Manulife removes need for nicotine testing for some life insurance applicants

TORONTO – People looking to secure health insurance from Manulife may no longer be subjected to nicotine testing, as the company looks to streamline the application process.

The insurer (TSX:MFC) says nicotine tests will no longer be required for individual policies for eligible applicants aged 18 to 40, on policies that pay up to $1 million in benefits.

Manulife says data analytics allow it to predict the likelihood that somebody is a smoker based on application forms, without meeting with a paramedical professional who tests for nicotine.

“We know that there are significantly fewer smokers than there were 20 years ago,” said Karen Cutler, vice-president and chief underwriter for Manulife.

“The benefit of doing the underwriting process the way we’ve done it for years and years and years doesn’t necessarily exist in all situations anymore. The reality is we have a lot more information for cause and effect for different illnesses.”

Manulife announced last May that it was removing the need for blood and urine tests on Manulife term life products. Tuesday’s announcement expands that to all individual life insurance paying up to $1 million, including whole life and universal life policies.

The insurer said it’s also reducing electrocardiogram testing requirements for clients between the ages of 41 to 69 applying for up to $5 million in coverage.

Testing will still be required for some applicants, for example those with pre-existing conditions such as diabetes or heart disease.

The change comes at a time when insurance sales are flat industry-wide, said Cutler. By simplifying the application process, the insurer is looking to save money and attract new clients, she said.

“When we look at our process and we see the time that it takes, even for some of our low-risk cases, it just doesn’t seem that it really meets the customer expectation anymore,” Cutler said.

“Naturally there will be some savings. We do believe the bigger benefit is that we can get the business processed more efficiently.”

The changes announced Tuesday are part of an ongoing overhaul by insurance companies in terms of how they underwrite risk and who they are willing to insure.

Last April, Manulife started offering life insurance to people who are HIV-positive, citing improved health outcomes stemming from advancements in drug treatments.

Sun Life (TSX:SLF) introduced similar measures in November. The insurance company announced it was revamping its life insurance application process to reduce the need for saliva, urine or blood samples and that it would begin providing insurance to those living with HIV.

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