Pay-As-You-Go Life Insurance: A Disruptive Model for the Digital Age

In an era where personalization, flexibility, and digital convenience are paramount, traditional life insurance models are being challenged.

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Enter Pay-As-You-Go (PAYG) Life Insurance-an innovative approach that aligns premium payments with lifestyle, behavior, and real-time risk exposure. Just as usage-based car insurance revolutionized motor policies, PAYG life insurance has the potential to disrupt and modernize the life insurance industry.

Understanding the Pay-As-You-Go Model

Unlike conventional life insurance where policyholders pay fixed premiums over long terms, PAYG life insurance allows premiums to vary based on:

• Real-time health data

• Lifestyle choices

• Duration of coverage needed

• Financial capacity or changing life stages

For instance, a 25-year-old active individual may pay less during healthy months and slightly more during high-risk periods (e.g., illness or smoking relapse). It may even offer micro-durations like weekly or monthly coverages, appealing to gig workers and young consumers with unpredictable income.

Why Is It Relevant Now?

The shift toward PAYG is driven by three key trends:

• Digital transformation: Proliferation of fitness wearables, health tracking apps, and digital wallets enables real-time monitoring and dynamic pricing.

• Evolving consumer preferences: Millennials and Gen Z seek on-demand, flexible, and transparent financial products.

• Gig economy growth: With increasing nonsalaried, short-term, or freelance employment, fixed long-term policies are often unaffordable or irrelevant.

Opportunities of PAYG Life Insurance