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Faster is Better: The Evolution and Impact of Accelerated Life Insurance Underwriting

Faster is Better: The Evolution and Impact of Accelerated Life Insurance Underwriting

April 22, 2024

The world of life insurance has undergone a profound transformation, particularly with the advent and advancement of accelerated underwriting (AU). Once an emerging concept, accelerated underwriting has swiftly become the preferred method for underwriting, especially in the wake of the COVID-19 pandemic. This shift has not only revolutionized the underwriting process but has also made acquiring life insurance faster, more efficient, and more user-friendly.

In many situations, gone are the days where buying a life insurance policy required a visit by the insurance medical examination service for an invasive medical exam involving a blood draw, fluid extraction, and quite often, an EKG and possibly even a run on a treadmill. Cedar Point Financial Services LLC provides our clients the opportunity to obtain significant life insurance coverage quickly using these services:

· The ability to apply digitally on-line at a client’s convenience

· The potential to forgo a medical exam and laboratory tests when applying for up to $10 million in coverage

· The convenience of medical records being collected from physicians’ patient portals

· Having a policy placed in force in hours or days instead of in weeks or months (with initial premium conveniently paid via bank account EFT or credit card)

The Start of Accelerated Underwriting

Accelerated underwriting's inception was driven by a desire to streamline the life insurance application process, making it quicker and less invasive for applicants. The traditional method of underwriting, which often required in-person medical exams and extensive health and lifestyle questionnaires, was time-consuming and cumbersome. The emergence of AU marked a significant shift towards using alternative data sources and technology to assess risk, thereby expediting the underwriting process.

How Accelerated Underwriting Works

At its core, accelerated underwriting leverages a wide array of data to assess an applicant’s risk and is collected with the applicant’s consent. This data includes, but is not limited to:

· Medical records

. Prescription history

· Financial behavior

· Public records such as assessor data, genealogy records, court filings, etc.

· Marketing and social data, e.g., mortgage amount/lender, occupation and education and social media

· Professional licenses

Technology plays a key role in this process, with algorithms and predictive models analyzing the data to make quick and accurate underwriting decisions. This not only speeds up the application process, but also allows for more nuanced and individualized risk assessment, potentially leading to better rates for applicants.

Cedar Point Financial Services LLC can demonstrate to our clients and their advisors how this data-driven approach significantly reduces the time and effort required to apply for and have a life insurance policy issued and placed in force by eliminating the need for medical exams and fluid samples.

The Advantages of Accelerated Underwriting

The benefits of accelerated underwriting extend to both insurers and applicants. For insurers, AU offers a more efficient and cost-effective way to assess risk, allowing them to process applications faster and at a lower cost. This efficiency can lead to increased competitiveness in the market, attracting more customers with the promise of a hassle-free application process.

For applicants, the advantages are even more significant. The quick and easy process removes many of the barriers to applying for life insurance, making it accessible to a broader audience. The reduction in turnaround times and the elimination of medical exams not only make the process more convenient, but also less daunting for many people, potentially increasing the overall uptake of life insurance.

In just the last year, major life insurance companies have increased the face amounts of life insurance they will issue by simply collecting information from existing medical records and other data sources. One insurer, a large mutual company, announced earlier this year that they would issue policies for up to $10 million in coverage without a medical exam. This company and many others can now provide applicants with an offer of coverage within 48 hours due to the advances in underwriting technology.

Whether someone is interested in a term policy or a cash value policy such as whole life, universal life or indexed universal life, Cedar Point Financial Services LLC has access to the accelerated underwriting programs of dozens of insurance companies. This allows clients to obtain the best life insurance options for their individual situations with as little friction in the application process as possible.

The Future of Accelerated Underwriting

Ongoing advances in data analytics and technology continue to refine and enhance the AU process. The use of more diverse and comprehensive data sources, including wearable technology and real-time health data, could further personalize risk assessment, and increase every opportunity to tailor life insurance to individual needs.

As an example, at least one major life insurance company will lower insurance costs on existing policies based upon data collected from fitness trackers. By transferring an insured’s exercise records to the insurer on a monthly or quarterly basis, significant savings on future premiums can be realized.

As underwriting models become more sophisticated, the potential for even faster processing times and more accurate risk assessments increases. This evolution will likely continue to push the boundaries of what's possible in life insurance underwriting, making policies more personalized, accessible, and affordable for consumers.

For those who have put off buying life insurance because of the perceived burden of the underwriting process, Cedar Point Financial Services LLC can explain how accelerated underwriting is able to dramatically streamline the process.

Privacy First

Life insurance companies relying on traditional and non-traditional data sources for their AU programs recognize the need for robust privacy protections and data security measures. Due to the intense state and federal regulation of insurers, substantial financial resources have been deployed in developing and operating data security processes. Going a step further, the National Association of Insurance Commissioners (NAIC) has an on-going working group that sets standards on the steps insurers must take to protect data.

We are Here to Help

Accelerated underwriting has fundamentally changed the landscape of life insurance, making it more accessible and appealing to a wider range of consumers. By leveraging technology and alternative data sources, insurers can offer a faster, simpler application process while maintaining accurate and effective risk assessment. As the technology and data analytics behind AU continue to evolve, we can expect even greater improvements in efficiency, customization, and customer satisfaction. At Cedar Point Financial Services LLC, we work with clients’ legal, accounting, and other advisory professionals in developing and implementing strategies that optimize their individual and business financial plans.