Americans Deemed "Too Risky" to Acquire Life Insurance are Getting a Second Look.

• Author: Ford, Paul
• Position: [LIFE INSURANCE]

Life insurance ownership across the nation has dropped by 9% in the last decade.(l) As of 2018, it was estimated that 27% of non-elderly adults in the United States had at least one pre-existing condition that would disqualify them from getting life insurance--that's 53.8 million people.(2) According to NerdWallet, the average minimum life insurance monthly premium is $26. Therefore, that's up to $1.4 billion dollars insurance companies are losing by not taking a second look at these allegedly at-risk Americans.

"The decline in insurance coverage is partly due to how frustrating the process of obtaining coverage is. Large legacy companies are sticking with outdated insurance technology using actuarial tables that haven't kept up with changing needs. Those obsolete ways of determining eligibility are part of why a large number of Americans with pre-existing conditions are rejected for life insurance," says Traffk Co-founder and CEO Paul Ford. "We'll actually run the data via medical records, pharmacy records and see how this person manages the condition. If we find it's suppressed and/or very well managed and their vitals are just as normal as anyone else's, we help them."

Changes in life expectancy and internet usage means more people need life-insurance but may not be able to access it. Throughout the COVID-19 pandemic people have had to confront their need for mortality protection.(3) Despite the radical changes, society underwent to keep people safely at home, most legacy companies have been stubborn about digitization.

Actuarial tables being used by these older companies are at least 40 to 50 years old, and they aren't keeping pace with the reality of at-risk insurance enrollment. These outdated methods don't consider how insurance and public health has changed in that time. It's a lose-lose situation, with a large swath of the population being unable to access life insurance and tying the hands of agents who otherwise could be making more sales.

Modern, smaller, and better-prepared start-ups are able to utilize InsurTech and digitization to take a new and more streamlined approach. They look at the large number of Americans being shut out of policies and are finding new ways to include them. There are at least 41 million consumers who say they need life insurance, but don't have it. (4) But these new life insurance companies take it one step further: They put the tool in the hands of the insurance agent. This way, both parties benefit...