The simplified life for policyholders

by David Keelaghan19 Apr 2017
With life insurance coverage rates declining in North America, providers continue to search for ways to make their products more accessible. That usually means a shorter and less invasive underwriting process, which has led to more insurers offering simplified issue products. In Canada, the likes of RBC Insurance, Blue Cross, Desjardins and Manulife now offer these products, which traditional were used by the elderly and those in the hard-to-ensure bracket.

According to new research by LIMRA, however, simplified issue products are now being used by a disparate selection of the population. That might mean a person who is time sensitive and wants to simply skip the medical exam stage, or perhaps someone previously refused coverage due to an unusual occupation or pastime that contains an element of danger.

The average turnaround time to issue a life insurance policy is normally around 28 days – a timeframe where many applicants often abandon the process.

Although policy limits are in place, under a simplified issue policy the turnaround time is expedited to such an extent that it can be issued within minutes (RBC Simplified Term Life Insurance quotes “as little as 15 minutes”).

The difference comes from the fact that applicants answer a short medical questionnaire rather than seeing a doctor in person. This can be done online, but is mainly carried out through insurance agents.

LIMRA’s data shows that 46% of simplified issue products sold are through the independent agent channel. In terms of the applications, some health-related and lifestyle questions are generally asked. The research showed that lifestyle questions are more prevalent than health questions, with drug/alcohol use and tobacco use both common queries.

In terms of the type of life insurance offered on the simplified issue platform, LIMRA data shows that 41% is in universal life, 35% is whole life and 24% term life.

While the information collected in the questionnaires is limited in scope, providers protect themselves by using advances in data collection and predictive analytics to obtain better information and analysis of potential policyholders.

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