Calling it "an invasion of privacy," she points out that insurers already have access to a broad array of "other information that can be used to determine if an applicant is a good risk." She cites motor vehicle records, financial and medical histories and personal interviews where applicants are asked about cigarette, alcohol and drug use, among other things. "I've often seen insurers receive incorrect information from sources such as doctors' reports and the Medical Information Bureau. Mistakes happen," she says. "Data mining often does not collect correct information or misinterprets that information."

While that may be true, industry defenders argue there's a difference between invading someone's personal information and simply using information that's already available. "The data is out there in the marketplace," says Anand Rao, a principal in PricewaterhouseCooper's Diamond Advisory Services division in Boston. "It's not like the insurance carriers are digging for information surreptitiously."

So far, Rao insists, this information is more of a supplement to than a substitute for the standard medical requirements. He points out that health records may soon be accessible electronically anyway, and consumers will likely allow insurers to download their personal health histories, just as today they permit carriers to see their doctors' records. "Sharing electronic data is just an easier way of giving that permission," says Rao.

Part Of A Historical Movement
At this point, the practice is more theoretical than actual. Yet some insurance companies have begun drawing on consumer data, particularly for their least risky situations-policies for younger applicants, say, or those for which coverage does not exceed $250,000. It's also more common for term life plans than whole-life coverage, for similar reasons. "Insurers are willing to waive medical testing only up to a certain degree of risk," says Rubin. "A $10 million policy, for instance, would require a lot more medical due diligence."

Industry experts further note that although electronically transferred information may be new, the concept behind it isn't. "Insurance carriers and their actuaries are always looking at trends in medical conditions and lifestyles," says Antoniello. "Thirty years ago, someone with high blood pressure or high cholesterol might have been flagged, whereas today, if it's controlled and the applicant is on medication, it's often not a problem."

Though qualifying for life insurance may have gotten easier, sales have actually declined over the past few decades. Part of the reason is the shift in our social fabric. "Two or three decades ago," says Rubin, "most families had one breadwinner. If he died prematurely, the whole family could be in jeopardy. Nowadays, with so many two-earner families, if one breadwinner dies the family's chances of survival are much better."

In addition, medical advances have made premature death less likely. "There used to be much more need for life insurance because the risks were so much higher," says Rubin.

Other Trends
If exploiting electronic data does make life insurance cheaper and easier to get, that may be just the jolt the industry needs. Sales are down in almost every life insurance category except term coverage, which is typically less expensive for consumers and less profitable for carriers. "Life insurance is often presented as a transactional product these days-something you get as cheaply as possible-instead of as an asset," says Cotter.

Yet some say that's already beginning to change. The volatile stock market has brought an influx of dollars to life insurance providers. Cotter notes that, as a kind of alternative asset class, life insurance represents a stable, secure pool of savings with a guaranteed return. In many cases, the cash value of the policy can be a source of retirement or eldercare funding, too.

Furthermore, the rise in life expectancy increases the need for long-term coverage. "People in their 60s used to cancel their insurance, but now they could still have a third of their lives ahead of them," says Rao.