverage, our sophisticated technology analyzes the health information that you’ve already provided in the application to make a decision in real-time. Once you submit your application online, we’ll inform you if a medical exam is needed to finalize coverage.”
Now, let’s take a look at underwriting with our “real-time” glasses on.
Since this process will be in real-time, you will no longer have to wait for the underwriter to give you a decision.
Insurtech Real-time Rapid Underwriting – Faster Than a Speeding Bullet
The data from your Medical Information Bureau Report, Prescription Drug Report, Motor Vehicle Report, Medical Records, Lifestyle and Financial History can all be pulled and calculated by software to give you an underwriting life insurance decision in approximately 15 to 20 minutes, in most cases.
The Insurtech Underwriting Process
Insurtech underwriting really is this simple:
- Find a carrier offering real-time underwriting
- Get a Quote
- Complete the Real-Time Underwriting Application
- Get a decision within 30 minutes
- Take an exam (if Needed)
- Get a copy of your policy
Because of this process, you are now be able to shop for life insurance as you shop for anything else.
Fintech Life Insurance Future – Lower Rates
As new insurtech firms crop up, the life insurance underwriting processes becomes more streamlined and you’ll start to see the cost of life insurance decrease and the approval rates increase.
Real-time underwriting is going to be the savior of the life insurance industry simply because it encourages younger people to get life insurance coverage at a faster pace.
Real-time underwriting will get rid of the stigma that getting life insurance takes forever.
The new insurtech innovations are certain to improve this legacy industry.
If you are seeking life insurance then look at products with real-time underwriting.
Insurtech’s real time underwriting will save you both time and money.
If you have any questions about specific carriers or need a better understanding of the process, please feel free to reach out to me.
JC Matthews is the Co-Founder & CEO of Simply Insurance. He is a Licensed Life and Health Insurance Agent with over 9 years of experience in the industry.