Crucial Facts to Know About Buying the Best Life Insurance

No matter how exciting and adventurous your lifestyle is, you reach a certain age when you must consider your financial situation and family obligations. Thinking about your spouse’s or children’s future makes you realize how much we depend on each other. It might sound cruel, but we must accept and prepare for the possibility of sudden death or unexpected terminal illness. Therefore, you undoubtedly could benefit from finding the best life insurance for you.

We presume that you have already taken into account your mortgage, everyday expenses, future college fees, and student loans for the children. Buying life insurance is like setting up a safety net designed to ease the financial burden from your loved ones’ backs. Death benefits cannot compensate for emotional losses. However, they could pay for the final expenses and ensure there’s enough money for your family to get back on their feet.

Taking the First Step

Deciding to sign up for a life insurance policy is the first step of a lengthy process. You must take into account many variables when choosing a policy. Thus, it could take quite some time for you to single out the best life insurance on the market. 

The 2019 Insurance Barometer Study says 57 percent of adult Americans own life insurance. Almost the same proportion of people in the U.S. overestimate the cost of a term life insurance coverage by as much as three times. This indicates that there is a considerate lack of knowledge about the topic. If you have already made up your mind to buy life insurance, but you feel confused and don’t know where to start, let us help you. This article will help you make an informed decision and answer your questions about insurance coverage, premiums, and benefits.

It will make the process clearer and provide some guidelines. An overview of some of the top insurance providers and their leading life insurance products currently on the market are a good starting point for your research. Let’s start with the basics.  

How Life Insurance Works

If you missed our Life Insurance 101 guide, let us summarize. Signing up for a life insurance policy means that you will make monthly payments to a life insurance carrier. In return, they pay your beneficiaries in the event of your passing, also known as a death benefit. The amount of coverage, the type, and duration are up to your choice. You can settle upon lesser coverage to provide enough cash to cover your funeral (also known as burial insurance). Alternatively, you can look at life insurance as a tax-free investment (permanent insurance). The last is also known as life insurance that does not expire. You can use that policy to withdraw cash, cover your child’s college tuition, or pay hospital bills.

Of course, you can’t decide how much you will pay every month in premiums. The insurer will consider your health condition and age when setting your payment amounts. However, it is essential to realize that some companies are more tolerant of tobacco users. On the other hand, others will see you as a higher risk if you don’t undergo a medical exam before signing up for a policy.

Benefits of Life Insurance

The first step in signing up for a life policy is to identify why you need it. It is individual, and many factors weigh in. Some of these factors are your stage life, size of your income, the number of relatives who depend on you, etc. Generally speaking, the main reasons people state for owning a life insurance policy in 2019 are income replacement, coverage of final expenses, mortgage payoff, and wealth transfer. Other motivations that are on the rise, according to the survey, include business purposes, policy replacement, estate taxes and liquidity, and charitable gifts. 

When defining your main reasons for buying life insurance, reflect on your life situation and what will happen if you die unexpectedly. What about your children? How old are they? What does it cost to care for them? What will their tuition cost in the future? How is the situation with your mortgage? Maybe you are responsible for taking care of other relatives. Through this process, you will also have a more unobstructed view of why you need life insurance.

Side view of elderly man sitting on wheelchair looking at life insurance contract form

How much coverage should I buy?

One of the most widespread suggestions for calculating the amount of coverage you need is to multiply your annual income by ten. Let us give an example. If you earn $50,000 annually, you should apply for $500,000 in coverage. However, if you want to do the math on your own, here is a list of questions prepared by the National Association of Insurance Commissioners:

  • Does anyone depend on me financially? 
  • How much of the family income do I provide? 
  • How will my family pay my final expenses and repay debts after my death? 
  • Do I want to leave money to charity or family? 
  • If I have life insurance through my employer, is it enough to meet my financial obligations? 

Here is a bit more information to consider. The average expenses for a funeral (i.e., service, casket, gravesite, and headstone) are estimated to cost between $7,000 and $10,000. Thus, your burial is already a considerable financial burden for your relatives.

