Tag Archives: life insurance

Selling Where Life Happens

Every moment of every day, retail operations are under scrutiny. Executives and management teams for grocery stores, gas stations, big box home goods, home repair and department stores are obsessed with merchandising. Product placement is always in flux. Endcaps are changed for a season or a weekend. Special displays are constructed as demand is anticipated.

And now executives are equally obsessed with their digital storefronts – the digital version of the physical store – highlighting new products and sales and suggesting items to customers based on their behaviors and engagement. 

A great deal of thought goes into both the digital and in-store experience – the same questions, just addressed differently. What is the flow like? Can we drive the flow of our store offerings to add more impulse purchases? How can we construct our checkout process to make it quick and easy? Can we accommodate for visual space for products at the point of purchase? May we suggest something else that may go with the purchases? In some cases, this results in a mini-maze just prior to checkout, where by chance some last glimpse of something will trigger an additional sale at the point of purchase. Do I add a warranty? Should I get a Starbucks gift card for my neighbor who took care of watering my plants? At the point of sale – whether in person or digitally – the retailer buys the space that’s in our heads. We advertise to ourselves. We make the decision.

And the process works and creates growth opportunities for retailers that are rapidly moving to offer both in-person and digital, like Walmart, to meet customer needs and expectations. When Walmart recently announced second-quarter results – crushing the numbers! – it said e-commerce sales in the U.S. shot up by 97% and same-store sales grew by 9.3% as customers had packages shipped to their homes and used curbside pickup. This was the biggest earnings surprise in 31 years for Walmart! A company that disrupted retail decades ago and was in the crosshairs of disruption by Amazon is reinventing itself once again.

Walmart is leveraging its massive store base – which is accessible by nearly every person in the U.S. – with investments in its e-commerce platform to expand reach, engage customers and grow the business. If you go on the platform, you will see brands that you don’t see in the store — partners selling through Walmart. And with this platform Walmart is now looking to expand by adding a membership service. This traditional retailer has reinvented itself to meet the expectations and needs of customers and create an experience – like Amazon – that creates loyalty and deepens the relationship with the customer as the place to buy and manage different aspects of their life. 

Which makes us wonder, what if life insurers reinvented themselves to be obsessed with the point of purchase – digitally and in-person?

In 2020, life insurers, annuity providers and voluntary benefits providers should remind themselves that, when it comes to point of purchase, this new retail mindset can be a game-changer. This is the very first step in establishing the need for a flexible, ecosystem approach that will fit as comfortably at any digital checkout queue as it will at the adviser’s office. If we can establish the points of life where purchase can be seamless, easy and almost frictionless, then we’ll drive growth – something that has been elusive the last few decades.

The Point of Purchase

In Majesco’s latest thought-leadership report, Rethinking Life Insurance: From a Transaction to a Life, Health, Wealth and Wellness Customer Experience, we take a closer look at what is driving buyers of life insurance and other related products to cross the line and make the purchase. In our analysis, we identified some indicators regarding product location and the easiest ways to construct simplified purchase experiences. Digging deeper, we looked at how we can help customers sell to themselves through new digitally enabled opportunities, which may still be connected to in-person engagement.

To better understand just how people’s life experiences relate to their potential life insurance transactions, we surveyed consumers, asking them a range of questions related to health, wealth, wellness, life insurance and purchasing habits. The details of the survey results highlight a rapid shift, particularly by millennials and Gen Z, to wanting a lifestyle experience rather than just a transaction.

This blending of the purchase experience into the life experience is the key to unlocking the point of purchase in insurance.

