Tag Archives: life insurance

Why to Provide Life Insurance for Workers

If all labor has dignity, employers must recognize that what furthers the soul does not feed the body, that spiritual recompense is not a dispensation from the laws governing labor: that worker retention is every employer’s job; that this job is just; that just compensation is an achievable end through the available means of life insurance. If employers want assurances from workers, if employers want to ensure workers do not leave their jobs, life insurance is a solution for management and labor. 

Life insurance levels the scales of competition, allowing employers to retain talent without bankrupting themselves in the process. Because of the flexibility that life insurance offers, employers can write and underwriters can issue policies that appeal to workers. The benefits are as diverse as any policy of workplace diversity, addressing the needs of specific workers—exceeding the needs of individual workers—by honoring workers through a combination of words and actions.

If, for example, an employer wants to introduce a deferred compensation plan and retain workers, awarding tax-free bonuses that mature within a set timeframe, life insurance expedites this plan. Life insurance makes this plan possible.

To make this plan probable, to increase the probability that employers will introduce such a plan—that takes communication. The onus is on insurers to tell employers the facts about life insurance. The onus is not expensive, though any such expense is defensible, because the price of success is responsibility. The responsibility to inform is a price insurers should acknowledge. The responsibility to lead is a price insurers should accept.

Communication works to answer the concerns of employers, whose questions include: Why invest in recruiting and training workers when someone else can profit from this investment? Why hire anyone when there is no way to stop everyone from joining another employer?

Both questions speak to matters of risk. Both questions speak to that which is containable but unavoidable. Both questions are reducible to a single question: What should employers do about uncertainty? In so many words, deal with it.

If employers want to lower risk, they should present workers with the certainty life insurance provides. If insurers want to expand their influence, they should present employers with the clarity workers deserve. If workers want to maximize their worth, they should be party to this presentation.

See also: Behavioral Science and Life Insurance

Because work is fluid and workers are mobile, the nature of work is as dynamic as the seasons and as unpredictable as the weather. What is predictable is what a life insurance policy does, when it takes effect, how much it pays and to whom it applies.

What is also predictable is the need among employers to retain their most valuable workers.

By this standard, the face value of a life insurance policy is not the total value of a life insurance policy. Not when a policy yields dividends by boosting loyalty and improving morale. 

By any standard, life insurance works to the benefit of employers and workers.

Foreclosing Danger by Ending Foreclosures

Every real estate closing is a beginning, an exchange of deeds and a chance to do good works — if real estate agents and insurers come together. If both groups unite on behalf of homeowners, offering life insurance with mortgage protection to homeowners, the result is a boon for all homeowners. 

The proof is not only on paper, in the papers that insurers issue, but in the peace of mind that homeowners enjoy: knowing that loss of property will not follow loss of life, that devastation among the living will not follow burial of the dead, that foreclosure will not follow a tragedy without closure. 

We can eliminate the fear of foreclosure by deputizing real estate agents, making them advocates of life insurance or insurance agents outright. Either way, everyone wins. Real estate agents earn additional income, insurers underwrite additional policies and homeowners receive additional protection. No one wins, however, when no one communicates. 

Failure to communicate is the cause of our problem. 

We have it in our power to fix this problem: to correct it by working with real estate agents. But before we can get real estate agents to talk to homeowners, we must set our own house in order. 

We must recognize that practice is a prerequisite to preaching, just as attentiveness — people’s willingness to listen to a speaker — is a perquisite of having a calling, of answering the call to spread the word. We must do as we say, and have something to say, replacing silence with words of soundness; converting a stutter of hesitancy into a score of certainty; turning applause into action. We must give real estate agents reason to believe.

Belief does not require faith, not when evidence will suffice. 

That insurers have a wealth of evidence, that the evidence is translatable, that insurers have a duty to translate the evidence into that which is intelligible to real estate agents and homeowners, that insurers know how to translate the evidence is reason to believe in what the evidence proves.

See also: Life Insurance With Mortgage Protection

The proof is in the value real estate agents can provide, in addition to the credibility they possess and the clients they advise. The proof is in the freedom — the freedoms — real estate agents and insurers can deliver. The proof is in freedom from fear of foreclosure. The proof is in freedom from want, allowing families to have the financial strength to live. The proof is in the freedom to recover, giving homeowners the added value of time. 