If you are part of group life insurance as an employee, have you made yourself aware of the insurance conditions and the fine print? Often you will realize that the coverage they offer is less than your estimated needs. Moreover, if you change jobs, the policies can rarely be transferred.

Who needs life insurance?

The family’s sole or primary money provider should have life insurance, but it makes sense for both partners to have coverage. Housework, even though it’s unpaid, has a monetary value. If a stay-at-home parent passes away, the work he/she was doing will have to be taken over by other family members or hired help. Thus, the most reasonable choice for financial stability is for both partners to buy life insurance. 

What should I look for when choosing a life insurance company?

With more than 700 different life insurers in the U.S., it is a vast industry. It is also impossible to browse through all the companies’ websites, research their life insurance products, and get familiar with the policies they offer.

Here are a few hints on what is essential to examine when choosing the best life insurance for you. 

Insurance Companies’ Financial Strength

The most important thing is the financial strength of the insurance carrier. After all, if you die in 20 years, you need the company you signed a life policy with to still exist and be ready to pay the coverage to your beneficiaries. Here is the list of the nine biggest life insurers, according to market share. Next to them is the percentage of the market they hold. Did you notice that the market share of the first is almost double the size of the company rated second?

1. MetLife Inc. – 14.1 percent

2. Prudential Financial Inc. – 7.8 percent

3. New York Life Insurance Group – 5.2 percent

4. Massachusetts Mutual Life Insurance Co. – 4.0 percent

5. American International Group (AIG) – 3.9 percent

6. Lincoln National Corp. – 3.8 percent

7. Principal Financial Group Inc. – 3.7 percent

8. AXA – 3.3 percent

9. Transamerica – 3.3 percent

Market Share

Market share is not the single most crucial factor to scrutinize when analyzing a company’s financial stability. The higher the share, the more policyholders choose the company. This indicates that they are trustworthy. 

However, you should also analyze the company’s finances, investments, and stability. For an unbiased assessment of the economic state of a company, turn to one of the leading independent rating agencies such as A.M. Best, Fitch, Moody’s, or S&P. Keep in mind that A.M. Best is the only one that specializes in the life insurance business, so check their financial strength ratings first. Below you can find a bit more about how companies are evaluated. 

Customer Service Level 

The next thing which should define your choice of company is the client relationship and customer satisfaction. Attention, swiftness, and personalization are some of the things you are seeking. In addition to dealing with the loss of a loved one, you don’t want to leave your family with slow, complicated procedures and clerks, do you? Before signing up with a company, check for feedback on social media, ask around, and read reviews. It can be useful to formulate questions that you wouldn’t otherwise think about asking.  

Get familiar with the company’s existing procedures. The simplified approach might save you time, but it will probably cost you money. Some companies might tend to take more time and request more documents and effort from you. However, they could have a sympathetic eye for smoking or other habits considered risky by most insurers. 

How are life insurance providers rated?

Independent rating agencies evaluate the current economic state of affairs of companies, industries, and even states. They research and analyze global capital markets and prepare tools for businesses to navigate better in the financial world. In each sector, rating agencies have different criteria based on which they do an assessment. Moreover, every agency has a distinct methodology that varies in the factors it considers. Thus, the same company’s rating might differ from agency to agency. 

Top Rating Companies

The leading rating companies are S&P Global, Fitch, and Moody’s. However, the portfolio of companies, industries, and countries is as broad as it can get. Therefore, we recommend consulting A.M. Best’s evaluation of a company first. As we already mentioned, it stands out from the other agencies because it is focused only on the insurance sector. They evaluate the financial strength and credit ratings by analyzing balance sheets, their level of operational performance, and other details.   

There is also the Comdex Index, which is designed to make it easier for one to study existing financial strength ratings. It is based on software called VitalSigns. It is not a rating scale; instead, it shows the average rate of a particular life insurance company based on the marks received by specialized agencies. This is useful if you want to take into account multiple assessments. You can request the ratings directly from the agencies or search for this information on the life insurance carrier’s website.

Transparency evokes trust, and at the end of the day, that is what insurers want you to experience. 

