Life Insurance Awareness Month

Insurtech Platforms Inspire Consumer Life Insurance Adoption

Every financial discussion today is a digital engagement

by Matt Essick

Mr. Essick is Chief Marketing Officer for Ensight™, a leading L&A insurtech firm focusing on sales and data acceleration for insurance carriers and national distributors. Visit Ensight here.

We are now several years down the road into the broad Fintech transformation era. The scale of the digital shift only continues to grow. Indeed, over $44 billion was spent on Fintech in 2020 alone according to Finextra.[1]

There is no doubt that insurtech platforms are now inspiring more consumers to consider and adopt life insurance. New direct (D2C), fast-flow models – such as HavenLife, Ladder, and Ethos Life – are helping more and more middle-market consumers quickly and easily purchase Term life insurance. Indeed, Ethos Life’s tagline is “Life insurance made easy.”

But is Insurtech inspiring consumer adoption of the permanent life insurance product suite? And is there a similar bright future on the horizon?

A Shift To Visual Story-Telling & Interactive Product Experiences Is Underway

Today, every financial services discussion is rapidly becoming a digital engagement.

Consumers now receive a visual, easy-to-understand and interactive experience across the board – whether it is their financial planning discussion with financial advisors using eMoney and Envestnet MGP, or within their 401k and investment account portals.

This is not only the expectation of consumers, but new “the language” for financial planning and investment activity – digital, visual, interactive and easy-to-understand.

Today, the life insurance sector is rapidly making the shift to close the gap in this regard.

Alongside Ensight, there is a new drive to more clearly articulate the permanent life insurance value proposition through visual story-telling – with the objective to help transform the advisor-consumer discussion.

Leading life insurance carriers are now using “design thinking” to recraft the traditional approach to the permanent life illustration itself, as well as incorporating digital tactics, such as hot-links to product content.

Tim Brown, Executive Chair of IDEO, describes design thinking as “a human-centered approach to innovation that draws from the designer’s toolkit to integrate the needs of people, the possibilities of technology, and the requirements for business success”.[2]

Simply put – the approach focuses on developing deep insight into the advisor and consumer for whom we are designing the product and associated illustration in order to drive greater understanding and adoption.

Now more than ever it is critical to simplify the story of permanent life insurance, and it’s living benefits, risks and costs, so that any consumer can understand the broad fundamentals of the policy. Why? Because we now operate in an economy where consumers increasingly expect to “self-educate” as part of any financial decision-making process.

Indeed, more and more consumers self-educate to perform their own medical diagnosis or conduct background research before a doctor’s visit using websites such as WebMD.

Simply put – the approach focuses on developing deep insight into the advisor and consumer for whom we’re designing the product and associated illustration in order to drive greater understanding and adoption...

As part of the design-thinking approach, the leading carriers are shifting to incorporate interactive visualization of life insurance policy performance, charges / fees and additional story-telling components.

There is also growing recognition of a principle that we have known for a very long time – “interactive learning outperforms passive learning”. It is why children use highly interactive software and tools such as ChromeBooks in the classroom. It is why the Socratic method has been used in law schools for over a hundred years.

It is promising news for the sector that leading life insurance carriers and distributors are now actively choosing to deploy this new “language of financial services”.

More broadly, what other new technology shifts may inspire consumers to include permanent life insurance within their overall financial plan?

The Application Of Data Insight To Life Stage Financial Planning

A core principle of financial planning has always been client focus. It is imperative to understand what is happening in the client’s life and how this impacts their financial goals and portfolio, personal objectives, and risk tolerance.

For decades, life insurance has been marketed based upon the life stage model. Consumers need for life insurance (or the perceived need) is driven by different life stage events, such as buying a home or starting a family.

The growing availability of data and advanced predictive analytics promises to shift this model to the next level.

Why? Because inspiring a consumer to consider a more comprehensive permanent life insurance strategy (vs Term) can be amplified by the “right discussion, at the right time”. This targeted engagement is driven by more real-time data insight based on actual life events.

We expect to see an impact on two fronts: first, advisors empowered with automated insight into client life events (e.g. a job change); and second, new data-based life insurance firms using third-party data to refine and optimize life insurance marketing funnels.

Which brings us to a final area of future change and innovation.

The Emergence Of D2C Models For Permanent Life Insurance

The broad trend in the economy today is the emergence of new types of “consumer-centric” distribution models.

Whether it is Tesla going direct through the mall (vs traditional dealership), or the uniquity of Amazon for all consumer goods and services – the consumer experience is king.

In the next five years, we can expect new types of permanent life products designed specifically for “self-planning” consumers and additional emerging target segments.

HavenLife has already started down this route with new types of disability insurance and annuities, designed specifically for the consumer.

Given longevity risk and other demographic trends, I would expect to see this trend continue and new types of permanent life products, designed to “inspire” the consumer, reach the market in the foreseeable future.

 

 

 

[1]“The State of Fintech” (https://www.finextra.com/blogposting/19849/the-state-of-fintech-a-recap-of-2020-and-a-glimpse-into-2021)
[2] IDEO Design Thinking – https://designthinking.ideo.com

 

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