See also: Reigniting Growth in U.S. Life Insurance

Trends in Life Insurance Ownership

Ownership of life insurance has seen significant declines over the last 50 years. In our survey, the older generation segment, Gen X and Boomers, has overall lower ownership than the younger generations, Gen Z and nillennials, as shown in Figure 1. Across the three categories of traditional, universal life (UL)/variable life (VL) and annuity, the younger generation’s total ownership level is 35% more than the older generation, reflecting a potential upswing in the life insurance market as the younger generation matures and expands their need for insurance. Most interesting is that both generations clearly gravitate to traditional insurance – term and whole life – as opposed to investment-backed products such as UL, VL and annuities by a factor of three to nine times, depending on the product. 

Interestingly, this strong interest in traditional products aligns with the growth of non-traditional, fluidless, rapid-issue life insurance from companies like Haven Life, Ladder Life and other insurers. The two are increasingly compatible.

Figure 1: Types of life insurance owned

Even more interesting and encouraging is that the younger generation believes more strongly than the older generation in the importance of life insurance, at 79% versus 69% (Figure 2). The key will be to meet their expectations in the risk product, customer experience and value-added services areas. 

Figure 2: Importance of life insurance

Interestingly, 70% of the younger generation who do not have life insurance still believe it is important – indicating a strong market opportunity for insurers who can meet their needs, demands and expectations. In contrast, only half (49%) of the older generation who do not have life insurance believe it is important.

With the value and importance of life insurance established, what will prompt each of the generations to purchase life insurance? Our research has shown that the younger segment has more life event needs on the horizon that would motivate them toward a life insurance purchase. They are interested. They find it to be important. So…

Why aren’t many of them acting on their need at common moments of impulse? 

Something is standing in the way of the insurance purchase. There is an understood need. There are relevant life events. So, something within current product offerings or the sales and engagement process does not align with their expectations. A hint emerges when you compare preferences for coverage periods.

For typical term insurance, everyone still favors monthly payments. However, coverage for a specific event or short period – on-demand insurance – is of higher interest to the younger generation and on par with the other payment options.

What this indicates is the need for different options to meet different needs at any point for life insurance, whether planning for a long-term coverage for death, or meeting the need for short-term insurance for an activity like a vacation. It is all about need and placement. The younger generation is poised to purchase at the point of need – and likely digitally.

Validating these assertions, we found that the younger generation is significantly more engaged in activities that would cause them to buy insurance. Nearly a third of the younger generation participated in a sport or activity that could result in injury or death as compared with 8% of the older generationMillennial and Gen Z generations participate more in extreme sports, they travel more, they do more shopping online. They are the generations that value experiences over ownership, which makes them highly likely to want to protect themselves and their experiences. This sheds new light on ways to capture and grow new customer relationships. 

With the Gen Z/millennials valuing and showing interest in buying life insurance, where and how will they buy?

Unsurprisingly, members of the younger generations are open to buying life insurance from a wide array of options, as highlighted in Figure 3. Agents and insurer websites are at the top, but, of the 16 options we included in our survey, seven of them exceed the 50% level of interest (a rating of three on the five-point scale), with the balance of them within just a few tenths of a point of this level – and a majority of these are digital, focused on the point of sale. In contrast, the older generation has only three of the 16 options at 50% interest or greater. 

The acceptance of a wider range of purchase options highlights the need for insurers to consider how and where they interact with the younger generation, and to be there with timely purchase prompts. This is where having partnerships and an ecosystem becomes very strategic in helping insurers expand their reach and presence to where their customers will be.

Figure 3: Preferences for different life insurance purchase sources

The Case for Point-of-Purchase Preparedness

If customers are interested and willing to purchase insurance from so many different sources and in so many different ways, then we can begin to innovate around what it will take for insurers to place their products in any place at any time – including their own digital platform. Walmart and Amazon are proving that product sales are most effective when they are multi-channel, multi-delivery-type and easily accessible. They are placing related products, such as warranties and accessories in front of buyers at precisely the right times. Each of them is successful because they understand their market’s purchase patterns and customer behaviors and they customize the purchase process to fit – with a digital platform that also uses sophisticated data and analytics.

See also: Fundamental Shift in Life Insurance?

