Revisiting Life Insurance

The New Dynamic Of Life Insurance

Bringing relevant solutions to holistic financial planning

by Brooks Tingle

Mr. Tingle is President and CEO John Hancock Insurance. Visit https://www.johnhancock.com/.

No matter the policy size or the complexity of a planning strategy, life insurance sits at an increasingly relevant intersection. It’s most widely known and used as an invaluable means of income preservation and can help families achieve financial and legacy planning goals across the wealth spectrum. But we also view it as a powerful means to helping people live longer, healthier lives – shifting the whole life insurance dynamic from focusing only on death to also focusing on living.

This changes the conversation. Whether it’s an estate planning attorney or financial planner speaking with a client, or a client speaking with their family, we want that planning conversation to include all the ways life insurance can offer value starting the day a policy is issued, not just on the day a claim is made.

 Elevating Today’s Planning Conversation

The COVID-19 pandemic has underscored the value of life insurance in any planning strategy. Consumers are more aware of their need for coverage. However, for too many Americans, the research is startling: some 60 million households are uninsured or underinsured, amounting to an average coverage gap of $200,000 per individual and leaving far too many families exposed to financial uncertainty in the event of a death or serious illness, potentially leading to long-term, generational consequences.

Since our company started issuing policies nearly 160 years ago, financial planning has become incredibly sophisticated, and our industry is now in a near-constant sprint to keep pace with an evolving digital marketplace. But what we do has never been more relevant. Not only are more people aware of their own financial vulnerabilities, but they also have a renewed appreciation for the importance of maintaining good baseline health. COVID-related data is compelling: by and large, better health results in better outcomes.

As life insurers, we know it’s often the most difficult conversations that are the most important. Making the connection between this need to satisfy both personal wealth and health needs is where innovation and personalization can help elevate today’s planning conversations to show how life insurance can benefit clients throughout the life of their policy, yielding real value, and, in many cases, enhancing an overall financial strategy. In many ways, this can make those difficult conversations easier, more timely and highly individualized.

Anticipating Sales Barriers

No matter what you’re selling, successful conversations start with knowing the barriers you’re up against. In our industry, one such barrier is often perceived affordability. Many people who begin to explore life insurance see broad-strokes guidance about how much coverage is recommended — in some cases ten times their annual salary — and make a determination that they can’t afford a policy, when really, their family can’t afford them not to have one. Prospective customers opt out before they ever get to see that there is a broad range of coverage at different price points. If we’re going to get to those meaningful conversations about lifelong value, we need to do more to educate on accessibility and availability of options.

When it comes to people with particular health profiles, sometimes we’re up against widespread misconceptions about our industry as a whole. For example, people living with diabetes often believe that they cannot qualify for life insurance, and if they can qualify, that the policy premium will be cost prohibitive.[1] This is one market segment where we see incredible potential to educate and reverse misconceptions — so much so that in 2019, we launched John Hancock Aspire®, the first and only life insurance designed for people living with diabetes. We want this population to know that life insurance can and should be part of their long-term financial planning.

Once you’ve anticipated misconceptions, the next hurdle in the sales journey is the application and purchase experience. Here, we’re making real progress. Historically, we have not made our products easy to buy. If there’s a silver lining to the pandemic, it’s that it prompted us to confront old ways of doing business and to radically simplify how we underwrite and issue our policies, so that we’re serving our customers in a more modern, digital-first way. This can mean fewer or no in-person visits, less paperwork and tech-enabled processing platforms. The transformation was underway before the pandemic but accelerated rapidly in 2020. The imperative now is to keep looking forward. Just because we can start to return to our prior ways, doesn’t mean we should.

Life Insurance Benefits For The Living

Many people who begin to explore life insurance see broad-strokes guidance about how much coverage is recommended — in some cases ten times their annual salary — and make a determination that they can’t afford a policy, when really, their family can’t afford them not to have one...

Recognizing and accounting for these challenges makes it easier to get to the great part of our work, bringing lasting confidence and value to customers. With the introduction of John Hancock Vitality, we made sweeping changes to the traditional life insurance model to include a personalized program that enables, empowers and incentivizes customers to live longer, healthier lives, and rewards them for the everyday choices they make towards achieving that goal. Those rewards include the opportunity to drive premium savings by as much as 25%.*

With six years of Vitality data, we know that this model is helping customers build healthier lives in terms of key metrics including BMI, blood pressure and reported overall wellness, and also that engagement is putting them in control of policy performance, helping them save money on the cost of their insurance and earn other significant rewards over the life of their policy.[2]

Remember that intersection? John Hancock Vitality sits right at the center of it and that’s where we believe life insurance should sit – offering long-term financial confidence and tangible, measurable benefits that help customers make the most out of every day. What’s more, life insurance can and should deliver new sources of value that are in line with consumers’ changing needs and wants. We achieve this by constantly growing our ecosystem of partners and collaborators to offer the latest in personal health technology and virtual resources, as well as integrating with platforms that make it easier to buy and sell our products. When coupled with the other important living benefits that life insurance can offer, including income tax free access to potential policy cash value and the potential to access funds for long-term care needs[3], permanent life insurance with Vitality is a compelling solution to help achieve a multitude of planning needs.

Delivering Value Every Day

Life insurance has always had an important role in financial planning, but now it has the potential to meet modern consumers’ multifaceted goals and interests. We believe in looking broader and thinking bigger, to find even more ways to make our solutions engaging and rewarding and mining additional sources of value that customers and their families can enjoy over the life of a policy. When a financial planner or attorney sits down with a client, it shouldn’t be about what life insurance can do for them tomorrow, but rather, how to design a highly customized ownership experience that delivers today and every day. Life insurance shouldn’t be a static. It should be a dynamic component of a nimble and future-focused financial strategy.

It’s an ambitious mission — one that is not only timely, but also offers the potential for tremendous shared value. Leveraging a model that focuses both on helping customers prepare for death while also helping them live well is good for consumers because they are reaping both financial and health benefits; it’s good for carriers and our partners because it enables us to grow our business with highly relevant and meaningful solutions; and it’s good for society because we’re contributing to a healthier, more financially sound population. Crafting a long-term strategy that meets a client’s financial and wellness needs contributes to benefits we are only beginning to fully realize. Early data is promising, and I am excited to see where this trajectory continues to take our industry and our customers.

 

 

 

*Premium savings are in comparison to the same John Hancock life insurance policy without Vitality PLUS. The level of premium savings are cumulative over the life of the policy and will vary based upon underwriting status, issue age, policy type, the terms of the policy and the Vitality Status achieved. Premiums savings are only available with Vitality PLUS.
[1] Nationwide survey conducted online by Qualtrics on behalf of John Hancock. Interviews were completed in September 2017 among 1,025 U.S. adults ages 25 years and older living with diabetes. The data were weighted by age, income, ethnicity and region to accurately represent the U.S. population.
[2] Findings based on John Hancock’s proprietary “Healthy Outcomes data” for Vitality’s five-year proof points, published on September 2, 2020. Based on logged activity through a phone or wearable for registered Vitality PLUS members as of year-end 2019.
[3] When a rider for long-term care is added to the policy
Vitality is the provider of the John Hancock Vitality Program in connection with policies issued by John Hancock.
Insurance products are issued by: John Hancock Life Insurance Company (U.S.A.), Boston, MA 02116 (not licensed in New York) and John Hancock Life Insurance Company of New York, Valhalla, NY 10595.
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