The life insurance business is always changing, but there have long been industry norms just about everyone involved - from insurers to policyholders - has followed for years. But now, thanks to changing consumer habits and emerging technology, those long-held standards are beginning to shift. The good news is that a lot of these changes might end up being beneficial for all parties involved by boosting enrollment in life coverage and thus giving consumers greater peace of mind throughout their lives.
One of the big changes that experts say is likely to arrive over the next several years is that the standard health assessment required in the application process for many life insurance policies may soon become a thing of the past, according to NerdWallet. While a medical exam may still be important in some cases, the vast majority of life insurance enrollees will probably not be required to go through one soon.
This process is already starting for some life insurers, who now issue what they call "accelerated underwriting" to entice consumers to sign up, the report said.
"In the next 10 years we are going to see that requirement go away … for most people," Elliott Wallace, vice president and general manager of life insurance for the analytics company LexisNexis Risk Solutions, told the site.
The medical exams that have long been a staple of life insurance may soon go away.
Other changes coming soon
In addition, life insurers are starting to leverage technology in new ways, including the use of selfies and other media shared on social networking sites to determine risk for would-be policyholders, according to PYMNTS. Companies are now developing software that can use selfies to determine an applicant's age, weight and body mass index, which can, in turn, be used to calculate risk based on other data points related to that person.
And that is just one way in which insurers may start to use sensitive information - another example is data collected by wearable technology like step counters - to either inform underwriting decisions or continually collect data about policyholders in exchange for discounts on their coverage.
Why do it?
The idea behind changing the way life insurance has worked for decades is relatively simple: Life insurers now understand they need to do more to engage young people in order to keep their underwriting efforts going strong, according to Fast Company. As such, more are trying to get innovative with how they reach out and make first contact with millennials and - in the near future - those in Generation Z. While the old methods may still work in some cases, finding new ways to engage younger generations who will, by and large, need life insurance in the next several years, is a good idea as it may unlock new avenues toward broader coverage nationwide.
The more that life insurers can do to show young people, in particular, the value of coverage, the better off both sides will be going forward. Data shows millennials know life insurance can be a big help for them and their families, but that doesn't always translate to actually buying it.