Time to grieve permits time to rest; time to heal contains time to learn; time to think begets time to do.

Preaching the value of time is a virtue. 

Adopting this value guarantees continuity; applying this guarantee secures the value of a family’s greatest asset; providing this security is a great and invaluable act of goodness.

Real estate agents and insurers share these values.

Homeowners deserve the protection these values afford, which is the protection they welcome; which is the protection they shall receive.

Behavioral Science and Life Insurance

Ask yourself these simple questions: Do I walk/run at least 5 km (3 miles) a day? Do I drive or take public transport everywhere I need to go? Do I drink more water than alcohol when having dinner at a restaurant with friends? At my lunch break, do I take 45 minutes to enjoy a healthy meal or eat fast food?

While some of us may have adopted very healthy lifestyles, many more have not. But what if technology and behavioral science could work together to help all of us live healthier, longer lives? The impact could be transformative. For example, the World Health Organization (WHO) found that the proportion of total global deaths due to chronic lifestyle diseases is expected to increase to 70% of the global burden of disease by 2030, up from 56% in 2015. A basic understanding of behavioral science, combined with advances in wearable and personalized technologies, could begin to make a tangible difference in risk assessment.

There are reasons, rooted in human psychology and behavior, that cause many of us to fail to act as we know we should. Cognitive biases, and the pressures of modern life, can defeat even the best intentions. For example, if you prefer red wine over water at dinner, you may fall into the “present bias” trap, or an aversion to delayed gratification in favor of an immediate reward. In other words, many of us would seize the prospect of a sip of a good cabernet over a less tangible future gain, such as healthier liver function.

Many of us are at pains to set objectives – avoiding an extra serving of cheesecake or sticking to the sparkling water over the pint of beer — but, despite the best plans, personal trainers and advice of friends, we fall into old habits. Similarly, many of us fail to follow through on New Year’s resolutions, a phenomenon behavioral scientists call the “intention-behavioral gap.” Often, our “doing-selves” do not follow the intentions of our “planning-selves.” We know we should take a real break to have a proper, healthy lunch but still end up ordering a snack.

Is there a way to help people achieve goals set by our “planning-selves?” Can insurers act to help people by designing value propositions that promote healthier behaviors? The answer may lie, in part, in whether carriers can fully grasp human biases and behaviors and harness technologies to use this knowledge to improve health.

Understanding Motivation

First, consider how people make decisions. In his book, “Thinking Fast and Slow,” famed behavioral scientist Daniel Kahneman argues that the human brain has two different operating systems: System 1 and System 2. “System 1” is fast, instinctive and emotional. “System 2” is slower, more deliberative and more logical. When we think of human decision making, we often assume that people are rational, calculating decision-makers (System 2) and therefore think that providing people with facts will change behavior.

Reality is a bit more complex. Matthew Battersby, chief behavioral scientist at RGA, often uses smoking as an example: “Lots of money has been spent for many years trying to inform and change the minds of smokers about the dangers and risks associated with the activity,” he says. “Many smokers know these risks yet still don’t change their behavior, and those who do change aren’t necessarily influenced simply by information. Instead, they may have been persuaded to stop smoking by various other factors, such as changes in the environment (e.g., smoke-free workplaces) and motivational aspects (e.g., it’s much harder to smoke when lots of your friends are no longer smoking).”

Even when consumers are well-informed about a health danger, some may continue destructive behaviors. Information alone — or System 2 thinking — is not enough. System 1 thinking may explain why; many smokers make instinctual, and perhaps irrational, decisions to continue the habit.

Most of us respond to environmental and social cues in a way that requires very little conscious engagement. Health decisions may be rational, but actual health behavior is much less so and more often driven by often unconscious, cognitive processes. Memory is also imperfect, and attention spans are limited, making fully fact-based decision-making even more difficult.