Life Insurance Companies: A Breakdown by Types

Have you noticed that the word “mutual” often is found in the name of an insurer (i.e., Mutual of Omaha, Northwestern Mutual, MassMutual, etc.)? Based on who owns the company, there are two main types: 

Mutual Held Company 

The policyholders own the mutual company. It means that the company belongs to the people who own its products. Policyholders share dividends if there are any. If you want to be insured by such a company, you must deal directly with their representative and can’t sign up for a life policy through a free agent. 

Stock-Held Company

A certain number of stockholders own the insurance company. Having a life insurance policy with such a company is not enough to own it. You would have to buy company stock additionally. Such companies are open to trade on stock exchanges.

Group Employee Insurance

One of the benefits businesses offer to their employees is group life insurance. It means the employer sponsors a life policy for those working for them. Is this the best life insurance? It probably isn’t, but it is an advantage you should be aware of when researching for a death benefit that will secure your family. 

Group insurance is mostly signed automatically, and the employee is spared medical exams and submitting documents individually. However, the coverage is often shallow and is far from providing a long-lasting replacement. Businesses can sign policies for their employees based on a flat rate. Each employee’s insurance has the same death benefit of about $10,000 to $25,000. The alternative is for the coverage to be a multiple of the employees’ salaries. For example, if you receive $50,000 annually, the death benefit could amount to $100,000. 

Group insurance policies differ, but if you are leaving the company, you might have the option to continue paying the premiums on your own and keep the insurance. That might be a sensible decision depending on your age, health condition, and amount of coverage. 

However, if you are young and healthy, it would be better to purchase life insurance on the individual market. Keeping the group employee insurance and buying a personal policy is also a valid option. Eighteen percent of insured people own only group life insurance, while 28 percent hold only individual coverage. Eleven percent have signed up for both individual and group life policies. 

Happy young couple taking financial advice at home

What is the procedure for signing up for an insurance policy?

  • We have already mentioned that the process of buying life insurance takes time. After all, you are looking for the best life insurance that is out there. 
  • The first step is to start seriously shopping. We might suggest that you are at this stage since you are reading this article.  
  • As a next step, get a life insurance quote from one or more companies. 
  • The last step involves signing up for your life insurance. 

Are you alone in this process? You could research on your own by checking companies’ websites, insurance aggregators, and insurance association websites. Most of the companies offer online tools to get an overview estimation of the cost of life insurance. Moreover, requesting a quote is as easy as it can get nowadays. 

However, we would recommend that you contact a financial professional to support you in the process. There are captive agents, free agents, and financial advisers. 

Financial Experts to Guide You

Captive Agents

Captive agents work for one particular company and offer only their own life insurance products. That will be your choice if you have decided on the insurer you would like to choose. Captive agents are familiar with the products they are offering in detail and can recognize your needs and priorities quickly to suggest the appropriate product.  

Free Agents 

They are consultants who receive a commission from the companies for every signed policy. They have a more comprehensive view of the market and the pallet of insurance offerings. Thus, this is your choice if you are still open to choosing a company and even a type of insurance. Free agents are informed and might suggest products you didn’t even know about or that are not publicly advertised. Keep in mind though that those free agents still are inclined to recommend some companies more than others because of the higher commission they would receive.

In both cases, once you have chosen your insurance, the agent will handle the sign-up procedure, which is quite an advantage. There are several trade organizations. Most of them provide a locator for independent agents close to you. For example, Independent Insurance Agents & Brokers of America is one option.

Financial Advisers

Finally, there are also financial advisers whose primary function is to give professional advice but not engage in signing deals. They are considered to be the most objective and willing to advise you based on your needs rather than financial gain. They also have the skills and education to consult you in any area of personal finances: investments, retirement plans, etc. Look for a Certified Financial Planner who works in your area. 

How much does the premium cost?

Almost 60 percent of Americans estimate that a $250,000 term life policy for a male aged 30 years in good health would cost $500 or more per year. In reality, the annual premium would amount to just $160. Thus, we can safely say that the price of life insurance is by far overestimated. While we cannot say it is always cheap, many factors influence the amount of the premiums.  