When the process conforms to the person, retailers and insurers alike will be able to relax and know that they are not just capturing the up-and-coming generations, but, like Walmart and Amazon, they are giving the best service possible to every generation.

Innovate for the Future

Will your products one day sell on auto screens? Will they sell through smart homes? Will they be as easy as a tap on an Apple Watch? Will they be part of another purchase – like buying a home and getting a mortgage?

Your best life ideas will come from watching lives and lifestyles and thinking, “We could place ourselves right there.” It all begins with insights and the initiative to transform the insurance model from a transaction to an experience.

Optimizing Experience for Life Beneficiaries

The life insurance industry hasn’t adequately supported the beneficiary largely because the industry has focused on supporting the sales channel and the insured.

In general, life insurance companies haven’t considered beneficiaries as key stakeholders. If companies don’t offer the proper experience to this group, carriers risk disappointing potential customers, damaging their brand’s reputation and, ultimately, hurting sales.

The beneficiaries of a life insurance policy require a dramatically different experience than that provided to the insured. The claims experience in life insurance is very different than for any other type of policy. Instead of the insured filing the claim, it might be their children or caregivers doing so. And the person filing the claim will be grieving, in addition to dealing with financial and logistical challenges. Many beneficiaries need emotional support, so it is essential for carriers to provide an optimal experience by using a variety of different contact and support options that offer the right combination of choice, guidance and advice. 

Provide Varied and Personalized Capabilities

Today, it’s important that life insurers offer automated self-service capabilities. However, life insurers can’t eliminate the human element, which is sometimes just as important as quickly delivering the claims check.

To expedite the claims process, one insurer that also owned a bank set up an account for the beneficiary and provided an account number and instructions on how to get the settlement funds. But this approach, while efficient, didn’t create the right experience for the beneficiary, who may have needed guidance in a time of need. The approach also eliminated the most important touchpoint for the salesperson, who wants to be involved in delivering the promise he sold long ago. Life insurers need to offer the right advice and hand-holding at the right moments. When there’s a death in the family, the survivors typically aren’t in the right state of mind to make important financial decisions.

See also: Reigniting Growth in U.S. Life Insurance

On the other hand, neglecting to offer digital capabilities can also be a mistake. Many long-term-care insurance companies, for instance, make the mistake of thinking that their customers will not use online and digital capabilities, given their age. However, the insured is not always the one making the claims. It’s usually their caregivers, who tend to be the insured’s digitally savvy children and who prefer to take a picture with their phone to submit a claim rather than stay on the phone with a claims contact-center representative.

Therefore, life insurers need to provide multi-channel access, because each channel can suit different needs of their customers. Limiting services or focusing on one to the exclusion of others can create a customer experience that simply does not work in all situations and for all people.  

Starting the claims process

To kick off the claims process, a life insurer should reach out to the beneficiary with a call from a contact center representative. A salesperson might not be the best fit to make the call, but a trained representative can provide comfort, offer help and support or even just serve as a sympathetic listener. The representative can ask how he or she can help, outline the multiple choices the beneficiary has in terms of next steps to the claims process and stress that all actions will happen on the beneficiary’s timeline. You want to make the customer feel special, that you’re taking care of him or her. That’s why the industry exists.

By offering a great claimant experience, insurers may even see beneficiaries turn into lifetime customers. Life insurance, as an industry, is seeing growth that is flat to low, at best, having traditionally been restricted to the upper-middle class and affluent groups, while the lower and middle-income groups have proven to be a challenge for the industry to reach. By offering the right experience and educating beneficiaries of the value of life and annuities products early in their lives, insurers can better position themselves to deliver their products and service to those groups. 

Stay in Touch

Life insurers can engage with the insured and the beneficiaries well before a claim to foster a relationship. Insurers can leverage an engagement platform like Life.io, a digital platform that educates, engages and rewards policyholders throughout their customer journey. Combined with the right experience and the right digital capabilities, such an approach to staying in touch could be a game-changer for the industry.