So, rather than bombarding a consumer with wellness data to encourage healthier behaviors, insurers can, instead, influence behavior by using use tools/mechanisms that target human System 1 responses (fast, impulsive), appealing to psychology and not rationality. This can take the form of reinforcement or reminders that focus attention on personal health goals and rewards or even celebratory messages when individuals reach health milestones, such as a certain step count.

See also: Life Insurance With Mortgage Protection

Applying Motivational Techniques

However, understanding human motivation is only half of the story. Success will require a means to reach the right customer, at the right time, with these messages. Wearable technologies offer a compelling means to help more people adopt healthier behavior, but they also present limits.

Why are wearables so promising? Consider the enormous popularity of these portable, data-rich devices. CNN Business reports that the Apple Watch sold 31 million units worldwide, while all Swiss watch brands combined sold 21 million units, according to research from consulting firm Strategy Analytics. Market researchers have found that 81% of wearable device owners feel that they have made an improvement in their overall health/lifestyles by using these devices.

So, the adoption of wearables technologies represents one step forward for the watch trade and one giant leap for the life/health insurance industry, right? Not necessarily. Many consumers appear to tire of these devices, and levels of comfort with health data-sharing can vary.

The COM-B model in behavioral science can help explain why. The model states that human behavior (B) consists of three components: capability (C), opportunity (O) and motivation (M). Capability refers to the belief that we are psychologically and physically able to change or improve a behavior. Opportunity refers to a social or physical opportunity to make a change (or reduce the environmental triggers that spurred negative behavior). Motivation is linked to the desire to carry out a certain behavior over competing behaviors.

Capability (I can cycle) and opportunity (cycling near home is safe) are obvious, but what about motivation? How do insurers get it, and how can insurers provide it?

Mastering Motivation

All of us have faced situations in which we must motivate someone to make a change, whether that person is a child, a coworker or a stranger. We use persuasive techniques that draw on behavioral science, often unknowingly. For example, it is common to promise a reward: Do X thing and receive Y benefit.

For organizations aiming to make us healthier and help us live longer, rewards make sense. But what rewards work? Behavioral science offers clues.

  • Frequent feedback: We are more likely to achieve a goal if we receive frequent and qualitative feedback, such as push notifications that congratulate users or explain areas of improvement.
  • Scarcity: Options or rewards that are perceived to be scarce can seem more attractive. For example, the idea of a “last chance” to win points can prompt someone using a wellness app to walk an extra 1,500 steps.
  • Commitment contracts: We are more likely to achieve goals if we have committed to them, so encouraging customers to commit to goals through contracts leads to greater success.
  • Messenger: Our reaction to information and messages depends greatly on the credibility of the messengers. For example, a recommended exercise regimen from a famous gym coach will carry greater weight than a suggested regimen from a friend.
  • Salience: Our attention is drawn to what is novel and prominent — that’s why “Walk Now” push notifications in health apps may increase our activity rates.
  • Relative ranking: We tend to do better if we can compare our performance with others. Competition yields results.
  • Utility: We act in ways that prioritize advantages, minimize losses and maximize perceived value. That’s why health programs and apps that allow participants to clearly evaluate value, such as weight loss or health improvement, can drive results.
  • Ease: We are more likely to change our behavior if we perceive that change to be easy. Programs that allow for incremental improvement, such as tips on how to walk 150 steps more per day, can yield greater participation.

Looking Forward

Insurance carriers are often perceived to have fewer customer interactions compared with other financial services providers, like banks. However, the ability to engage through wearables could create more active relationships that benefit both the consumer and the insurer.

The popularity of connected devices offers an opportunity to support insurers in offering services that can adapt to consumer behavior and support customers in managing personal risk and improving health. Insurance companies can move from being perceived as simply “providers of policies that protect against risks” to being seen as guardians of health and longevity.

Life Insurance With Mortgage Protection

From a downpour of tears to a deluge of debt, the loss of a loved one can drown a family in a sea of emotions and a storm of expenses. The loss can flood the last refuge of sanctity and shelter, leaving a house underwater and a family homeless; leaving a widow without a lifeline, a widower without a line—a path—to safety and children without the means to pursue any number of life opportunities. Given these dangers, given the specific danger of losing a house to foreclosure, life insurance has the power to protect spouses and families from further suffering. 

