COVID-19 Accelerates No-Exam Trend in Life Insurance


This year, life insurance is dominated by big data.

Interest in coverage has surged during the pandemic, but for many people, social distancing mandates took the life insurance medical exam off the table. Insurers have begun to use accelerated underwriting to help consumers buy policies quickly and without invasive procedures. This process uses algorithms to assess applicants instead of taking exams.

According to a Society of Actuaries study, accelerated underwriting is not new. However, nearly a third of life insurance companies have increased it in response to the pandemic. And no-exam life insurance appeals to many people. Gina Birchall is chief operating officer of LIMRA’s life insurance trade group.

You can get life insurance online quickly with accelerated underwriting, but there are some caveats. You may lose flexibility and pricing for what you gain in speed.

How big data has changed the face of life insurance

Traditional life insurance required lengthy approvals, which involved bloodwork and urine samples. Brooks Tingle, President and CEO of John Hancock Insurance says that it was “probably the most difficult or most difficult product to purchase left in the modern economic system.”

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As big data became more prevalent, this changed. Insurers now typically check your prescription drug history and data from the MIB Group, an information-sharing service for insurers. Non-medical data may also be considered by companies, including your credit history and driving record, as well as shopping habits. Algorithms combine these data points to determine quickly whether you are eligible and what the cost of your coverage will be.

Although this data is difficult to analyze, industry experts believe that the trend will grow.

Jackie Morales is chief insurance officer at Bestow, an insurer using accelerated underwriting. “The more information that we have, and the deeper the data that our data has, the better we can make sound decisions,” she says.

How accelerated underwriting works

Two types of accelerated underwriting are common in companies:

  1. To expedite applications from healthy individuals. Quotacy CEO Jeremy Hallett says that many major insurers approve applicants with low risk based on big data. They then require medical examinations for all other applicants. According to LIMRA, an average of nine days is required for an insurer’s final decision to use accelerated underwriting rather than the traditional 27. Even if you do not take an exam, these policies are fully underwritten.
  2. To give instant answers. Bestow uses information from your application as well as big data algorithms to determine risk. They do not require you to undergo a medical exam. Although coverage is not guaranteed by insurance, the application process is quick and often results in a response within minutes.
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Accelerated Underwriting should not be confused with simplified issue life insurance. This policy considers your application, but does not tap into large data. Because they are based on less information, these policies tend to be more expensive and provide less coverage than standard policies.

Consider these things when selecting a policy

Ask how much the policy costs when you are shopping for life insurance. There are pros and cons to both instant-answer policies and fully underwritten policies. Your specific needs will determine which policy is best for you.

These are the questions to ask before you submit your application

What speed do you need coverage?

If speed is paramount, consider instant-answer life insurance policies that solely use big data and never require an exam. Although you will receive an answer quickly, it may not be true.

According to Bestow’s Morales, “What big data provides people is speed.” She says that nearly 85% of those who apply for Bestow policies do so via a mobile device.

What price do you want?

The cheapest policy is one that includes full medical underwriting. Hallett states that if the insurer uses accelerated underwriting in order to expedite your application, you will not be penalized. Your price and product likely will remain the same as if the exam was taken.

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Insurers don’t have the option to conduct a medical exam, so rates may not be in the lowest brackets for instant-answer policies. Morales said, “Some people will sacrifice that ability to receive a quick decision at a fair price.”

Are you looking for flexibility?

Fully underwritten life insurance might offer additional options such as the possibility to convert from term coverage to permanent coverage. Policies that only rely on your application information or big data may not offer this option.

Hallett states, “When you have at least a medical exam as an option, you get a stronger product.”