See also: Will COVID-19 Spur Life Insurance Sales?

Life carriers must connect with beneficiaries as often as possible. It’s important to capture beneficiary email addresses and phone numbers early, updating the information continually and using tools and technologies to keep in touch. The data will be very valuable for insurers in creating their products as well as evolving service models.

Improving the beneficiary experience with an omni-channel approach, fostering a relationship and focusing on this key stakeholder can not only help facilitate the claims process but also provide life insurers with opportunities for growth.

6 Life, Health Trends in the Pandemic

COVID-19 is, in many ways, still a disease of uncertainty, both in the severity of its symptoms and the scale of financial hardship it could ultimately cause. And no business is better equipped to confront uncertainty than insurers.

So it is perhaps unsurprising that life and health carriers are responding to the pandemic with a variety of consumer offerings, from complimentary, compassionate benefits to new protection products and services.

After performing a global review of responses to COVID-19, RGA identified six primary trends:

Compassionate and Complimentary Benefits

Insurers have sought to build trust and goodwill by offering complimentary COVID-19 coverage as a compassionate benefit or marketing expense, with an emphasis on policies with lower face value to manage overall exposure. A multinational insurer in Hong Kong, for example, has begun offering an additional hospital cash benefit of HK$600 (equivalent to US$77) per day for covered clients who may be required to undergo a mandatory quarantine in a hospital or isolation center. Similarly, the local branch of another major insurer in Thailand partnered with a leading telecom operator to offer a market-first, free-of-charge COVID-19 coverage benefit to customers. If a customer requires treatment in a hospital, he or she will receive a hospital indemnity benefit of up to THB1,000 (equivalent to US$31) per day. Still another multinational partnered with a Singapore-based insurer serving private hire drivers to offer a complimentary benefit for all of these essential workers as part of the company’s Group Prolonged Medical Leave insurance policy.

Other forms of consumer relief have proved popular, including premium holidays, grace periods and reductions to policy/premium amounts. Many insurers globally have offered grace periods for premium payments either voluntarily or at the request of local governments and regulators. On the health insurance side, some insurers have waived cost-sharing, co-pay and other deductibles for inpatient hospital admissions due to COVID-19. Some have also sought to support healthcare first responders and other frontline workers through donations of personal protective equipment (PPE) and other charitable efforts.

COVID-Specific Protection

COVID-19 emerged in Asia, so it stands to reason that regional insurers have been first to develop hospital cash and comprehensive care products offering standalone protection in case of diagnosis. For example, one Bangkok-based broker and insurer teamed up to offer Thailand’s first policy that provides cash upon diagnosis with the coronavirus. Similarly, a major Indian insurer offers a COVID-19 support plan, providing end-to-end treatment services, including consultations with qualified doctors, to policyholders who become infected. In Malaysia, a major multinational has introduced a COVID-19 hospital assistance program with an upfront one-time cash payment upon hospitalization with the disease. The program includes a one-time cash payout for family assistance should dependents also be diagnosed. It also includes other assistance for consultation and treatment costs while in isolation or intensive care. Similar products are now emerging across Europe and North America.

See also: Reigniting Growth in U.S. Life Insurance

Segment-Specific Offerings 

The word pandemic derives from the combination of two Greek words: pan (“all”) and dēmos (“people”). But, while all are at risk of contracting the coronavirus, a few face far greater danger due to the essential public services they must perform. Insurers are customizing certain offerings to serve these frontline workers. In China, a first-in-market COVID-19 medical worker insurance program pays cash compensation upon diagnosis. Similarly, healthcare personnel at specified primary and secondary public hospitals, treatment centers, and pharmacies are eligible to sign up for another Chinese insurer’s COVID-19 coverage for free. Another insurer launched COVID-19 coverage targeting shopkeepers in India, with the product paying 100% of the sum insured, irrespective of hospitalization expense, upon diagnosis.

