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From Resource,
February 2007
Copyright by LOMA
Instant Underwriting
Some
insurers are taking advantage of automated underwriting solutions to approve and
sell simple, lower-cost policies in real time.
Note:
This article is based on a new
LOMA
Information
Center
Brief. The full brief can be accessed on the members-only LOMA Web site by
employees of LOMA member companies.
The Internet and life insurance
underwriting have never seemed like a natural fit—the underwriting function
has almost always been considered slow, inefficient, and constrained by old
technology. Optimizing the process for Web-based distribution has been stymied
by the need for medical exams and complete medical histories.
However,
rather than abandoning the Internet as a direct sales channel, some insurers are
taking advantage of automated underwriting solutions to approve and sell simple,
lower-cost policies in real time, particularly through financial institutions.
Instant-issue
underwriting solutions are essentially automated processing systems that allow
for the quick evaluation of an insurance application, usually submitted over the
Internet, and an almost immediate response to the applicant or financial
representative. Life insurers have used “expert” or “jet issue”
underwriting systems for years, but some of the latest, Web-based versions
promise responses not in days or hours, but in minutes.
The value proposition of
real-time underwriting allows insurers to quickly close the sale on
straightforward policies that used to take up much of agents’ time. It also
eliminates some of the new-business paperwork for relatively simple policies
that do not require a medical exam.
The following are recent
examples of insurers that have launched products that rely on almost-instant
underwriting responses, which are usually targeted for healthy individuals
purchasing lower face amounts of term insurance or single-premium life.1
In June 2006, ING announced
the introduction of ING Instant Term, an immediate-issue product sold through
banks and credit unions. The policy is designed to make it easier for low- and
middle-income customers to buy life insurance.2
With ING Instant Term (issued
by ING’s ReliaStar Life Insurance Company) prospective buyers answer brief
medical-history questionnaires at designated branches of participating financial
institutions; no medical exams or lab tests are required. Qualified customers
walk out with an issued policy.3
Available for periods of 10,
15, 20 or 30 years, the policy offers guaranteed-level premiums. After the level
term period, coverage can continue until age 95 with annually increasing
premiums. Customers can choose coverage of up to $250,000 (although certain
restrictions apply to applicants over the age of 50).4
“As a nation, our
population is underinsured, with just two-thirds of individuals owning a life
insurance policy,” said Alan S. Lurty, head of commodity products for ING’s
U.S. Life Business Group. “The ING Instant Term product makes it easier for a
person to walk into a branch uninsured or underinsured, and if they qualify,
walk out with a policy that can help protect a family’s financial security.”
In August 2005, Jefferson
National Life Insurance Company, a wholly owned subsidiary of Inviva, Inc.,
enhanced the servicing of its instant-issue term life product by integrating its
seven-question online application into brokerage general agents’ (BGAs’) Web
sites. This action was the second of a two-phase partnership with iPipeline, a
software and content service provider for the life insurance industry.5
Agents can remain within the
workflow environment of their own BGA’s Web site, through which they are given
direct access to Jefferson National’s quote engine. They can then transfer to
the Simple Term online application, which provides qualified applicants with
instant-issue term coverage in as little as 10 minutes and generates approved
policies at the point of purchase.6
The system is designed to
improve the productivity of agents, simplify insurance purchases for customers,
and reach more prospective distribution partners. (iPipeline reaches more than
550 wholesalers and more than 125,000 agents.) 7
Several years ago, Minnesota
Life introduced its Real-Time Underwriting Response system – a feature of its
group-insurance online enrollment service that gives customers an answer in
approximately 60 seconds. 8
Employees of Minnesota
Life’s group-insurance clients enroll for life insurance coverage through a
proprietary Web site that is accessible through their workplace. Through a
secure connection, they complete the online health questionnaire, attach their
electronic signature, and submit the evidence-of-insurability form. Applicants
receive an immediate approval, or a response that tells them what to expect
(i.e., further underwriting required). 10
Minnesota
Life’s affiliate, Securian Financial, also offers instant-term coverage to
customers of financial institutions through its CustomQuote term life program
(http://www.securian.com/FinancialInstitutions/
consumer/termlife.asp). Coverage amounts range from $50,000 to $500,000.
