Artificial intelligence (AI) is rapidly becoming a fixture in many industries. For life insurance users, AI helps to target online advertising and helps customers learn more about what policy might work for them. AI also helps life insurers who use its capabilities to lower policy issuance time, help identify potential options, help to reduce some of the risk of fraud and cybersecurity attacks, and reduce times for approval or denial decisions, and for such tasks as assigning underwriting risk classes.[i]
How providers began exploring strategies with AI
For customers interested in purchasing a life insurance policy but unsure which plan might align with their needs, AI has helped life insurance providers customize coverage options and works to design flexible plans to fit a customer’s needs while simultaneously automating the underwriting process. Insurance companies have long been in the business of using data to generate new clientele and assist customers already signed up for one of their programs. To combat risk, industry leaders are working to develop cybersecurity and risk management practices to align with the rapidly changing technologies.
As Grant Thornton Senior Manager, Kaitlyn Ramirez explains, “Humans are increasingly giving more license to algorithms to make sense of all this complex data. This is advantageous in many new ways as humans are embracing the algorithms’ ability to unveil hidden insights that were previously undiscovered.”[ii]
The benefit of AI for prospective clients
AI can simplify the process by having prospective customers input information by way of answering a few questions and AI compares and presents real-time quotes to pinpoint beneficial coverage unique to a customer’s needs. AI also offers the potential for updated cybersecurity and fraud protection.
The benefit of AI for existing customers
The use of artificial intelligence is not just for assisting new clients, but also for existing ones. Some providers invest in AI programs that help to collect information about customers’ habits and behaviors, reward healthy ones, and recognize the opportunity for rate modifications.[iii] This process is called “machine learning,” which is an analysis software that collects data, analyzes it based on your needs, and creates an informative presentation of data to help you with your life insurance questions. [iv] Along with recommending policy choices based on your behavior, existing customers can benefit from AI through more intensive risk management and fraud safeguarding, and more efficient customer service with the use of chatbots.
Setbacks and challenges associated with AI
Like anything, nothing is perfect. With the advancement of AI, potential downsides have also become an obstacle for some consumers and businesses. In Illinois, for example, a class action lawsuit was filed after it was alleged that through the use of AI with claims processing and fraud detection, some policyholders were discriminated against.[v] Another concern is the potential for AI to inadvertently disclose customers’ private information. With the expansion of data collection and analysis by machine learning tools, the incentive for criminals to hack the systems increases.[vi] However, insurance companies work just as hard to keep their customer’s data secure.
What the future holds
We don’t know what the future holds but as AI continues to advance, there is no telling how life insurance providers and customers will be able to harness its power to more intricately identify plans, rates, and policies that benefit everyone. Historically, life insurance companies generally created coverage options around groups of people. This could dramatically change with the evolution of AI. As the technology for AI has been developed, life insurance coverage involves a more personalized approach. For customers, this is encouraging as they can find options that are more fine-tuned to their wants and needs. For providers, it could potentially help them provide services for their customers more effectively and efficiently potentially saving time, money, and hopefully managing a more satisfied clientele.[vii]
Consider scheduling an appointment with a financial professional
Searching for a life insurance policy that can align with you and your family’s financial goals can be a complicated and stressful process. There are so many options available, and it can become complex when trying to work the numbers to determine if one option is more beneficial in the long term than several others, so seeking guidance from a financial professional may help to avoid setbacks and unexpected challenges that could arise and help you safeguard your assets as the world and technology are evolving around you.
Important Disclosures:
Content in this material is for educational and general information only and not intended to provide specific advice or recommendations for any individual.
All information is believed to be from reliable sources; however, LPL Financial makes no representation as to its completeness or accuracy.
This article was prepared by LPL Marketing Solutions
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