Health and Wellbeing

The coronavirus not only co-opts our cells, it exploits our fears. A lack of clear information and shortages of available testing have compounded the problem in some locations. U.S. insurers responded with new consumer plans that seek to bundle mental wellness services with physician care to address public anxiety with clear and actionable medical guidance. One U.S.-based healthcare carrier repurposed its existing telehealth application for mobile devices. The app now provides a coronavirus assessment based on guidelines from the U.S. Centers for Disease Control and Prevention and the U.S. National Institutes of Health. Customers can connect directly to a board-certified doctor via text or secure two-way video call and use the app to discuss the assessment results. Another U.S-based provider of healthcare IT solutions and services launched a new telehealth product to help physicians and patients stay connected during COVID-19 through real-time video technology. A number of mental health schemes have also emerged around the world with an emphasis on technology to address social isolation.

COVID Diagnostics

Artificial Intelligence (AI) has been coming to medicine, and insurance, for some time. Now the spread of COVID-19 may present a new opportunity to increase use of smart apps and chatbots. A number of insurers are relaunching and rebranding existing AI applications to meet surging diagnosis and informational needs in an era of social distancing and staffing shortages. In China, one major insurer launched a smart, AI-based audio screening system for COVID-19 to strengthen epidemic control and prevention through automated interviewing and risk assessment. Another U.S.-based case manager launched a coronavirus chatbot to answer questions related to COVID-19 and assist in diagnosis, and a multinational in Hong Kong retooled its mobile application to assist in coronavirus contact tracing. Much remains unknown about the overall effectiveness of these emerging technologies, but the increasing use of AI is a trend that merits monitoring.

New Approaches to Sales Operations

COVID-19 has been dubbed an “invisible enemy,” but its effect on the insurance industry has been very apparent. As traditional evidence and sales channels have been disrupted by lockdowns, carriers have moved to accelerate a transition to alternative evidence, simplified and accelerated underwriting and digital distribution.

“Selling at a distance” is a hot industry topic, and those insurers with relatively strong digital capabilities may be best-positioned, while others are playing catch-up. A major multinational recently launched a digital enrollment system, while another unveiled “simple life insurance” to be sold online. Another insurer is now using WhatsApp to deliver policy and renewal documents. One carrier has simplified the claims process for its critical illness policyholders. Upon diagnosis of COVID-19, the policyholder needs to only submit a certificate from a government medical officer to receive a lump sum payout rather than the more copious paperwork typically required.

See also: 4 Post-COVID-19 Trends for Insurers

As the pandemic unfolds, we expect more offerings to emerge. In the medium term, it may not just be health and safety concerns that drive offering design, but the state of the overall economy. Interest rates and slowing economies are placing renewed pressure on insurers to reassess less profitable offerings, such as those with generous guarantees, and to emphasize capital efficiency in the overall product portfolio. Against this challenging backdrop, it is unclear how many product innovations of all kinds are languishing in the exploratory phase versus being introduced to consumers at this time.

Reigniting Growth in U.S. Life Insurance

Catastrophes can often be catalysts for how society manages risk. For instance, World War II transformed the U.S. into a highly industrialized economy and put us in a position of global economic leadership. As a result of the COVID-19 pandemic, the U.S. life & annuity insurance industry is at such an inflection point.

Life insurance has endured flat to declining sales for over a decade. Put simply, sales have by and large not kept up with the growth of the population, and younger generations are not seeing insurance as a product that belongs in their financial portfolio.

But as the world shut down seemingly overnight, interest in life insurance has come roaring back, and COVID-19 is now accelerating sector adaptation. Electronic application (eApp) submissions are up by 20% year over year, and e-policy deliveries by 52% YOY, according to recent insight from iPipeline. At Ensight, we have seen a dramatic shift toward the virtual sales experience, with growth of 155% in just the last three months. This agile sector response to COVID-19 bodes well for returning the sector to long-term growth and wider financial protection in society.

