Sun Life overhauling life insurance application process in Canada

Sun Life Financial Inc. is overhauling its life-insurance application process in Canada, cutting down on intrusive tests as part of an industry-wide push to make getting coverage easier for customers.

The Toronto-based insurer will no longer routinely collect saliva, blood or urine samples, as new medical research and a reassessment of the company's processes has altered the way it evaluates health risks. More than half of new life-insurance customers will be exempt from this rigorous testing, as will most people applying for critical-illness insurance.

Sun Life's effort comes as the life-insurance industry is increasingly looking to technology to simplify its processes, trim the amount of time it takes to get insurance and cut back expenses. These changes not only cater to consumers' desire for less invasive and time-consuming tests, but also save the insurance companies money.

Sun Life has been evaluating its life-insurance underwriting processes for many months, said Kevin Dougherty, president of Sun Life Financial Canada. "The context is advances in medical technology, big-data analytics and I think we're living in a world where people want simplicity and ease of access," he said.

That means that in many cases advisers won't have to take saliva samples, seal them up and send them off for processing.

Many nurses that used to be sent to homes and offices to draw blood will not be needed. And fewer applicants will have to make the trip to the doctor's office or clinic for other testing. Exceptions to these rules include older applicants, those seeking high insurance amounts and customers with certain pre-existing medical conditions. But even in those cases, the company is trying to offer more, such as making lab results available to those with type 2 diabetes, or showing signs they might develop the disease.

Other life and health insurance companies are also rethinking their approach to selling life insurance and cutting costs to spur growth in the country's mature life-insurance market. Manulife Financial Corp. made sweeping changes to its blood-testing requirements and was the first to cover Canadians living with HIV earlier this year, after reviewing its data and consulting actuaries as part of a broader push to simplify the insurance process.

The life-insurance industry is also preparing for changes to the legislation that governs life-insurance tax exemptions in 2017. This affects policies that not only provide life-insurance coverage, but also allow customers to build up savings on a tax-preferred basis. Tweaks to the Income Tax Act will mean that the way those savings are tallied and how people can access them will change starting next year for new policyholders.

"That was sort of a catalyst for us to look at our whole retail-insurance and critical-illness product line," Mr. Dougherty said, noting that half of the time, insurance products are bought as estate, small-business or retirement planning tools, as opposed to customers purely seeking a payout in the case of illness or death. "We took the opportunity to not just relaunch existing products, but to really go back and rework them and evolve them."

As a result, the application form will often be the only source of data for most types of either critical-illness or life insurance.

"Then the adviser can concentrate on what is the right product, instead of saying 'this is more onerous or time consuming,' " Mr. Dougherty said.

At the end of 2015, 22 million Canadians had $4.3-trillion of life-insurance coverage, according to the Canadian Life and Health Insurance Association. Individual life insurance, most often purchased through an agent or adviser, has been growing at a faster rate across the industry than group insurance coverage, which is usually bought by employers or other associations.

Sun Life's Canadian individual insurance business has been growing quicker than many of its competitors, at a rate of about 13 per cent compounded over the past five years.

"This is a very important part of our business," Mr. Dougherty said.