For starters, there is the type of insurance you choose. Term insurance policies tend to be considerably cheaper than permanent ones. The main difference is that with term insurance, there is quite the chance you won’t die within the designated period. Hence, life insurance carriers have less risk. Below there are some more explanations, advantages, and disadvantages of both types of insurances. 

Factors That Have an Impact on Your Premium

Age and Health Condition

Important factors that determine your monthly premium include your age and health condition. Typically, you sign up for life insurance when you are younger, in good health, and have a steady income. Dying is possible but does not appear to be likely any time soon. Therefore, it is less of a risk that the company will have to pay your beneficiaries the death benefit. However, if you are getting older, your health tends to deteriorate, so the premiums will increase. 

Bad Habits

Other criteria define the monthly payments’ size. One of the most critical factors contributing substantially to increased premiums is smoking. You might seriously contemplate quitting smoking before you sign up for life insurance. 

Occupation and Profession

The type of occupation you have could also influence the size of the premiums. If you have a risky profession, you should be prepared for a more diligent search for a company willing to offer you affordable premiums. Fishing, logging, construction work, farming, mining, and even driving a truck are considered industries with a higher rate of fatal injuries. 

The process of getting life insurance will include filling in a questionnaire and often undergoing a medical exam. For some companies, answering the survey is enough, especially if you are younger. This could also mean that you are assigned a slightly higher premium just because the insurer has no proof of your excellent medical condition. Be honest in answering the questions. Any hints of false information might result in the refusal of your application, or the insurer may offer a more expensive policy.  

Whole life or term insurance?

In 2019 customers continue to prefer term insurance policies before whole life ones (71 percent to 44 percent). What is the difference?

Term Life Insurance 

You can purchase a term life insurance policy for a specified period: 10, 20, or 30 years. These are the years when your children are still dependent on your income. You are also probably still paying for your house, and your savings have not yet reached a high level.

Typically, insurers expect that within this period, you will have paid for your home, and your children will be living on their own. You should have saved up some money for your greyer days and for arranging your final expenses too. Hence, there will be no need for life insurance anymore.

Whole Life Insurance

With whole life insurance, your beneficiaries are guaranteed to receive the death benefit. No matter when you die, or if you pass away before you reach 100 years of age, the insurer will pay your loved ones. Moreover, there is cash value they collect in time that results in a higher death benefit. The pros of this type of insurance are quite apparent; however, it also costs more. Therefore, it is less popular than term life insurance. If you opt for a permanent policy, there is also universal insurance. The difference between whole life insurance is that you can set up a flexible payment plan. The only requirement is that you cover the minimum to guarantee that your policy is still in force.

There are also other products on the market. For example, some insurance allows you to use living benefits. These policies place cash at your disposal in times of terminal illness and the need for long-term health care. 

What if your term is up?

Buying a term life insurance policy is the predominant product on the market. However, lifestyles have changed since the time this type of insurance was introduced to customers. It is possible that near the end of your policy term, you find yourself in a difficult situation. Your savings are not enough to cover the bills and the everyday needs of your partner in the event of your death. Or maybe your kids are still in need of your support due to the challenging economic situations and burdensome student loans. Or perhaps you have divorced and remarried in those 20 years and were taking care of young children again. 

Luckily, even if you are 55 years old and in relatively good health, you might receive a fair offer. For example, let’s say you get a 10-year term policy with $500,000 of coverage for about $1,151 per year (source: Kiplinger’s Personal Finance, 09/2018). Once your term starts getting closer, it comes time to shop for a new policy. 

Extension to Current Coverage

Some life insurance allows conversion, and it is smart to go for such an option. These policies will enable you to extend your current coverage rather than buy a new, more expensive one. This is an important feature to consider if you decided to go with a term policy. Be smart and ask if there is a time limit for renewing your insurance. You don’t want to miss it.

