Life Insurance’s Awkward Necessity – Death

Discomfort with the certainty of death leaves life insurers questioning where they can meet customers. The answer lies where almost all other industries have ventured – online.

Two men sitting a table with papers in front of them

Let’s get it out of the way early. Everyone will die. It is not an “if”; it is a when. And because it is a guarantee that no one likes to entertain, consumers shy away from even thinking about the topic of life insurance, let alone going through the process that puts them face-to-face with statistics and data surrounding their own mortality. 

Longstanding Hurdles

That resistance is actually deeply intertwined in who we are as people. In a study from Bar Ilan University in Israel, Yair Dor-Ziderman found that “the brain does not accept that death is related to us.” Humans have a primal mechanism that tells us the information is not reliable when it links oneself to death, so the brain doesn’t believe it to be real. Because the process of purchasing life insurance is linked to the realization that a consumer will in fact die for the policy to be enacted, it’s human nature to want to avoid it. 

Even if consumers can get over the mortality hurdle, they have traditionally been met with an intermediated, agent-assisted, purchase journey that can last up to two months. If they are using an agent, they are left to disclose personal health information to either someone they have known a long time and consider a family friend or a stranger; both instances can cause great discomfort. This leaves life insurers questioning where they can meet these customers. The answer lies where almost all other industries have ventured – online. 

See also: A New Boom for Life Insurance?

Digital Solutions

At Legal & General America (LGA), the team has taken an aggressive growth trajectory to bring the digital experience to the American term life insurance market. Since launching the digital experience, LGA has found significant success and customer adoption of the new process. With the new model, they found that 90% of those who start the application complete it; that figure was previously 40% when using a non-digital, paper application. The ability to complete some of the application, put it down and come back to it allows users the freedom to not feel pressured to carve out a block of time to sit with an agent or a handwritten application; they can get back to what matters most, the people they’re looking to protect when they’re gone. Twenty percent of applicants receive an instant decision, which means they have a life insurance policy as soon as they complete the application. More than half of applicants are approved without the need for a medical exam. An online experience shifts the agent into a support role, because anyone with access to the internet can use it.

Rather than sit across a table or on the phone with an agent and 25 pages of rigid questions, consumers can open the application where and when they want to fill it out. Not surprisingly, LGA has found that, with its digital application, most applicants are filling out their details later in the evening. And they can reply to only the questions that are relevant to their own medical history and experience. For example, a 50-year-old with pre-existing conditions may have 25 questions while that same 50-year-old with no pre-existing conditions may only have 20 because the dynamic digital application means there is no need to ask questions about medical conditions you don’t have! 

Keeping Consumers, and Agents, in Mind 

When designing the platform for consumers, it is vital to keep the user in mind. Again, thinking about death can be overwhelming, and that can be compounded by looking at a page or screen with five or 10 detailed health questions demanding a response. However, when the application is broken into one question per page, it makes life insurance even more accessible through technology. This platform also allows for increased transparency. The old model required the consumer to ask the agent for the status of their application. The agent then asked the insurer administrator, who had to check with underwriting and then relay all that information back through that same chain. By leaning on transparency, the agent can simply log in and see the status of where the application stands – a more financially leaning pizza delivery tracker of sorts.

All this technology does not remove the agent, either; it simply frees them from the arduous administrative tasks to let them get back to what they love doing – connecting with consumers and helping them find the best solutions for them and their families. Even if they’re the one driving the online application, they can reach more families in their day to increase their own goals. 

Shaving more than 20 days off the non-digital model, the self-guided consumer application can be completed in under 20 minutes, with a life insurance policy in-hand in 25 days on average (if an instant decision could not be made). Investing in technology to make insurance approachable and accessible provides the freedom for all users to find the journey that works best for them. The world continues to spin on a digital axis with the support and backbone of humanity and human connection. When we can harness the power of both, without having to give the heavy topic of death more brain real estate than it truly requires, everyone is granted the freedom to live a brighter life and leave behind the same opportunity for their loved ones

Raju Seetharaman

Profile picture for user RajuSeetharaman

Raju Seetharaman

Raju Seetharaman is senior vice president, IT and transformation, of Legal & General America's insurance division, which includes operating companies Banner Life Insurance and William Penn Life Insurance of New York.

He is responsible for IT and transformation strategy, IT operations and change management, with the mission to combine business strategy with cutting-edge IT expertise to deliver efficient, effective solutions.

Seetharaman is an engineering graduate.

Read More