However, this resurgence will be short-lived if the life insurance industry doesn’t use this moment of opportunity. Younger generations will not tolerate antiquated illustrations or the absolute need for an in-person sale. When we take a step back, COVID-19 is very likely to drive the following three transformations within the life insurance sector: 

  • Greater focus on the transformation of the sales experience
  • A broader, accelerated shift to more holistic financial planning by advisers
  • Increased consumer understanding of the importance of life insurance

These are potentially simultaneous tectonic shifts. And the potential long-term positive implications for life insurance sales are significant. 2020 may therefore represent the long-awaited inflection point for the U.S. life insurance industry.

So, what are insurance carriers doing well today? More importantly, what additional gaps must be closed to ensure long-term growth?

See also: Will COVID-19 Spur Life Insurance Sales?

The Current Frontier – Tackling the Application Pain Point

Over the past decade, the principal transformation agenda has been on addressing the pain point and cost inefficiency of the life insurance application process. Insurance carriers have largely focused on shifting to electronic applications (eApps), as well as implementing new accelerated/simplified underwriting programs.

This shift is critical. However, insurance carriers need to remember that eApps and accelerated underwriting programs will drive little long-term competitive advantage, because everyone will have them.

The next chasm to cross for the sector is product accessibility. Without it, we will not return to a vibrant life sector in the next decade.

Crossing the Chasm – Addressing Product Accessibility

In 1991, Geoffrey Moore wrote “Crossing the Chasm,” which quickly became the bible for entrepreneurial technology marketing. “Crossing the Chasm” focused on how to drive the introduction of innovative products from early adoption, to finding product market fit and ultimately to wider adoption.

To truly cross the chasm and reignite significant sector growth through broader understanding and belief in the value and application of insurance products, life and annuity carriers should prepare to address digitalization of sales and distribution.

Complete digitalization of the point of sale

Even with eApp growth, the permanent life insurance point of sale experience continues to be rooted in paper. Whether it is PDF brochures heavy on the compliance language or the 40-page illustration, the point of sale has simply not adapted to the 2020 expectation threshold. 

Consumers today – with the fintech movement transforming everything from banking and investing to mortgages – expect a digital, intuitively visual and easy-to-understand experience. These are the prerequisites for selling your products successfully – especially in the world of Amazon.

Life and annuity carriers need to transform the entire sales lifecycle – not just the application pain point. This means addressing everything from digital presentation of the product by financial professionals, to interactive training and to a consumer-oriented in-force web experience. Policy statements sent via snail mail are out of date. 

And financial professionals, for whom 50% of client engagements are now virtual, should be enabled with an interactive, digital experience to explain products to clients. Clients should be able to interactively play with products online to better understand how they might perform, for instance under different market scenarios. This is now par for the course.

Change distribution mindset and prioritize technology “platform plays”

Silicon Valley venture capitalist Marc Andreessen said, “Software is eating the world.” A corollary in financial product distribution could certainly be: “Technology platforms are eating distribution.”

Life and annuity distribution has traditionally been focused on relationships and traditional distribution partner platforms (i.e., people plus services). There is an unprecedented shift happening today – the introduction of distribution technology platforms and the elevated importance of the platform experience.

Insurance carriers will need to open their distribution mindset and strategy to prioritize “platform plays.” This means not only reevaluating whether they are delivering a modern, Intuit-like illustration experience for different types of personas, but also consider how they are enabling new technology platforms to drive premium growth.

See also: Fundamental Shift in Life Insurance?

Increasingly it will be the “platform plays” that will drive premium growth. And without addressing the challenge of “product accessibility,” the life and annuities market will never truly “cross the chasm” and return to long-term, sustainable growth.