What happens if you get seriously sick and have to undergo lengthy medical treatment that doesn’t allow you to work? Some insurance will enable you to receive a certain amount of money from your coverage, which you can use for health care. That would lower the amount of your coverage, but it would provide money when you need the most. For example, you can receive $50,000 for medical treatment, which will reduce your death benefit payout by about $150,000 if your coverage amounts to $750,000.

Signing Up for the Best Life Insurance: What Comes Next?

Before sealing the deal with your life insurance company, you should make sure that you are aware of the premium payment plan and whether you can afford it. We are not only talking about your insurance policy but also possible changes in the amount due to the company’s state of affairs. Some life insurers’ policies are affected by companies’ investments or benefit claims. Inform yourself of the maximum premium you would be expected to pay and consider whether you could afford it.  

Choose Your Beneficiaries

The next step is to choose your beneficiaries. They are the person(s) who will receive the death benefit after you pass away. We do not advise that you select a minor child as your beneficiary since companies are not be inclined to pay the benefit to a minor child. The payment gets much more complicated when the beneficiary is a minor. 

Know Your Policy

Acquaint yourself thoroughly with your policy. Read it from cover to cover and be sure that you understand everything written there. If there is something you find unacceptable, there is usually a predefined period during which you can cancel your policy and get a refund. Most often, it is up to 10 days. Check the first page of the policy. The insurer should state the review period there. 

Visit Your Financial Advisor

Finally, even the best life insurance needs a regular reread from time to time. Ask your financial advisor or company representative to go through the policy. Check what changes have been introduced in the meantime. Maybe premiums or benefits have been subjected to review? What about your life situation? Would the death benefit still meet your needs? Has there been a significant life event such as a new child’s birth, divorce, or remarriage? Life insurance policies allow you to change your beneficiary for free. 

Best Life Insurance Company Overviews

Let us give you an overview of the ten most prominent U.S. life insurance companies by market share. At the end of this section, we will suggest a couple more companies that might not be within the top 10 but have excellent products and a trustworthy reputation.

MetLife Inc. 

Without question, the largest insurance company is MetLife, and they have some history. Founded in 1868, MetLife has worked hard to gain the trust of its consumers. It provides a significant range of insurance products, including annuities and auto, dental, and homeowners’ insurance, with their leading focus being life insurance. The company offers both term and permanent policies at very affordable rates. It is one of the first choices when it comes to group employee life insurance.

As of the beginning of 2019, the company’s financial strength ratings among agencies are high: A+ with A.M. Best, A.A.- with Fitch, Aa3 with Moody’s, and A.A.- with S&P. However, be prepared for a more complicated underwriting procedure with a strict exam policy. There is no option for getting a policy without a medical exam. If you are looking for a socially responsible company, MetLife has domestic and international educational and environmental programs to support sustainability and development.

Prudential Financial Inc.

It is not only that Prudential Financial is the closest to MetLife in terms of market share in the U.S., but it also holds sixth place in the world for 2019. Thus, you should consider this 140-year old company when researching the best life insurance. In Prudential’s portfolio, you can find some concrete underwriting proposals that are not offered on the mass market. If you are a smoker, you should check this company out first since it has a higher risk tolerance for tobacco users.

Whole life is not available; however, you could find suitable universal insurance policies. We would argue that the company explains the pros and cons in a very understandable chart. The company’s ratings are high, but a medical exam is necessary to go further with underwriting. The term life Insurance could have better conditions, though. Fortune magazine has just named Prudential as a changemaker for the second consecutive year for its investments with social impact. 

New York Life Insurance Group

Being within the top three in the U.S. is already saying something about New York Life. What is even more important is that the policyholders are highly satisfied with the way they are being served. Founded in 1845, the company has rating scores through the roof (A++ by A.M. Best, Aaa by Moody’s, AA+ by S&P, and AAA by Fitch). Term, whole, universal, and variable life insurance policies are on offer here, and there is special attention for people opting for their first underwriting. Since New York is a mutual company, it works only with captive agents.

If you want to get a life insurance quote from them, you will need to contact the company directly. You might consider New York Life if you are searching for a way to support diversity. The insurer has been nominated as one of America’s best employers for diversity by Forbes magazine.

