A few years ago, the woman who processed my life insurance application made me cry. She wasnâ€™t rude, I simply wasnâ€™t prepared for her to ask: â€śAre your parents alive or deceased?â€ť
My dad had passed away a few months earlier with pancreatic cancer, and I was still getting used to talking about it. It was a very emotional time for our family.
Purchasing life insurance involves many â€ścoldâ€ť elements â€” policies, premiums, risk, assets â€” but for customers, the process can be very personal. The emotions involved in seeking life insurance is in direct conflict with the transactional nature of the process. The driving concept behind life insurance â€” your loved oneâ€™s security â€” coupled with a variety of potential emotions, whether it be mourning a deceased parent or reflecting on oneâ€™s own health and lifestyle, can make the process of buying life insurance emotionally charged.
When you couple that conflict with a variety of other hurdles â€” the need for a physical, the complexity of coverage types, the paperwork and the cost â€” itâ€™s not surprising many people quit during the process and never purchase a policy.
Most policyholders believe once you buy life insurance, you can â€śset it and forget it.â€ť And carriers â€” who do little more than send premium reminders and administrative updates â€” do nothing to change that perception. So, even if someone converts to a policyholder, lapsing policies are significantly impacting carrier revenue and growth.
An opportunity for reinvention
So whoâ€™s scooping up these un-converted customers and lapsed policyholders? Insurtech disruptors are capturing a portion of the $16 trillion in missed coverages that LIMRA identifies as being â€śstuck shoppersâ€ť who donâ€™t finish the quoting process. Companies like Ladder are touting simplicity and ease, taking the complexity and burden out of purchasing a policy. In addition, banks and financial institutions are increasingly expanding their services to include annuities, leveraging their relationships with existing customers.
Meanwhile, life insurance companies are grasping to better engage policyholders to protect against these competitive forces. Theyâ€™re often unsuccessfully creating Amazon-like portals and mobile apps in the hopes that self-service and digitization efforts will create more loyal customers.
Building a portal where you can upsell and cross-sell policyholders and expecting them to proactively visit it is false hope. Why? Because life insurance isnâ€™t part of their daily lives.
Like it or not, life insurance companies have trained customers to believe the cold, transactional experience theyâ€™ve created is acceptable. However, this relationship can be improved by reinventing how life insurance companies do business using a people-centered approach that acknowledges how consumers actually make decisions.
Reimagine the role of life insurance
Life insurance is ready for re-invention, and the key is a business strategy that reimagines your relationship with policyholders.
Changing peopleâ€™s perception about life insurance is the goal of reimaging your role and relationship with customers. Adopting a customer engagement model that is people-centered ensures youâ€™re making business, technology, process and communication decisions that support this goal. We’ll cover that more in our next installment.