An insurance joker once professed, “Insurance employees don’t need titles on their business cards; white shirts actuarial, blue shirts marketing, black shirts underwriting”. Underwriters are viewed as the morgue of an insurance company, “the policy prevention department” as my business partner once put it. Assessing individual mortality is part science and part luck. But the advances made in genome sequence are going tip the scales greatly towards the world of science.

The X Prize Foundation is offering US$10M to the first team to sequence the genomes of 100 centenarians.  In layman’s terms “find the genetic code for those that live beyond 100 years”.  The competition starts Jan 2013, and the sequencing has to take place in 30 days.  The competition aim is two-fold. First, find a way in which genomes can be sequenced accurately in a relative short period of time, second, determine what genetic pool is consistent with longevity. No easy task apparently (read the article in the economist for more info).

Back to the black shirt underwriters. The ability to sequence genomes quickly will make the cost of getting a report on an individual’s DNA make-up much more affordable. A hair sample will give an underwriter an accurate description of the likelihood of all or any serious alignments that may linger, and a much better view of longevity. No more blood or urine tests; simply send a hair sample and with-in minutes the underwriter will have a health assessment waiting on their PC with the aid of some ingenious piece of software. The push to economise genome sequencing is going to revolutionise the underwriting world, and my pick is it is going to happen a lot quicker than underwriters are prepared for.  Resistance to change will fall by the wayside when their masters learn of the cost savings to be made, and the improved outcomes these new techniques will deliver, particularly when underwriting for critical Illness and disability products.

The tag-line of the future?……  Life insurance premiums as unique as your DNA

It would be remiss of me not to write an article about the Rugby World Cup, and life insurance. How could I let such an opportune moment slide by without giving the lighter side of the important role sport events plays in our industry?

Let’s start with the car keys, that silver and brass jingle in your pocket (or so you thought), essential to getting back home in time to watch the replay. Statistics show, that your keys are the most likely item to be lost at a major sporting event. After a major sporting event, a stadium will receive on average 70 calls for lost keys. It may well be the levels of intoxication that predicate these lost keys. A study conducted by the University of Minnesota determined that one in every 12 fans leaves a major sporting event intoxicated.

It turns out that all types of motorists — not just pizza delivery drivers — are at risk on the roads after a major sports event. A study published by the New England Journal of Medicine tracked driving deaths on 27 consecutive Super Bowl Sundays discovered a 41% jump in the number of fatalities in the hours after the game than in the same time period on all other Sundays.

The study also reported that the number of crashes in the state of the losing team rose 68% after the game, compared with an increase of just 6% in the winner’s state.

So let’s keep the road fatalities down to an absolute minimum. …. Go The All Blacks!

…and click here to see what you’d pay for life insurance…

MillionDollarWoman is a new Australian website launched to promote insurance products designed specifically for stay-at-home mums. Its product provides cover of either $500 or $750 a week if you’re temporarily sick or injured. It means stay-at-home mums can now buy insurance cover for short term illness and injury that stops them doing everyday household tasks. You can claim a payment if you get sick or are injured and can’t do any two or more regular household chores (like cooking and cleaning) for more than 14 consecutive days. The cost for a 41 year old mum wanting $500.00 cover is $50.57 pm. These prices quoted are in Australian dollars, but even if we convert to NZ dollars, it seems to be pretty good value.

Traditionally, a parent, an in-law or good friend would find the time to come over and do the cooking, cleaning and other household chores required while mum recovered. Today the best a stay-at-home mum can expect is a Facebook post “hope you get betta soon luv”. The only way to seamlessly stay on top of the household chores and concentrate on recovery is to use your insurance pay-out to employ help. Hired help will go a long way to help mum recover and keep the household fed and happy.

These types of insurance products are becoming more and more available in western societies. Mature insurance markets like USA and UK are working hard at developing living insurance products which seek to provide temporary cover in the event of illness or injury. While the insurance focus has traditionally been on providing cover in the event of the bread winner’s death or injury, it’s good to see some insurers thinking outside “the box”.

Almost 3 years ago, Pinnacle Life launched a policy called ‘Funeral Cover’, an insurance policy that pays up to $20,000 to cover the cost of a funeral.

Whilst the product is designed essentially for people over 50 (some insurers call it ’50 Plus Insurance’) it’s available online to anyone aged 30 to 69.

What continues to surprise us is the proportion of people in their 30’s and 40’s that have purchased Funeral Cover - clearly the product’s hitting the mark with a younger audience than we had initially envisaged.

How does Funeral Cover work?

The entire application process takes around 5 minutes.

