New light on life
by P.E. Kelley
The word ‘gap’ can be misleading. It may pertain to a ‘shortfall’ of some sort, or perhaps something being a ‘little off.’ But in the life insurance sector, there exists a ‘coverage gap’ that stretches the term well beyond normal or usual implications. The coverage gap in life insurance ownership is currently about $33 trillion dollars, and accompanies an ownership percentage of only 51%. From another perspective, only half of us owns it… and even that number appears to be diminishing.
Andrew Doerman is vice president of digital distribution and strategy for Legal & General America, and in this position is accustomed to working with driving sales growth. In 2019, he and his company established Horizon, a digital platform designed to improve and heighten pricing, underwriting and service to their consumers. And with remarkable success. Having this holistic digital approach, he says, means they can meet consumers when and how they want, on their time.
PEK Where was the beginning of the so-called “coverage gap”, and what has it become?
AD: A coverage gap has always existed to some extent, however, it’s grown over the past few decades to a whopping $33 trillion dollar chasm1. We’ve seen financial literacy rates in the U.S. drop which has contributed to a general lack of understanding of how life insurance can truly help families in their time of need. The Baby Boomer generation has the highest financial literacy rate at 55% while Gen Z has the lowest financial literacy rate at 38%, and overall we’ve seen rates drop 12% over the past 15 years2. This is why it’s more important than ever to educate consumers in the U.S. on the value of life insurance and bring products to market that are simple, affordable and easy to understand.
PEK: So, why are nearly 102 million Americans either uninsured or underinsured?
AD: Roughly 49% of Americans do not own a life insurance policy, as current data indicates about 51% of the U.S. adult population has life insurance3. And, this number grows significantly when combining the population identified as uninsured or underinsured. Despite an overwhelming amount of free personal finance resources, there still exists a few common misconceptions about life insurance that contribute to the coverage gap including perceived cost, overestimating employer-provided insurance and underestimating end-of-life medical care and burial expenses. In fact, a 2024 Insurance Barometer Study from LIMRA confirmed that three-fourths of Americans overestimate the cost of life insurance. That’s why educating consumers on the value of life insurance is essential to bridging the coverage gap.
PEK: Since establishing Horizon, you’ve seen substantial growth that is, well, staggering…buy why?
AD: Since we brought our digital platform, Horizon, to market in 2019, we have grown from the 8th largest Term life insurance carrier in the U.S. to the 3rd largest. And, this year we continue our year-over-year growth thanks to the strength and dedication of our teams here at Banner Life. It’s been this digitization of our entire business, end-to-end, that has allowed us to bring innovations in pricing, underwriting and service to our consumers. Having this holistic digital approach means we can meet consumers when and how they want, on their time and how they want to interact with us.
PEK: Talk about the barriers to growth in life insurance sales, especially Americans’ supposed inability to manage their finances alone.
AD: In addition to the financial literacy rate challenges already discussed, we’re seeing an evolution of demographics and social trends that have created new and diverse needs that the industry is still trying to wrap its arms around. Consumers now want personalized products and services with greater transparency and accessibility, fast and efficient claims processing and seamless digital experience. Consumers also demand more flexibility and convenience in their interactions with insurance companies. We must adapt our products to be more customer-centric and leverage data to gain insights into their preferences and behaviors in order to tailor our offerings. We must also invest in digitization to provide a seamless experience across all touchpoints. That’s what we’ve been investing in here at Banner Life and why we’ve been able to out-pace the market in terms of the volume of Term life policies sold year-over-year.
PEK: How do data and education come into play when trying to break through what you’re seeing as “financial illiteracy”?
AD: It’s no secret that life insurance can be a tough topic of conversation – it involves death and money, two things that be uncomfortable to talk about. In fact, a study shows that almost half of Americans would rather discuss their dating history over finances with their family members. But, having the awkward conversation is where growth happens, and how we can start to close the coverage gap. This is why it’s important to have our products accessible in many different distribution models in an effort to reach more Americans. We rely on advisors and agents to reach new consumers in an approachable and authentic way, and with our Horizon platform, advisors and agents can be more efficient in their daily workflows, freeing up more time to have more conversations with potential customers. And, data helps this by providing us, the carrier and the agent, with a better understanding of consumer behaviors and demands, so we can tailor the products and experiences to meet their desires.
PEK: How do you explain the “deep rooted myths” about life insurance that curtails its sale? Is there really a wall to break through that will open sales?
AD: In the 2024 LIMRA Barometer Survey, more than three-fourths of American overestimate the cost of life insurance, and 52% cite the perceived expense of life insurance as being the reason for not purchasing coverage. In reality, a Term life insurance policy can be very affordable, as little as $14 a month. In addition to being affordable, it’s important that the process is made easy and frictionless, for both the advisor and the customer. Consumers still think of life insurance as slow, invasive and expensive. That’s why one of our overarching goals here at Banner Life is to be the “easiest carrier to do business with”. By removing the friction from the process and providing faster decisions we can free up advisors to concentrate on talking to more Americans and educate them on the value of life insurance. Currently, more than 75% of our applications are approved without the need of an exam, and over 40% are approved instantly, providing immediate peace-of-mind to our customers.
PEK: Talk about the “digital sale” and how Americans can use it to reimagine the process and products being sold?
AD: Now more than ever Americans expect things to be digital. And, like with the Amazon shopping experience, consumers want everything at their fingertips and with the simple press of a button. With our Horizon platform, that’s exactly what we’ve built. Whether you’re interacting with an advisor, or at-home shopping for life insurance, we’ve created a digital experience that allows you purchase life insurance how and when you want. Gone are the days of paper applications and providing fluids during a paramedical exam. Instead we’re using different data sources to collect medical information to provide instant or accelerated decisions without the need for exams. You can track the progress of your application through automated updates via email or text messages, based on customer preference. And, with our instant decision capabilities, the entire buying journey can be completed in as little as 20 minutes!
PEK: Please talk about the Horizon concept and its inherent plan to close the “coverage gap” by making the process of buying life insurance easier and faster?
AD: We want to be the digital life insurer of the next generation, and we’ve been investing in our digital capabilities to make that goal a reality. By digitizing our business with Horizon, we are making the process of purchasing life insurance easier and faster by pushing the boundaries of underwriting innovation leveraging data and machine learning to offer more instant decisions. We are leveraging data to understand our customers better to help us tailor products to fit their needs. In the end, it’s all about meeting consumers when and how they want, on their terms, with simple, affordable products they can trust in knowing they’ve set-up a lasting legacy for their loved ones.
