Greetings, my friend. We are all interested in the future, for that is where you and I are going to spend the rest of our lives. And remember my friend, future events such as these will affect you in the future. –Criswell
But since my recent post about the history of life insurance was such a hit, it only seemed fair to look at the future of life insurance, too.
What will life insurance be like in 100 years?
No one knows for sure, but I do know that a look at what the future likely holds, in general, can help us extrapolate some assumptions about life insurance.
According to this page on BBC, many futurists agree that we’ll be able to engineer DNA. We’ll also be able to integrate robotics with human biology. Not only will this make us incredibly smart, it will make us effectively immortal.
One of the assumptions behind this prediction is that medical technology is advancing at such a rate that we’ll be able to keep people alive until true physical and/or electronic immortality is not only available but cheap.
For one thing, people will still die. Accidents happen, if nothing else. I don’t anticipate that crime and murder will disappear, either. If we start to explore space or the depths of the ocean, a certain mortality rate is assured, too.
The kinds of deaths that the transhumanists and futurists are talking about eliminating are deaths from natural causes. Pneumonia, heart disease, and cancer are the biggest killers. Suicide is always an issue, too, although I don’t think a century is going to create a change in the insurance rules related to paying benefits when someone commits suicide.
But death rates will surely decline significantly, and the prices for life insurance will go way down. You’ll still need life insurance, just in case. It just won’t cost as much, because the insurance companies will have fewer benefits to pay out.
Now, permanent life insurance policies provide coverage until you reach the age of 100. As medicine continues to advance and lifespans lengthen, that age limit is likely to change, too.
Actuarial tables are what the insurance industry uses to price policies. These are tables which analyze the likelihood of death for a person over a certain age over a certain period of time. They’re already accurate enough that the entire life insurance industry relies on them. In aggregate, they’re incredibly accurate.
But the implications of artificial intelligence and the rapidly increasing abilities of computers to make complicated mathematical processes will combine to make today’s actuarial tables look charmingly quaint and inaccurate.
We can already draw conclusions based on lifestyle and blood tests regarding how much longer you’re likely to live. But as computers grow increasingly able to analyze DNA and genetics, insurance companies are likely to be able to predict how long you’ll live with seemingly unerring accuracy.
Pricing will become more efficient. Life insurance will become even more of an investment than it already is. After all, if you’re reasonably sure you know when someone is going to die, you just work the math backward. How much money do you need to set aside to pay the benefits by a certain date? And how much of a profit is reasonable?
In the near future, we can anticipate some of the following changes to the life insurance industry. We can extrapolate from these short-term predictions further into the future.
The first thing I know about the near future of the life insurance industry is that it’s going to continue to become more competitive. The information age is already transforming the industry. What used to be a paper and pen, relationship business is becoming one where customers have access to information about every possible life insurance policy available.
What does this do?
The increased competition makes pricing more competitive. It drives down rates. Life insurance will likely continue to get cheaper as a result.
Also, consumers who want specific features from their life insurance policy will make sure they’re able to get such features. If they’re not, they’ll just find a competitor who offers such features. These include popular riders that cover things like permanent disability. It also includes savings and investment vehicles that offer more competitive interest rates.
I’ve seen some predictions that life insurance will become simpler. More customers will be less interested in the cash value accumulation and investment vehicle side of life insurance.
I think what we’re more likely to see are life insurance policies that offer better savings vehicles. Today’s consumers grow more sophisticated every day. If they can find one financial product that will serve multiple purposes, they’ll buy that product.
You can expect the life insurance industry to adjust its products accordingly.
The other thing you can expect in the near future is a changing legal landscape. Laws related to financial products are always changing. Over time, I think you can expect more regulation and more protection for life insurance customers.
How do you extrapolate these near-future predictions a century out?
The life insurance marketplace will probably become so transparent and efficient that only a handful of companies will offer the product. The product will be extremely efficiently priced, eliminating much of the need for the comparison shopping that goes on today.
It’s also possible that people will be legally required to carry life insurance in the same way that they’re required to carry liability insurance on their cars. It will become a small detail that’s almost entirely taken care of with little involvement from the consumer.
Remember on Star Trek: The Next Generation how the crew would address the computer directly and ask questions? And the computer would always have specific, accurate answers?
