The ongoing threat of COVID-19 poses a constant reminder of the importance of life insurance. Life insurers have an unprecedented opportunity to communicate their value proposition to an engaged audience through multiple digital channels. Indeed, life insurance sales jumped to the highest level seen in nearly 40 years in the first quarter of 2021. Despite the increase in sales, the percentage of individual Americans covered by life insurance dropped from 63% in 2011 to 52% in 2021.
Insurers could make close to $4 billion more annually in potential premium income by closing sales with this untapped market.
To understand how life insurers can seize this opportunity, we must first understand the challenges they are facing, then discuss how approaches like hyper-personalization, digital distribution, and accelerated underwriting can solve them.
Why are so many people underinsured?
For consumers, it comes down to price and policy complexity.
The Oliver Wyman Forum’s Global Consumer Sentiment survey found 69% of consumers say the price is essential when choosing a life insurance policy, and 44% of consumers say ease is vital in their decision. Additionally, one-third of Americans who considered buying life insurance did not end up purchasing it.
Traditional whole life and term life policies can be generic and inflexible. Rather than having a one-size-fits-all approach, carriers need to allow policyholders to determine the length of their policies so they’re able to afford premium payments and get coverage when they need it the most.
With these critical factors in mind, let’s look at how life insurers can improve sales and reduce churn by hyper-personalizing life insurance.