Life insurance, like most things these days, is always changing. Not so much the product itself, although that too continues to evolve, but much more so the underwriting of the product.
The basic concepts really haven’t changed since the product was first introduced; it is still cheaper for younger and healthier individuals, although those definitions have changed over the years.
As life expectancy has increased, the premiums have decreased because the insurance companies are able to collect the premiums for a longer period of time before paying a death claim. That’s logical. If a 30 year old used to have a life expectancy of 40 years and now has a life expectancy of 50 years, the companies will be able to collect premiums and defer payment for an additional 10 years, thus lowering the premium.
Additionally, diseases that once were fatal can sometimes now be manageable. For example, when someone was diagnosed with cancer in the 1950s, that was pretty much a death sentence. Not too many people survived cancer back then. Now, depending on circumstances, not only can that person live to life expectancy, but she can also qualify for life insurance.
In the 1970s and 80s, companies started offering preferred (lower) rates for applicants in very good health. As a result of the valuable information obtained via blood screening, companies introduced a super preferred rate in the 1990s. This rate has very strict health guidelines regarding many aspects of an applicant’s health, including, but not limited to, build, cholesterol, blood pressure, and family history, and by the companies’ own admission, only 10-15% of applicants will qualify.
So the underwriting process has evolved into a comprehensive and somewhat complicated process that could inhibit people from applying for coverage. As a response to that, many companies have developed policies that are available with no bloodwork and limited underwriting. There are usually just a few basic health questions and a check of the MIB (Medical Information Bureau) and DMV.
In return for the convenience of not having to go through the complete underwriting process, those products are usually priced a little higher than fully underwritten policies, which is understandable. Additionally, the face amount is limited. Although I have seen one carrier that will issue up to $1 million under this format, most companies that offer this type of policy limit the face amount to $250-500,000.
In summary, the landscape is changing and will continue to do so. The companies are engaged in a balancing act of reducing underwriting requirements so as to to make it easier for consumers to buy while at the same time maintaining profitability. To the extent they are successful, a logical conclusion would be fewer uninsured and underinsured individuals, which in turn would be good for society as a whole.