We’re in the infant phase of that technology now. It won’t be long before we’re able to announce to our computer that we need the following groceries delivered to our front door. The computer will then order and pay for those groceries, and the company on the other end of that artificial intelligence will deliver them.
You’ll be able to use the same kind of technology and artificial intelligence to order life insurance. You’ll literally be able to say, “Computer, how much would it cost me to get a $200,000 term life insurance policy?”
The computer will be able to reply with several prices from multiple companies. Soon the artificial intelligence will also make recommendations for products based on your specific needs.
When you’re ready to order the life insurance product, you’ll just tell the computer, “Make it so.”
That’s all a combination of AI (artificial intelligence) and NLP (natural language processing).
But the implications of AI as it relates to life insurance are bigger than just being able to order a policy more easily.
For one thing, AI will be able to help you assess what kind of insurance needs you have. The computers will ask you a series of questions. Your answers to those questions will help the AI make recommendations specific to your life.
By 2117, the computer probably won’t even need to ask you questions to answer. It will almost certainly already have all the data it needs to determine your life insurance needs. If my prediction about mandatory life insurance comes true, it’s possible that you’ll just have (and just pay) for life insurance without having to make much in the way of a decision at all.
On the insurance company side, the pricing of policies will become unbelievably efficient. Now, insurance companies take a handful of data points about your lifestyle to draw assumptions from:
But AI will be able to cross index all those data points with all kinds of data points you might not even think about. Your profession, your marital status, the health of your parents and grandparents, and more will all be gathered, crunched, and cross-indexed, The resulting picture will give the life insurance company an uncanny ability to predict how long you’ll live.
Manual reviews of these data points are now used to massage the recommendations of artificial intelligence.
But it won’t take long for AI to become sophisticated enough that this is no longer necessary.
Here are the top 10 leading causes of death in the United States:
The first 3 items in the list account for 50% of the deaths in the United States. It might seem incomprehensible to think that we’ll eliminate heart disease, cure cancer, and prevent pneumonia in everyone over the next 100 things.
But let’s look at the record:
In 1917, the life expectancy for an average United States male was only 48 years. Tuberculosis was one of the top 3 causes of death. The other leading causes of deaths were infectious diseases like the flu, diphtheria, and gastrointestinal disease. Most of the deaths from these causes are easy to prevent now.
The average American male now has a life expectancy of 78 years–an additional 30 years. If we just draw a direct extrapolation, we can expect the average American male to have a life expectancy of 108 by 2117.
Let’s look at heart disease. Just in my lifetime, the treatment and prevention of heart disease have improved dramatically. My family doctor told me that when he was in medical school, the danger limit for cholesterol was considered 500. He could remember when they’d updated that to 350, and then later to 200.
Also in my lifetime, open heart surgery has grown increasingly common. Heart transplants were an experimental procedure just a few years ago. They’re not commonplace now, but I know at least one woman who’s survived her heart transplant and is enjoying life.
In 1917, there was no cure for cancer. For many kinds of cancer, this is still true. But as early as 1953, doctors were able to completely cure a cancer patient by completely removing a tumor with chemotherapy.
In the last 20 years, the number of new drugs and vaccines used to treat different kinds of cancers numbers in the dozens.
What kind of progress do you think we’ll make over the next 100 years?
Especially when you consider advances in genetic research.
In fact, if you look at each cause of death individually, you can think about the progress that’s been made in treating and eliminating those conditions. Accidents are less common because of improvements in the safety of vehicles and other machines.
The only one of the top 10 causes of death that seems to have seen little progress over the last century is suicide. It’s my hope that advances in mental health will eventually result in progress there, too.
What will life insurance be like in 100 years?
My best prediction is that life will have changed so much in the next century that life insurance will be practically unrecognizable.
For one thing, life expectancy will continue to rise. One of the nice things about living a long time is the effect of compound interest. Anyone who has any kind of moderate savings program should be able to save enough money to be self-insured by the time they reach the “new elderly”.
Artificial intelligence will continue to make the industry incredibly efficient. Prices will drop. The risk for the companies will also drop.
Even if practical immortality is impossible, the risk of death will decrease so much over the next 100 years that life insurance will become one of the smallest and least significant financial decisions most people will need to think about.