A New York and New Jersey Lawyer Who Represents Policyholders and Beneficiaries in Life Insurance Denial Cases

Typically, an applicant for life insurance has to fill out an application and, in many cases, undergo blood and urine testing. I have written in the past and on my firm website about how life insurance companies often do not go far enough when investigation applications, instead denying coverage for misrepresentations only after a claim is made — called postclaim underwriting.

Well, the Wall Street Journal reports that life insurance companies are beginning to use computers to evaluate applications along with prescription drug history in order to assess insurability. For instance, MetLife has instituted a program for life insurance customers who are 18 to 40 years old for as much as $500,000 in coverage.

This type of system is similar to how companies have offered the purchase of life insurance online. Many of you may have received life insurance offers in your spam folders.

According to the article, because term life insurance policy sales have fallen during the economic downturn, insurance companies are looking to speed up the evaluation process in order to hopefully boost sales. In fact, life insurance policy sales have fallen by 45% over the past 25 years.

Critics say that the new application process will result in higher rates, because it factors in the increased likelihood of misrepresented health conditions. It is also meant to prevent the inevitable dropping off of customers that results when there is a more drawn-out application process.

And there is the rub. When companies enact speedy, less careful underwriting processes, the customer can be the loser when it comes to increased premium rates. In addition, when the insured dies and it is time to make a claim, you can bet the insurance company will go through the application with a fine-toothed comb (if the insured dies within the contestability period, that is).


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