Massachusetts Mutual Life Insurance Co. or MassMutual 

MassMutual is another dinosaur within the insurance business with a rich history and credibility over more than 160 years. You can feel entirely secure if you choose to underwrite with MassMutual. The company’s financial stability is tremendous, and its ratings are very promising.

Additionally, the company offers a great diversity of products from which to choose. Are you considering getting not only life insurance but other financial and insurance products as well? Save time and energy and look no further as MassMutual will probably have it available. As suggested by the name of the company, policyholders own the company. If you choose whole life insurance, you are eligible to vote in elections for the board of directors. As part of MassMutual’s corporate social responsibility efforts, its legal team supports various charities pro bono in its work for social justice.

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American International Group (AIG)

AIG is also known as American General. It qualifies as another of the leading companies not only by market share but also due to good and steady ratings, financial strength, and proven reputation. If you choose AIG, you can rely on competitive life insurance rates. The company offers a solution to your financial situation, namely, $250,000 of term life insurance coverage for up to $160 per year. AIG’s products are a bit more complicated, and it would be best to consult with an expert before underwriting a policy. Climate change and sustainability are AIG’s leading corporate social responsibility goals. 

Lincoln National Corp.

Financial stability is not even a question for Lincoln National Corporation, also known as Lincoln Financial Group. A.M. Best, Moody’s, S&P and Fitch all give A scores to the company. Lincoln offers some of the most affordable premiums out there, and it has more than 100 years of history in the market. Like most of the companies listed here, customers can choose from an excellent product portfolio. Whole life insurance is lacking, however. Try the built-in calculator to estimate your needs when it comes to life insurance. Lincoln secures some of the best conditions for work for women and people with disabilities. 

Principal Financial Group Inc.

Principal scores A ratings among all the leading agencies. It was founded in 1879 as an insurance company. Today it provides a wide range of financial services to its clients. It offers a great variety of products with some significant innovations, like underwriting for higher coverage, in which no exam is required. Still, conditions are quite clear, and there is not a lot of room for flexibility left. Be prepared to pay a little bit more in premiums, but what you get is quality service.

Principal offers both permanent and term life insurance with short-term policies for one year. You will not get a lot of information from their website, so consider contacting an insurance agent or the company. Check out their retirement programs once you establish contact.

AXA Equitable Holdings

What started as Equitable Life Assurance in 1859 is now owned by the French brand AXA. A.M. Best, Moody’s, and S&P all rate AXA with at least an A score. The list of policies within the AXA portfolio includes term, whole, universal, variable, and survivorship life insurance. AXA is dedicated to contributing to children’s financial education by partnering with schools around the country. 

Transamerica

Transamerica is among the best life insurers on the market with four A ratings. Whole life, term life, universal life, and index universal life insurance are the types of policies you can choose. It takes some time to do your underwriting, and there is an obligatory medical exam. Besides life insurance, there are more programs to choose from.

Take a look if you are researching offers for your retirement. Clients have excellent feedback, so no worries in that area either. Take the time to get more educated in the so-called “Knowledge Place” on the Transamerica website. There is some useful information that could make the process of selecting life insurance easier. The company partners with different organizations and institutions to improve health care. Thus, if you are looking for a health insurance product, that is an excellent place to start.  

More Life Insurance Companies to Consider

As we have already said, the biggest companies on the market earn customers’ trust and have built a strong reputation. However, smaller life insurers are worth exploring if you are on the hunt for the best life insurance. Here are a few more corporations to consider. 

Haven Life

The first thing you should know about Haven Life is that it is a new player on the market. At the same time, it has MassMutual’s backing, so you shouldn’t be anxious about its financial strength. What is unique about Haven Life is that it offers a very simplified underwriting process. You do everything online, and the company makes decisions in no time. Premiums are within the lower levels of the market. However, there are limited products on offer.

We are looking forward to how Haven Life will develop, and hopefully, the company’s portfolio will grow. 

