How Will AI in Life Insurance Disrupt Our Industry?

Ai in life insurance

AI in Life Insurance Sparks Enthusiasm—and Fear—Among Tech Champions 

The launch of OpenAI's ChatGPT in November 2022 marked a milestone in the history of modern technology. With 100 million active users just two months after its release, ChatGPT has garnered the fastest-growing user base ever recorded in the tech industry.

With the increasing prevalence of artificial intelligence, new questions arise across diverse industries on how it will change how we interact with each other and how businesses interact with their customers. 

A mix of optimism, curiosity, and fear of AI fuel the conversation as tech titans such as Elon Musk call for a pause on developing advanced AI systems out of concern for “profound risks to society”.

While AI in life insurance promises newfound process efficiencies, some fear AI also threatens to imbalance the labor market and eventually replace most insurance agents. This article explores four components of AI in life insurance that Whole Life agents should know about the risks and rewards.

Possible Outcomes of AI in Life Insurance

1. Expedited Approval Process

The long road to purchasing a whole life insurance policy can be a drawback for customers and a significant cost to insurance providers. The approval and underwriting process can leave customers dragging their feet and wondering if whole life is worth the effort.

With the integration of AI in life insurance underwriting, providers can pinpoint risk with increasing precision and sophistication. As a result, we can expect a greatly improved process for both the agent and the client. While this may not eliminate the health exam or questionnaire, it has the potential to make the process much more palatable.

AI in life insurance can also streamline purchase and contract processing. Blockchain-powered smart contracts will instantaneously authorize payment information and generate bindable contracts. This facilitated process will appeal to customers and reduce insurers’ customer acquisition costs.

2. Advanced Predictive Analytics

AI-generated risk profiles will become increasingly reliable thanks to advancements in biotechnology. Underwriters will use AI-enabled platforms to access data from various sources and determine insurance classifications in minutes that are tailored to each customer. This can cut back on the wait times for policy approvals significantly.

Deep learning tools will interpret data from customers’ smartphones and wearable devices. For example, companies like John Hancock are incentivizing their customers to share personal smartphone data. It’s offering Amazon and REI gift cards for those who opt into data tracking.

It's important to note, however, that companies like John Hancock do not offer whole life insurance, and instead, only sell UL as “permanent life insurance.” By tracking client data for policies, will this affect internal policy costs? This may be one more reason to opt for whole life insurance, which locks in your client's insurability upon issue, guaranteeing premiums that won't increase.

3. The “Downgraded” Role of the Insurance Agent  

Scientists and tech advocates worldwide are openly weighing AI's benefits and risks, while some media commentators express dystopian views. 

Forbes Former Contributor Russ Alan Prince anticipates AI will inevitably and radically impact society, making ripple effects across all professions.

“All the professions are going to be reconfigured by artificial intelligence. The result will be fewer professionals and many of their roles ‘downgraded,’” says Prince. Fortunately, we believe that this will primarily effect the sales of term insurance above all else, because whole life insurance is so specialized and requires a more thorough approach.

The Forbes article explains that, while advancing technology may disrupt the career path of life insurance agents as it exists today, it will also carve out an opportunity for a small portion of agents to capitalize on the AI takeover.

“There will be a select percentage of innovative, forward-thinking life insurance agents who will leverage the technology and the accompanying changing industry dynamics to create tremendous value for others. These agents will, consequently, create considerable personal fortunes providing life insurance.”  

In our view, relying solely on AI to advise on complex financial decisions is unrealistic. People need real-world, human connection when making these impactful decisions. Therefore, AI in life insurance will not replace but support insurance agents in building relationships with clients by empowering them to understand their financial options. 

Agents should not fear AI. However, they should adapt to avoid losing out to competitors who are more willing to experiment and incorporate new tools and technologies into their practices.

4. New Opportunities for Agents

AI in life insurance can analyze mountains of data at lightning speed. Advanced algorithms make it a powerful tool for agents who want to help their clients manage risk. 

It will enhance their ability to assess investment options and the history of risk cases in any given market. It can also provide detailed forecasts based on multiple variables that are essential to financial planning and assessing opportunity cost.

Insurance agents who are slow to take advantage of sophisticated tools and software that analyze investments against other investments or life insurance policies will be at a disadvantage. It’s more important than ever to start integrating these tools into your practice to demonstrate and visualize the power of whole life insurance. 

Where AI Can't Compete

Despite the changing landscape of AI, we want one thing to be clear: AI can't compete with unique ability. In fact, AI has its own unique ability. When we view it as a tool to partner with, it can't be a threat to our positions as agents or entrepreneurs.

To put it quite simply, there's no one like you. The unique ability you bring to your practice and the team you work with is what enables your success. AI may help you, yet it cannot replace your uniquely human element. The fact is, there are some things technology cannot do, and can never replicate. And while it's important to stay current with technology so that you don't get left behind, it's equally important not to get bogged down by fear.

Fear of AI is what gives the technology power over you. Choosing not to fear it, and instead use it to your advantage, can keep you at the cutting edge of the industry AND working in your “zone of genius.” It's the best of both worlds.

No one can predict how vastly AI in life insurance will affect the whole life industry. However, those who embrace the change and learn how to navigate this rapidly changing game will be well-positioned for success. It’s essential to differentiate yourself by using technology to build trust with clients and advance your practice.

If you’re ready to step up your game as an advisor and prepare for the changes AI in life insurance will bring, start your free 30-day trial of Truth Concepts™ software or contact us with any questions.

To learn how to advance your practice in precarious markets and through an emotional recession, read our article about how to introduce whole life insurance as a safe wealth builder for your clients.