With sales on the decline, life insurance companies are scrambling to find new and easier ways for people to buy life insurance products. Prudential Financial is introducing two life insurance products that incorporate a "virtual" physical and delivery of the new policy directly to your email. Prudential's "My Term" policy and its single-premium universal life product, "My Legacy" are still in the testing phase and are currently sold only by banks and websites like Matrix Direct. But Mark Hug, who heads up product and marketing for Prudential's individual life insurance, says the second largest U.S. life insurer could soon market these products directly to consumers.
'Pinging' personal informationWhen an agent sells a traditional life insurance policy, a paramedic usually goes to a prospective client's home or office and performs a physical, which includes taking a blood and urine specimen, monitoring blood pressure and performing an electrocardiogram. It can often take 45 days to complete and issue the policy. But Prudential streamlines the process by having an agent compile the medical history on the phone, which takes about 15 minutes. Then the agent will ask for an "electronic signature," allowing the insurer's computer to "ping" several sources to verify confidential information. Prudential's computer will search the state motor vehicle database for evidence of tickets or drunk and reckless driving, all of which can help predict mortality. It will also scan the Medical Information Bureau (MIB), a database of past information from life and health insurance applications. MIB red-flags inconsistent or suspicious information. Prudential also checks a pharmaceutical database that many corporations use; it lists the medications of present and former employees. The medications, even marijuana, are not a deal breaker, but can indicate underlying medical conditions which the prospective client may not have revealed.
No paperworkPrudential will turn this information into a sophisticated algorithm that uses predictive analytics to determine whether it will offer a policy.
"The decision is binary, yes or no, based on the price we originally offered," says Hug. "Between 50 and 70 percent are approved and no paper is involved."Hug points out that Prudential is governed by federal privacy laws and takes in much of the same information before it issues a traditional policy. "Most people are honest," he observes. The cost for a "virtual exam" life insurance policy is slightly higher than a normal term policy. But analysts say it's a price many people would be willing to pay for the convenience of a quickly issued policy that doesn't involve lab tests. The difference is about $3 a month for a younger person.