Unlike most life insurance products, the premiums for Funeral Cover remain the same every year, without increasing. And once you turn 85, you totally stop paying – and your cover continues free of charge until you, ahem, expire.

Best of all, being a ‘guaranteed issue’ product, Funeral Cover is offered with no health questions asked, and the policy will be emailed to you immediately online.

And the extra bonus?

Your family will say great things about you at your funeral… see this ad on YouTube and you’ll see what I mean!

I read an article in the Economist recently about lonely people being more likely to get ill.  Lonely people, it seems, are at greater risk than the gregarious of developing illnesses associated with chronic inflammation, such as heart disease and certain cancers. According to a paper published last year in the Public Library of Science, Medicine, the effect on mortality of loneliness is comparable with that of smoking and drinking. It examined, and combined the results of, 148 previous studies that followed some 300,000 individuals for an average period of 7.5 years each, and controlled for factors such as age and pre-existing illness. It concluded that, over such a period, a gregarious person has a 50% better chance of surviving than a lonely one. Ref: http://www.economist.com/node/18226813?story_id=18226813

Ed and I recently returned from the USA, where we learned that Life Insurers place a much larger emphasis on moral underwriting. A life insurance application will always have a motor vehicle and felony report attached to help determining risk. Insurers and re-insurers will determine mortality rates based on channel delivery experience. For instance, if you apply for life insurance through an employer scheme, you’re far more likely to get offered better rates than if you apply say by phone to a call centre. History of employment has long been deemed a better indicator of mortality than a health report.

Which brings me back to my original thought, imagine the day we asked applicants for access to their FaceBook or LinkedIn profile? A FaceBook user today is loner if he has only 400 friends. Social network users today are life insurance buyers tomorrow. A FaceBook diary is an accurate chronicle of one’s life. FaceBook and LinkedIn could be used as better mortality indicators than a medical test. So should we ask for your Facebook link rather than your medical record? Tomorrows underwriting is a social network link away. How soon cometh the day?

A survey released in the US found that 69% of single parents with children still living at home are uninsured… confirming that children of single parent homes are at greater risk of enduring financial hardship if their sole provider were to pass away.

Whilst this was a US-based survey and not a Kiwi survey, we suspect that a similar study in NZ would turn up similar results. This would be consistent with many studies that have been carried out around the world highlighting the problem of people being under-insured.

Specific results of the survey were these…

• 79% of single men and 66% of single women with dependent children, and who earn less than $50,000 per year, have no life insurance
• 79% of single men and 56% of single women with dependent children, and who earn between $50,000-250,000 per year, are uninsured.

The survey suggests that single fathers with dependent children are more uninsured than single mothers. It also suggests that the level of under-insurance for single parents is not radically affected by level of income.

So why is this? Is it because single parents don’t worry about the financial consequences of dying?  Umm, probably not.

Maybe it has something to do with single parents being very pushed for time and simply not getting around to it, or maybe a single income family is more likely to be financially stretched.

Thankfully ‘online’ life insurance has changed all this. Buying online takes as little as 10 minutes and you’ll typically pay around 20% less!

So… if you’re

• a working single parent
• without life insurance
• and your children are financially dependent on you

just click here!

The first ever cancer-only insurance policy in NZ is now available from online provider Pinnacle Life.

What is Cancer Cover?

Cancer Cover is a form of stripped-down trauma insurance.

Whereas trauma insurance typically covers as many as 30 different ailments and is expensive, Cancer Cover focuses on the most significant of these risks, being Cancer. To put this in perspective, over 85% of trauma claims paid out by insurers relate to just three conditions – cancer, heart attack and stroke – and if you break this down further, 80% of these claims relate to cancer.

Cancer Cover is part of Pinnacle Life’s bid to win younger, price-conscious policyholders from the big insurers who dominate in trauma insurance.

Why does Cancer Cover appeal to younger consumers?

Many of the conditions covered and paid for under trauma insurance are related to ageing… such as heart attacks, heart bypass surgery, stroke, arthritis, Alzheimer’s and chronic lung disease. Whilst there is obviously some risk associated with these diseases for any consumer, more and more people in their 20’s and 30’s just don’t see the value in paying to cover these conditions. They see them as extremely low risk.

Any stats to support this?

• Cancer is the leading cause of death in NZ, accounting for 30% of all deaths.
• 1 in 6 people will be diagnosed with cancer between the age of 30 and 64.
• For females the biggest cancer killer is breast cancer. All women have a chance of developing breast cancer at some point in their lives.
• Breast cancer accounts for 17% of all female cancer deaths and around 1 in 9 women in NZ will be diagnosed with breast cancer at some stage in their lives.
• For males, lung cancer is the highest killer – accounting for 21% of male cancer deaths. However, prostate cancer represents the highest incidence of male cancer – 25% of all male cancer cases.
• In 2005 (latest NZ stats that I can find online) there were 18,610 new registrations of cancer in NZ and 7,971 deaths. This means there were almost 11,000 more people living with cancer than the previous year.

