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How is biology disrupting life insurance?

Life insurance is being disrupted by biology. Epigenetics, the branch of genetics which deals with expression of genes, can help predict the longevity of a person more accurately than the current actuarial methods. Epigenetic testing will improve the cost, speed and accuracy of life insurance underwriting. As the cost of this test falls, epigenetics will become a standard for life insurance underwriting.

How is biology disrupting life insurance?
Life insurance is being disrupted by biology. Currently, life insurance companies estimate the longevity of the insured using actuarial methods. And then fix premiums for the policies. Epigenetics, a branch of genetics, can help predict the longevity of a person more accurately than the current methods. As you probably know, the traditional actuarial method calculates the longevity of a customer from the data from a large population. But the epigenetic method estimates life expectancy, specifically for the individual insured. Epigenetic testing will improve the cost, speed and accuracy of life insurance underwriting. GWG Life is the first InsurTech company to use this method and more insurance companies are likely to follow its lead.

What is epigenetics?
Epigenetics is the science of how our genes are either turned on or off. And this process depends on the internal and external environment of the body.

Dr Steve Horvath created the epigenetic clock called the ‘Horvath Clock’. This clock estimates life expectancy using the number of methyl groups attached to the DNA.

How can we use epigenetics in life insurance?
The epigenetics method is completely different from actuarial calculations. Here, we measure the methylation patterns in different tissues from different parts of the body of a single customer to determine his mortality. This is very specific to the individual. In other words, the DNA methylation technology provides a customized longevity assessment for a single client.

GWG Life is the first InsurTech firm to use epigenetic testing to improve the life insurance underwriting process. In addition to a partnership with UCLA (University of California, Los Angeles), the company is working with a group of epigenetic experts to perfect this technology.

What is the future of epigenetics in life insurance?
Using epigenetic clocks for life insurance underwriting is new. And the regulatory framework is yet to evolve. In due course, regulatory agencies may prescribe norms for testing. Also, unlike genetics, epigenetic genome of a person is likely to change over a period of time. So, insurers may want to test the insured at regular intervals and adjust the premium rates.

Like most innovations, this technology will need a few more years to perfect. Over time, epigenetic testing will become available everywhere. Also, testing accuracies will improve in due course and the costs will come down. Till then, insurers may use a combination of the conventional actuarial method and the new DNA methylation technology. And in time, regulatory requirements will become clearer. Once that happens, epigenetic testing will become a standard in life insurance underwriting.

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