Fintech is evolving our world and creating experiences that a growing portion of our potential client base have come to expect. While insurance has gained some renewed interest during the pandemic, we are now at the inflection point that will determine how well we can adapt and grow over the next decade.

Will COVID-19 Spur Life Insurance Sales?

As the pandemic began to sweep across the world, reports of people panic-buying life insurance appeared in the media. RGA reviewed the available data to determine if a COVID-19-inspired spike in sales is in fact taking place and to consider whether the current crisis could prove to be the tipping point for a new era of digital life insurance sales.

Most people have a problem that life insurance can solve: If your family would struggle to survive the permanent loss of your salary, then life insurance could be vital. This is the case for hundreds of millions of people around the world.

The challenge is that most people do not realize they have this problem. Few people spend time thinking about the consequences of low-probability events and are therefore disinclined to consider the need for life insurance. This has given rise to the industry adage: Life insurance is sold, not bought. 

But surely the COVID-19 pandemic has awakened public awareness of the need for life insurance, right? With the world shut down and media reports filled with stories of tragic loss of life, people are increasingly aware that good health and a long life cannot be taken for granted.

Initial media reports spoke of COVID-19 fears leading to increased online life insurance sales, with Forbes even reporting evidence of “panic shopping.” At RGA, we have been actively analyzing available data to identify and try to explain any early patterns. 

Early data indicates limited early impact

We began with Google Trends data to determine how searches for life insurance have been affected.

Source: Google

NB: The chart covers May 10, 2015, to April 26, 2020. The data is based on random sample of searches, excluding duplicates by user. Results are relative to all other Google searches during that period and geography – decreases are relative to other searches, not necessarily absolute. 100 = highest relative search volume for that term.

As the graph shows, worldwide searches for “life insurance” have risen steadily over the last five years and peaked from January to early March 2020, coinciding with the beginning of the COVID-19 outbreak. However, searches have since fallen back to pre-virus levels. Furthermore, this peak did not occur in all countries. Analysis at a country level shows that the U.K. and U.S. mirror, and perhaps drive, the global pattern, but no discernible peaks or subsequent decreases coincide with COVID-19 outbreaks in Italy, China, Germany, Australia, India or South Africa.

We should be cautious about drawing too many conclusions from Google Trends data. Considerable noise and fluctuations make it difficult to distinguish clear effects from statistical randomness or other patterns. For example, similar Q1 trends occur in the previous four years – although the March 2020 decrease is much larger than in these earlier years. Most importantly, Google Trends does not indicate causation. For example, some people may have been searching simply to check if their life insurance policy likely covered COVID-19.

Yet evidence from other sources supports the U.S. Google Trends pattern. A  LIMRA survey of 47 U.S. insurers assessed the impact of COVID-19 on individual life sales and applications in the U.S. 24% of companies reported that online and mobile applications rose in March, but 63% reported either no change or a decline. Only 7% saw an increase in face-to-face applications and 9% an increase in call center or mail applications.  Nearly half of companies said they were expecting a decline in sales in March, with 20% expecting a decrease of 10% or more. How this reflects normal seasonal fluctuations is unclear, but most companies were expecting sales in the full first quarter to be flat at best. 

According to the MIB Life Index, which measures U.S. life insurance application activity, demand for policies in January and February reached its highest level since 2015 but then dropped by 6.7% in March and a further 5.5% in April. This was a year-on-year fall of 2.2% in March and 3% in April.  

See also: Fundamental Shift in Life Insurance?  

Data available to date suggests that, even if an initial COVID-19-related bump in applications occurred in some markets, that bump was both limited in time and geographic spread and may be outweighed by a subsequent drop in applications. So we must now ask: Why has COVID-19 had such a seemingly limited impact? 

