What Must Life Insurers do to Remain Relevant?

More than just getting consumers through the door, carriers must evolve the value of life insurance to offer immediate value to the policyholder that goes beyond a death benefit alone.

(Image credit: Dollar Photo Club.) 

According to LIMRA, the life insurance industry trade association, only 44 percent of households had life insurance in 2010. This represents a 50-year low. In contrast, in 1960, it was 72 percent. To reverse this trend, life insurers have to think differently about the policyholder relationship and learn to interact with customers on their terms.

Millennials have surpassed baby-boomers to become the most populous generation, a generation that is not purchasing life insurance at the rate needed for carriers to maintain stable growth. As a group, Millennials and Gen X’ers are following a more circuitous path, taking-on major responsibilities later in life and prioritizing their current standard of living over long-term financial security. For these generations, life insurance is a nice-to-have, not a need-to-have.

(Related: John Hancock’s Vitality Program: SVP Brooks Tingle Talks Wearable Devices)

Furthermore, technology and demographic shifts have changed how consumers learn about, evaluate and purchase products and services. Younger consumers seek immediate gratification. Want to go to the beach for the weekend? It takes 5 minutes on Airbnb to book a beach house already vetted by a dozen of your peers. Want a new TV? It will be at your doorstep tomorrow courtesy of Amazon. Hungry? InstaCart will deliver your favorite groceries right to your door. We live in a highly personalized on-demand economy.

The new generation of consumers is not interested in building a relationship with an agent or investing hours to research and secure a life insurance policy. They want easy to digest, personalized and actionable information.

The life insurance industry acknowledges the need for change, and a handful of innovators are leading the charge while others are waiting and watching.

Companies who do not mobilize to address the winds of change stand to lose market share to their bolder competitors, while new entrants with deep consumer insights and strong consumer relationships such as Google, Facebook, Amazon, and Apple take note of the opportunity to disrupt the insurance market.

Beyond the Death Benefit

To engage Millennials and Gen X’ers, carriers must reach them where they are and deliver a message that is personalized, relevant and targeted. More than just getting consumers through the door, carriers must evolve the value of life insurance to offer immediate value to the policyholder that goes beyond a death benefit alone.

Through deeper engagement, carriers have an opportunity to offer immediate value, build brand loyalty, and learn about the consumer. This means attracting new consumers, building stronger relationships, and having the insights to offer the right product at the right time, tailored to each individual consumer’s needs and preferences.

For those who make the shift from selling a death benefit to selling a benefit about life, the opportunity has never been greater ($7 trillion in face value according to LIMRA). For those who don’t, the stakes have never been higher.

Jon Cooper // Jon Cooper is founder and CEO of Life.io, a web-based platform delivered through insurers or employers that is designed to help users make better decisions every moment in support of a healthier, happier and longer life. Cooper has held leadership positions at The TriZetto Group, founded MedVolution, an innovative health insurance IT company, and has held senior roles at CodeRyte, Medtronic and WellCare.

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