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
'Pinging' personal information
When 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
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
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
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.
Prudential 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
"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.
Hug says his goal is to speed up the life insurance application
process and, once refined, to put it out on the market for
everyone, in effect, creating a GEICO-like process for life
"Our Holy Grail is for our regular product and our electronic
product to be equivalent in price," he says, "and to offer
15-minute life insurance."
'No muss, no fuss'
Insurance analysts say Prudential's electronic approach to
buying life insurance is innovative and could be a game
"For the consumer, the products promise no muss, no fuss, no
in-home medical specimens," says insurance analyst Donald Light of
Celent Research. "Prudential could see strong sales for both
Steve Weisbart, chief economist for the Insurance Information
Institute, says, "This could definitely increase Prudential's
ability to sell, particularly among moderate-income people who
haven't got time to sit around the home or office waiting for
someone to give them a physical." Many people simply don't like the
invasiveness of a physical, particularly by a stranger, he
Life insurance companies like Prudential need to move quickly to
regain lost ground. Less than half of all American households have
individual life insurance, according to LIMRA, an industry research
group, which says that during the first three months of this year
individual life insurance growth rates declined by 5 percent in the
number of policies written.