Why is cancer different to other ailments such as heart disease?

Cancer doesn’t correlate with age to the same extent that many other ailments do… even the young and the fit are susceptible. Like super-cyclist Lance Armstrong (testicular cancer in his 20’s), Wallaby rugby player Julian Huxley (brain tumour), cancer doesn’t respect how young or healthy you are.  It just happens.

And if you’re unlucky enough to be diagnosed with cancer, the financial consequences can be severe. You may need to take time off work. Or you may need to remodel your lifestyle, or you may need to find cash for to fund cancer treatment or medication.

That’s where Cancer Cover comes in… affordable cover that pays a lump sum if you’re diagnosed with Cancer.

Is Cancer Cover more affordable for younger people?

Pinnacle’s cancer policy pays up to $250,000 if you’re diagnosed with cancer. The specialised scope of the cover can save a bundle in premiums. A 40-year-old non-smoker in good shape with limited history of cancer in the family buying the cancer cover would pay only $19 a month for $100,000 of cover… compared with $37.55 that you’d typically pay for trauma cover in NZ.

You can get cancer Cover online in less than 10 minutes… and if you click here to buy, some extra cover will be thrown in free…

PINNACLE LIFE today claimed another first in NZ… Cancer Cover… now available as a fully underwritten product instantly online.

Cancer Cover, as explained in this Stuff article, is a straightforward insurance policy that pays a cash lump sum if the insured person is diagnosed with cancer… simple as that!

With the purchase of a Cancer Cover policy, Pinnacle Life will donate the first three monthly payments to either the NZ Breast Cancer Foundation or the Prostate Cancer Foundation of NZ (depending on the gender of the person covered by the policy).

Cover up to $250,000 can be purchased immediately online, without a medical.

The policy is applied for and issued online in the same way that existing Life, Mortgage and Funeral products are offered on the PINNACLE LIFE website. The buying process from application to policy issue is fully automated using advanced electronic underwriting software developed by Intelligent Life Limited.  The on-line underwriting is supported by reinsurance giant Hannover Life Re of Australasia.

The entire application process takes less than 10 minutes after which applicants can see a draft version of their personalised policy document before committing themselves.  On payment, consumers are emailed their policy document instantly.

Whilst Cancer Cover is designed essentially for the under-45 consumer, it is available online to anyone aged 20 to 59.

Buying Cancer Cover is now as straightforward as buying an airline ticket… maybe even easier!

Today’s ‘instant serious illness cover’ follows the launch of instant Life Cover, instant Mortgage Cover and instant Funeral Cover by PINNACLE LIFE over the past 18 months.

See also Stuff article here.

We copped some flack this week for standing up for policyholders whose premiums are about to be increased by some life insurance companies. The flack from some professionals in the industry was a little unfair, we thought, with some comments bordering on what we would regard as ‘myths’. I’d like to bust a few of them…

Myth 1

Pinnacle Life sources it’s new business by somehow ‘piggy-backing’ off the hard work of other insurers…

Busted! Pinnacle Life spends significantly on radio/TV advertising and employs its own underwriters and administration staff… fair to say that Pinnacle Life pays its own way for its new business.

Myth 2

Consumers that buy insurance from Pinnacle Life don’t understand what they’re buying…

Busted! It’s patronising to suggest consumers are illiterate and can’t understand a straightforward policy document, particularly when Pinnacle Life won the NZ WriteMark plain English Award in 2009 for its clear and understandable policy wording. We think consumers are smarter than that.

Myth 3

An adviser that switches a policy to Pinnacle Life to achieve a 20% saving for a client, while earning a 75% commission is “shameless”…

Busted!  If that adviser is shameless, what do you call an adviser that switches a policy to achieve a 5% saving for a client and then pockets a 220% commission?

Myth 4

Pinnacle Life’s only point of difference is price…

Busted! Besides offering the most competitive prices in NZ, life insurance policies from Pinnacle Life are jargon-free, straightforward and relevant… and can be purchased online in less than 10 minutes…

Ok, we admit we’ve been rather quiet on this Blog lately.

There’s a lot to catch up on, starting with the fact that Pinnacle Life is now advertising on TV.

If you’re a regular TV watcher, you’ll see the PINNACLE LIFE ads on TV3, Prime and some of the SKY channels.

Here’s the first of three ads, right off YouTube… click here to view

Feel free to let us know what you think…?