Will Life Insurance Change in the Coming Decades?

As we quickly the end of the first decade in the 21st century, life insurance still remains one of primary means of providing for loved ones after the death of the family bread winner or person responsible for family support. Many heads of households rely on life insurance to pay for funeral expenses, pay off obligations and provide a level of comfort and support for their families after they have departed. The basic concept of life insurance is the same today as it was hundreds of years ago when the concept was first introduced to society. However, the way life insurance is obtained, maintained and used continues to evolve as people live longer and technology innovations have help to modernize the life insurance industry.

 Technology Effects on Life Insurance

 Many years ago in London, life insurance companies began to use actuaries to calculate how long people would live and what types of risk factors made people more susceptible to early death. Actuaries are people that are experts in certain forms of mathematics and statistics that and are quite adept of developing models for use in the insurance industry. These people gather data from many sources and compile statistics and studies that can better help insurers gauge how long people will live, amounts of premiums to be collected and anticipated levels of claims payments. Generally speaking, this system has worked quite well for the insurance industry for a few hundred years.

However, more and more companies are relying on computers and highly specialized actuarial software to develop new rate models and calculate the length of life for policyholders. Computers are also now being used to help sift through much more data than was ever analyzed by actuaries in the past. The result has been the identification of many more risk areas and factors that were never considered before in calculating customer premiums, determining appropriate policy limits and even predicting who and when will die.

 As technology continues to advance at a staggering rate, it is easy to envision a day when all people wishing to purchase life insurance will be approved or denied simply based on the recommendation of a computer software program. The software will negate the need for a personal review of policies and determine rates and policy limits that will maximize profit and return for the insurance company. Many may say that this is a stretch of the imagination; however, the approval process and rate structure for many policyholders is already left up to, in large part, a computer system.

 Life Insurance Will Become a More Traded Commodity

 As people live longer, they seek more mobility and choices in their golden years. Also, family sizes are not what they once were with people having far fewer children than in years past. In fact, more and more people are having no children and are thus left with fewer commitments after they have passed on.

 What that probably means to insurance companies is that you will probably see more and more people converting whole life policies to cash and a rise in the number of companies that offer to buy the rights to the proceeds of these policies and earn a profit when someone dies.

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