Manulife is simplifying its life insurance application policy.
Applying for life insurance is about to get a little less invasive at Manulife Financial Corp.
The Toronto-based insurer is doing away with drawing blood, testing urine and collecting other biometric data for term life insurance policies of up to $1-million, purchased by new customers from ages 18 to 40.
It's a change that has been more than one year in the making as Manulife reviewed medical literature, scanned its applicant pools and consulted actuaries as part of a broader push to simplify insurance applications.
"What we decided to do was look at our processes and really test to see whether or not the way we are actually underwriting today still makes sense given the medical improvements we are seeing [and] mortality improvements in the general population," Karen Cutler, Manulife's chief underwriter, said.
The shift comes as more insurance companies are investing in technology to better connect themselves with customers and make it quicker and easier to get insured. It also marks the way that Canadians' expectations are changing when it comes to the coverage they want.
Canadians owned nearly $2.5-trillion in individual life insurance at the end of 2014, according to the most recent figures from industry group Canadian Life and Health Insurance Association (CLHIA). That represents millions of policies from coast to coast.
There are two kinds of life insurance that customers can buy. About 41 per cent of policies are permanent, with a cash value and potential savings component used to accumulate investments. The other 59 per cent are term policies, meaning their main use is to pay beneficiaries if a policyholder unexpectedly dies before they reach a certain age, such as 65 years old.
In the last decade, there has been a shift toward the purchase of these term policies as young Canadians – perhaps with new families, tuition debt or heavy mortgage payments amid a rising housing market – look to protect their assets for a low monthly premium. Many of these term policies can be converted into permanent policies – which typically come with higher monthly premiums – later in life, when the buyer has more assets.
A change in consumer sentiment may also be at play in this shift, said Ron Sanderson, director of policyholder taxation and pensions at CLHIA.
"If I think back to the early eighties, when interest rates were high and people had confidence in securities markets, people were prepared to invest. Right now, I'm not sure that people are," he said. "They're seeing historically low interest rates. They're afraid the stock market is overvalued and will tank again. So people are nervous and they tend to focus on consumption rather than investing."
Amid that shift, Manulife's new application process will set it apart from competitors. Applicants still have to meet with an adviser and fill out an application, but the $1-million payout offered exceeds the industry standard cap of $250,000 without donating some bodily fluids. The process means that Manulife will miss out on catching some undiagnosed conditions affecting the liver, kidneys or cardiovascular system.
Ms. Cutler said Manulife has done the math on those risks. Young applicants typically carry less risk, she said, and advancements in pharmaceutical drugs have made many conditions more manageable than they used to be. The company's new analytics tools also allow it to track the results over time.
"The world has changed a lot and we have a lot of data we can rely on," Ms. Cutler said. Manulife's simplified application process will apply to existing products and prices have not been changed. And the adviser network that sells policies will like it because it speeds up the application process, she noted.
Ms. Cutler said there is a shift in the U.S. market toward simplifying the application process for life insurance and that momentum has carried into Canada..
Manulife hopes to reduce application requirements for other, permanent insurance products and move to make applying for coverage easier in the coming months. In April, the insurer began offering individual life insurance policies of up to $2-million to those who have tested positive for the human immunodeficiency virus (HIV) – the first in Canada to do so.