Life insurance is still sold, not bought 

It is possible that any initial rise in searches and applications came from those already considering life insurance and for whom COVID-19 acted as a final spur and accelerant. Some media reports support this thesis. This could also explain why the sales impact was greatest in those markets where it is easy to buy life insurance online or where consumers are accustomed to buying other financial products online. Similarly, advisers may have accelerated sales ahead of the lockdown, as they anticipated delays and restrictions on medicals, lab tests and other underwriting requirements. The subsequent reduction could also then reflect the delays and restrictions that people experienced once the lockdown began.

For the majority of those people not already considering life insurance, data indicates the pandemic has not motivated them to make a purchase. Also, the subsequent drop in searches does not suggest consumers are trying to buy online but finding it difficult to do so. The key reason, of course, may be economic. Most people do not view life insurance as an absolute essential, so if the primary breadwinner has lost, or is at risk of losing, his/her job, it is unlikely the person will decide now is the time to spend discretionary money on life insurance.

This is another reason why, counterintuitively, now might be a bad time to be promoting life insurance. It is easy to forget many people have an instinctive negative reaction to talking about money in relation to death. We are hearing about an increase in complaints and negative comments in response to online ads for life insurance, even when they are seemingly innocuous and make no reference to COVID-19. One prominent clergyman in the U.K. has even criticized the “grim promotion” of life insurance ads on Twitter. Many insurers have recognized this and are delaying planned email marketing pushes.

It may also be that the risk of COVID-19 is still too abstract for most people. One of the main triggers for purchasing life insurance occurs when someone we know passes away, especially if that individual is young and leaves behind a family. This was highlighted earlier in 2020 with the death of basketball legend Kobe Bryant. The volume of life insurance application requests and submissions spiked by over 50% in the days after the 41-year-old’s death on January 26, before returning to normal levels within a week, according to True Blue Life Insurance, an online aggregator and comparison site for life insurance. True Blue’s CEO commented: “In a lot of the phone calls to our agents, Kobe came up.” 

Whereas a personal story of loss such as Kobe Bryant’s can significantly affect numbers and statistics, the risk of COVID-19 may still feel distant and theoretical for many people. 

Or perhaps this crisis is just another reminder that the life insurance industry has not yet cracked the digital distribution challenge. Buying life insurance is not natural human behavior. In fact, from a behavioral science perspective, it is probably one of the hardest products to sell. We are drawn to personal, immediate and certain rewards – but the rewards of life insurance are for others, seem distant and often appear uncertain.

People need to be persuaded to buy life insurance, and the human-to-human approach remains the most effective. Even if we see an increase in online applications, it may not make up for losses incurred from sales teams’ inability to go out and sell. For example, Ping An in China has reported a hit to sales driven by a decline in face-to-face services.

An uncertain future

It may be that COVID-19 will eventually help drive demand for life insurance, but not quite yet. As lockdowns began and people were stuck at home, often juggling work and parental responsibilities, life may have simply become too busy to think about life insurance, especially as many came to grips with social distancing and other disruptive public health measures. We are still in the eye of the pandemic storm, and people have more immediate concerns than life insurance.

COVID-19 could create fertile ground for future sales opportunities. It has been suggested that younger generations, especially in developed markets, view life insurance as less necessary than previous generations did at the same age.  

See also: Pulse of Insurance Shopping During Crisis  

This may change in a world where illness or accident is no longer a distant threat and where we can clearly demonstrate the value of life insurance to people. Once the immediate COVID-19 fear has passed, insurers may find it easier to help consumers appreciate the “peace of mind” that life insurance brings. 

It is clearly too early to draw conclusions about how COVID-19 will change society and undoubtedly too early to be certain how it will affect demand for life insurance. However, at the moment the evidence suggests that the adage about ‘life insurance being sold, not bought’ still rings true. COVID-19 is hampering the intermediary sales channel more than at any time in living memory. For many developed markets, this merely highlights a problem expected to occur in the next few years anyway as the intermediary market continues to age and shrink. 

In recent years, the life insurance industry worldwide has made great strides in making life insurance easier to buy. The focus may now need to shift toward finding ways to make it easier to sell.