Legal&General America

Legal&General America, formerly known as Banner Life, is a lesser-known company with an A+ rating from A.M. Best. The parent company was founded in 1836 in London. What is unique about the company’s products is the flexibility in the underwriting. The term policies offer extensive options for riders and conversion possibilities. The payment schedule is flexible, and you can choose whether to pay monthly, quarterly, or annually. If your medical condition is not the best, Legal&America is considered a good alternative. 

Protective

Protective might be unfamiliar to you. However, it is a company with more than 100 years of experience and A scores from the four leading rating agencies. The variety of insurance policies is impressive, with prices that can suit almost everyone. Protective is another company that gives a choice between many riders and options for convertibility. 

Northwestern Mutual 

As the company’s name suggests, Northwestern Mutual is another mutual company, so it works only with captive agents. The opportunity for dividends comes with the focus on selling mainly whole life Insurance policies. However, the products are of high quality, possibly even some

of the best on the market. The offer of primarily permanent insurance results in a strict underwriting process and limited and expensive term policies. Thus, Northwestern is not the company to consider if your best life insurance choice will be term insurance. 

Mutual of Omaha

Mutual of Omaha was founded in 1909. It enjoys A ratings from A.M. Best, Moody’s, and S&P. The company offers term life, whole life, and universal life insurance policies. However, if you decided to get burial life insurance, Mutual of Omaha might be the right choice. The life insurance rates are quite competitive, the underwriting process is quick and easy, and products are available for a wider group of people. 

Future Trends and Ethical Questions

In recent decades, artificial intelligence and genetics have been hot topics in most areas of life. They influence the way we act, the products we purchase, and the services we acquire. There is also a considerable amount of work being taken over by A.I., not only in the physical labor sector but also in administration and clerical work. Mostly it stays unseen to the eyes of strangers. 

Game-Changing Algorithms

In the life insurance sector, algorithms are being introduced to the way insurance systems function. They analyze behavior in search of patterns and trends, thus defining risks and probabilities. When we talk about car insurance, this means monitoring driving skills, proneness to reckless actions on the road, and accidents. The safer we behave on the road, the lower the premium we would be estimated to pay. If this is applied to the life insurance niche, it means the healthier we live, the cheaper the premiums we pay. If you exercise regularly, have your medical check-ups on time, and engage in less risky activities, your coverage could rise while your monthly premiums decrease. This requires real-time monitoring and is already happening. 

Smarter Devices

An incentive that Manulife Financial Corp. has introduced is the use of Apple Watches and Fitbits for their customers. If you take enough steps each day or spend time meditating, you get points to exchange for purchases. The decrease in the premiums to be paid on your life insurance policy is even more critical. From the insurer’s point of view, this means the client lives healthier, and their life expectancy is higher. Thus, there is a lower risk of having to pay a death benefit. The mere act of agreeing to use such a device already suggests the customer prefers to avoid risks. This is the best type of client for an insurance company. 

On the other hand, there is the question of privacy. Are we getting closer to the dystopian scenario of Orwell’s 1984? How willing are we to be continuously monitored? Where is the limit in letting an artificial intelligence evaluate our every activity and determine a response?

Artificial Intelligence and the Insurance Business

With AI, genetics also plays a significant role in the way the insurance business functions. On the one hand, the trend is that genetic tests are becoming more affordable and accessible to everyone. On the other hand, we are facing the possibility of economic discrimination based on genetics. Let us illustrate our point of view.

Checking your genes might suggest that you are predisposed to get a terminal disease. It is not guaranteed, but the probability is higher. Ultimately, that is what life insurance providers are evaluating when signing up a policy with a client. Thus, a genetics check might lead to more expensive offers. This is not hypothetical. The companies have access to your medical files, and if you have done such tests, they can see the results. Your confirmation is required, but how often do you review what you agreed to when you accept terms and conditions? Is it fair to make someone pay more just because they are genetically disposed to certain diseases? 

Tell Us What You Think

We pose these questions to provoke some further thoughts and a more in-depth analysis of the topic. We hope that our extensive overview of the steps, criteria, and some companies in the life insurance sector has been useful. Tell us if you have already signed up for your best life insurance, or are you still searching? 

What is the most crucial factor you considered when signing up for your life policy?