Prospective buyers in good health who meet the age requirements can be instantly
approved for up to $150,000 in coverage.
Another provider to banks is
First Symetra National Life Insurance Company of
New York
, which announced an agreement with The Bank of New York (with 341 retain
branches) in March 2005.11
First Symetra has an online
quote and application tool, Symetra Express, that allows bank platform
representatives to quote, apply for and bind coverage in as little as 10 minutes
for qualified applicants. It facilitates immediate coverage under the Temporary
Insurance Agreement while the coverage is underwritten.12
One of Sun Life Financial’s
bank products, launched in October 2005, is Sun Value Single Premium Universal
Life Insurance. The Sun Value policy is a single-premium, instant-issue life
insurance product available to bank customers in
New York
State
through Sun Life Insurance and Annuity Company of
New York
and to customers in other states through Sun Life Assurance Company of Canada
(U.S.).13
Eligibility is determined
through a simplified underwriting process that requires applicants to respond to
four questions. Customers can receive approval notification within 10 minutes.14
American Life Direct (http://www.americanlifedirect.com),
operated by Spectrum Direct Insurance Services, Inc., also sells instant-issue
term from Liberty Life Insurance Company on its Web site. Qualified customers
can obtain the coverage, up to $150,000, by answering a few health questions
online. The policy, which includes a 31-day free-look period, becomes effective
once it is approved and the customer’s online payment is received. The
insurer’s Web site states that the entire process can take as little as
fifteen minutes.
[NOTE:
For more on the broader strategies that insurers are implementing to streamline
the new business function and take advantage of the Internet, access relevant
research briefs and peer-to-peer surveys on LOMA’s Members Only Web
site—https://registeredusers.loma.org —or contact the Information Center at
1-800-ASK-LOMA or 770-984-3720 or infoctr@loma.org.]
ENDNOTES
1. “ING Introduces
Instant-Issue Term Life Insurance to Be Sold at Banks and Credit Unions.” ING
Groep N.V., June 26, 2006.
2. “ING Introduces
Instant-Issue Term Life Insurance to Be Sold at Banks and Credit Unions.” ING
Groep N.V., June 26, 2006.
3. “ING Introduces
Instant-Issue Term Life Insurance to Be Sold at Banks and Credit Unions.” ING
Groep N.V., June 26, 2006.
4. “ING Introduces
Instant-Issue Term Life Insurance to Be Sold at Banks and Credit Unions.” ING
Groep N.V., June 26, 2006.
5. “Inviva’s Jefferson
National Makes Instant-Issue Term Life Insurance Easier for Agencies and
Approved Customers by Expanding iPipeline Partnership.” Inviva, Inc., Business
Wire, August 22, 2005.
6. “Inviva’s Jefferson
National Makes Instant-Issue Term Life Insurance Easier for Agencies and
Approved Customers by Expanding iPipeline Partnership.” Inviva, Inc., Business
Wire, August 22, 2005.
7. “Inviva’s Jefferson
National Makes Instant-Issue Term Life Insurance Easier for Agencies and
Approved Customers by Expanding iPipeline Partnership.” Inviva, Inc., Business
Wire, August 22, 2005.
8. “Minnesota Life’s
Real-Time Underwriting Gives Employees Instant Answers.” Minnesota Life
Insurance Company, Business Wire, August 18, 2003.
10. “Minnesota Life’s
Real-Time Underwriting Gives Employees Instant Answers.” Minnesota Life
Insurance Company, Business Wire, August 18, 2003.
11. “First Symetra National
Life Insurance Company of
New York
Named Preferred Provider of Term Life Insurance for The Bank of
New York
.” First Symetra National Life Insurance Company of
New York
, March 9, 2005.
12. “First Symetra National
Life Insurance Company of
New York
Named Preferred Provider of Term Life Insurance for The Bank of
New York
.” First Symetra National Life Insurance Company of
New York
, March 9, 2005.
13. “Sun Life Financial
Introduces New Single Premium Universal Life Insurance Product.” Sun Life
Financial, October 12, 2005.
14. “Sun Life Financial
Introduces New Single Premium Universal Life Insurance Product.” Sun Life
Financial, October 12, 2005.
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