Life insurance is arguably the most disturbing financial product a law-abiding citizen can buy. After all, life insurance is essentially an investment on your life that pays off only when you die.If someone is buying a car, it would be normal for them to consider various features like vehicle safety and gas mileage. Comparatively speaking, someone shopping for life insurance must confront the fragility of his own existence. The mental calculus of this purchase is unnerving, “When am I going to die? What might be the cause of my death? And, how much is my life worth?”
On the other side of the negotiating table, the insurance company needs to calculate the probability of your death before it will invest in your life. However, insurers have smartly recognized that asking customers to help guess their own time and manner of death is an awkward way to sell insurance policies. As a courtesy, life insurance companies will predict your death for you. The professional Las Vegas oddsmakers who take bets for sports games call it “setting the spread.” Life insurance companies call the process “underwriting.”
Estimating Your Demise
Life insurers require massive amounts of information to profitably “underwrite” potential customers, thereby separating risky people (i.e., sick or likely to become sick) from desirable people (i.e., healthy and likely to remain healthy). To feed this insatiable appetite for intelligence, life insurers have built the most sophisticated software tools and deepest pools of consumer data on the planet.
Actually, life insurers have been pioneers in the field of big data and personal analytics for more than 100 years. The Medical Information Bureau Inc. (also known as MIB Inc. and MIB Group Inc.) was founded in 1902 and is America’s oldest and longest continuously operating credit reporting agency. Accessing 100 million records and growing weekly, the Medical Information Bureau (MIB) owns and monetizes, “North America’s largest database of medical conditions on insurance applicants. [Including] diagnosed medical conditions from attending physicians, lab test results, qualified physical exams, self-admitted medical conditions.”
to read more: finance.yahoo.com
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