Transformations in outreach, underwriting, and delivery may be game-changing
By John DeremoMr. Deremo is Executive Vice President and Chief Distribution Officer, Life Insurance, AIG Financial Distributors. He can be reached at firstname.lastname@example.org.
It’s too soon to know whether your favorite NFL team will celebrate a win after Super Bowl 50 next month, but as we kick off this new year, we all have reason to celebrate our work. Our industry provides protection and peace of mind at one of life’s most pivotal moments – when a loved one dies.
Many families may be facing bills at this difficult time, and financial services companies are the ones typically providing checks. In fact, life insurers pay out $1.5 billion every day.1 Additionally, as LIMRA has shared, “95 percent of life insurance beneficiaries are satisfied with the overall service of the issuing carrier.”2
However, in 2016, as for the last several decades, our industry continues to grapple with low life insurance ownership in the United States. Only 60 percent of households own some form of life insurance,3 down from 72 percent ownership in 1976.4 We’re continuing to deal with disenfranchisement in America.
To further narrow the gap between the policy holders and the holdouts, I believe we must overcome misconceptions, hone our approach to multicultural markets, and enhance how we serve each distinct generation of client. Transformations in outreach, underwriting, and delivery may be game-changing.
Perception has been a part of the problem. Eight in 10 people overestimate the cost of protection, guessing that a 20-year, $250,000 level term life insurance policy for a healthy 30 year old would cost $400 per year. Furthermore, 1 in 4 people think it would cost $1,000 or more per year. The actual cost is approximately $160 per year.5
Also, while some consumers assume life insurance is not a need they can afford to address, many people shell out $83 a month for their cell phone bill,6 $66 a month for cable TV,7 and $140 a month for take-out lunches,8 compared to $13 a month for life insurance.9 Continued education about the value proposition of life insurance remains vitally important.
Multicultural outreach matters
While making forward progress in some market segments may seem challenging, other niches appear to offer abundant opportunities. Consider America’s burgeoning multicultural communities and in particular, new Asian and Hispanic immigrants to America. According to the most recent U.S. Census estimates, the Asian population is projected to rise 143 percent by 2060. The Hispanic population, with more than 55 million people already, is projected to grow 114.8 percent by then.10
Think about the strong work and family values in the Asian and Hispanic communities, the affluence of many recent immigrants, and their need for a culturally sensitive service approach. Research indicates that many of these consumers may value protection and appreciate expert help with addressing their financial priorities. In fact, LIMRA has found that approximately 40 percent of Hispanics in America, compared to 15 percent of the general population, “strongly/very strongly” prefer to have a financial professional advise them.11
I believe deep insight into the needs of multicultural communities ought to be central to our industry’s end-to-end commitment, from talent recruitment to client education to underwriting and claims service. Effective interaction hinges on insight into community and personal values, and how and when people prefer to be communicated with. But it’s not only cultural sensitivity that matters if we want to engage with more individuals, more effectively.
As financial professionals, it’s incumbent on us to understand and respond to the distinctive characteristics of each separate client generation – the Matures (ages 71-88 in 2016), Baby Boomers (ages 52-70), Generation X (ages 36-51), and Millennials (ages 20-35). While every consumer is unique, just as each demographic group is different, generational insight has the potential to help us adeptly address the multiple, diverse needs of all clients.
In particular, however, I believe our industry must look more closely at the needs and purchasing preferences of Millennials, particularly the oldest among them. Millennials tend to marry later in life than members of the Mature generation did when they were young,12 and many of the oldest Millennials are now approaching the time when they likely will have significant financial and social responsibility (if they do not already).
This is the time in their lives when, as financial professionals, we ought to be ready to help identify needs and offer appropriate solutions. As LIMRA President and CEO Bob Kerzner shared during the organization’s 2015 annual conference, 41 percent percent of consumers who shopped for life insurance did so because of a life event: they got married, bought a house, or were having a child. He asked, “Shouldn’t we be present when there is the highest propensity to buy?”
When it comes to buying, Millennials tend to value education and resources; thus, financial professionals who are willing to give helpful information rather than a sales pitch, and meet Millennials on their own time and terms may have the most viable opportunity to provide effective outreach. There’s no lack of Millennials with whom to engage; there are more of them now than baby Boomers.13
Yet, a disconnect seems to exist between the delivery of life insurance and the way many Millennials seek to learn about and purchase the products. A recent LIMRA report relayed that 3 in 4 independent financial professionals are above age 50;14 the oldest Millennials are ages 34-35. Common sense dictates that to serve Millennials successfully, we must bridge to where they are, respect them, and interact with them in meaningful ways.
To that end, research indicates that some best practices for connecting with Millennials include:
- Acting your age. – Refrain from acting young and hip, unless, of course, you are.
- Giving it away. – Millennials tend to appreciate freebies. Let prospects try your service with no financial obligation. (Be sure to keep your firm’s policies in mind.)
- Embracing technology. – Treat your website to a face lift; make it easy to navigate and full of helpful resources. Create a LinkedIn profile, a Facebook page, and a Twitter feed for your business. (Check with your firm about any restrictions on social media.)
- Building rapport. – Recognize each Millennial’s individuality and accomplishments.
- Being accessible. – Let Millennials connect with you via via email or telephone. Offer to meet them with their friends.
Additional tips on connecting with Millennials (and the other generations) are available from AIG Life at http://www.aig.com/generationmatters. On the site, you’ll find a generational reference guide, infographics, videos, scripted presentations, brochures, stats, and more.
As our industry continues to analyze the needs and wants of Millennials, and how we provide financial products to them, significant advancements in underwriting and delivery may be forthcoming. I believe it’s highly likely that during the next three to five years, most carriers, particularly if targeting Millennials, will offer life insurance products via a form of guaranteed or simplified issue – transforming our industry as well as our service to many clients.
As a hypothetical example only, think of how the Millennials – or even some of the Gen Xers under age 50 – with whom you’ve interacted might respond to the potential to own a life insurance policy with a $500,000 face value, without the need to undergo a mandatory medical exam. Would they appreciate your help in facilitating that protection? Would your job be easier?
In my view, it’s incumbent on our industry to make the purchase of life insurance easier and less intrusive. If we can break down barriers to ownership, embrace and educate diverse communities, provide in-language resources and culturally responsive service, and engage with each generation in the most appropriate ways, we can likely help many more people gain protection. And wouldn’t that constitute a win for all? ◊
AIG Financial Distributors is the sales and distribution arm of AIG Consumer Insurance, an enterprise name representing a group of companies offering insurance, retirement and investment services, and is a member of American International Group, Inc. (AIG).
American International Group, Inc. (AIG) is a leading global insurance organization serving customers in more than 100 countries and jurisdictions. AIG companies serve commercial, institutional, and individual customers through one of the most extensive worldwide property-casualty networks of any insurer. In addition, AIG companies are leading providers of life insurance and retirement services in the United States. AIG common stock is listed on the New York Stock Exchange and the Tokyo Stock Exchange.
Additional information about AIG can be found at www.aig.com | YouTube: www.youtube.com/aig | Twitter: @AIGinsurance | LinkedIn: www.linkedin.com/company/aig
AIG is the marketing name for the worldwide property-casualty, life and retirement, and general insurance operations of American International Group, Inc. For additional information, please visit our website at www.aig.com. All products and services are written or provided by subsidiaries or affiliates of American International Group, Inc. Products or services may not be available in all countries, and coverage is subject to actual policy language. Non-insurance products and services may be provided by independent third parties. Certain property-casualty coverages may be provided by a surplus lines insurer. Surplus lines insurers do not generally participate in state guaranty funds, and insureds are therefore not protected by such funds.
1. “Across America…Life Insurers Provide Financial Security and Peace of Mind,” American Council of Life Insurers (ACLI), Oct. 2015
2. Life Insurance – Why So Down?” LIMRA and Life Happens, 2015
3. “Facts from LIMRA,” LIMRA, Sept. 2015
4. The Facts of Life and Annuities, LIMRA, Oct. 2015
5. 2015 Insurance Barometer Study, LIMRA and Life Happens, 2015
6. “4 Ways to Save Money On Your Cell Phone Bill,” ABC News, May 26, 2015
7. Report on Cable Industry Prices, Federal Communications Commission, Dec. 15, 2014
8. Accounting Principals’ Workonomix Survey, conducted by Braun Research, March 13, 2013
9. 2015 Insurance Barometer Study, LIMRA and Life Happens, 2015
10. “Projections of the Size and Composition of the U.S. Population: 2014 to 2060,” U.S. Census Bureau, March 2015
11. Connecting with Hispanics, LIMRA, 2013
12. “How Millennials today compare with their grandparents 50 years ago,” Pew Research Center, March 19, 2015
13. “Millennials Outnumber Baby Boomers and Are Far More Diverse, Census Bureau Reports,” U.S. Census Bureau Release Number CB15-113, June 25, 2015.
14. The Independent Financial Professional, LIMRA, 2014