Life insurance with mortgage protection allows families to shelter at home—to stay in their homes—rather than sheltering in place. Rather than leaving families seeking temporary shelter, or evacuating to emergency shelters, life insurance with mortgage protection not only diverts the course of a storm but dissipates it altogether. But families must first buy this protection, which means insurers must explain why families—particularly young families—need life insurance with mortgage protection. 

The explanation is a matter of basic math, where loss of life equals loss of income. This loss expands as bills accumulate and interest accrues, turning survivors of the hardest loss into nomads in a permanent state of hardship, turning the worst hard time into hard times without end, turning all time into the horrors of the end time.

This scenario is no exaggeration, as too many live to survive while too few have the protection to live well. For families to avoid this scenario requires the insurance industry to speak to the urgency of the issue. 

Emphasizing this issue, repeating the emphasis on having life insurance with mortgage protection, is a duty the insurance industry must honor. Anything less is a disservice to those who need to know the truth, that this protection is indispensable to honoring the terms of a mortgage without mortgaging the strength or savings of the good.

The good include families in pain, whose sorrow insurers can assuage through policies—life insurance policies—that are palliatives of a financial sort. That these palliatives may be curatives, that these treatments may have restorative properties, that among these properties are the protection of property and a source of monthly income—these goods are just and righteous.

Insurers must, however, promote this message.

See also: Simplicity, Magic in Life Insurance Sales

If insurers think people think of themselves as prospects, and consumers treat themselves as contacts, if insurers think lack of contact corresponds to lack of interest, that consumers have no interest in life insurance with mortgage protection, insurers need to rethink everything.

The insurance industry has a chance to broadcast a digital PSA, a public service announcement for online media, about the benefits of life insurance with mortgage protection.

Every post that highlights this message, every email that encapsulates this message, every message about this message advances a cause for the good. 

Every advancement due to this message is an act of goodness.

In writing this message, insurers have the potential to underwrite more life insurance policies with mortgage protection.

Could COVID Help Life Insurance?

With vaccination programs rolling out across the globe, and cases beginning to fall exponentially, there is finally hope that the worst of COVID-19 may be drawing to a close. But while this may signal the imminent end of the pandemic itself, it is surely only the end of the beginning with regard to its long-term impact. In almost every area of life, from the political through to the economic, the transformative consequences will be felt for some time.

The world of life insurance is no exception. But while the impact of COVID-19 on many industries remains uncertain, to say the least, the big picture for the life insurance industry is a lot clearer.

Prior to the pandemic, the so-called generation gap when it comes to life insurance was a constant point of consternation for the industry. Back in the mid-20th century, life insurance policies were as common and ubiquitous as mortgages or car ownership – a standard rite of passage for younger households embarking on their journey into adulthood. This culture has almost entirely evaporated. Younger cohorts, especially the millennial generation – under new financial constraints and not necessarily catered to by traditional sales channels – had little awareness of or inclination to take out life insurance policies, and sales withered. 

Remarkably, though, the last year and a half has seen a dramatic reversal of this long-term trend. Despite a period of volatility around March and April 2020, coinciding with the initial swath of lockdowns, the MIB Life Index ended 2020 up 4% year-on-year, the highest annual growth rate on record. What’s more, this growth was driven predominantly by younger cohorts, with activity increasing in the 0-59 age range rather than 60+, in stark contrast to recent years, where any growth has been almost entirely driven by the latter group. Recent sentiment research underlines this turnaround; members of Generation Z are now significantly more likely to increase life insurance spending than other generations, with millennials following close behind.

Intriguingly, this shift started slightly before the pandemic came to America’s shores, in January 2020. Kobe Bryant’s death from a helicopter accident appears to have triggered a sharp uptick in demand for financial protection in the case of unpredictable tragedy. Then the pandemic understandably heightened awareness of mortality in generations previously unaccustomed to such perspectives. The economic hit also contributed – with many facing the prospect of losing employer group coverage.

This uptick of interest alone, however, will not be enough to bridge the generation gap in life insurance for the long haul. Consumer demand for life insurance has only ever been one piece in a larger puzzle. For some time now, the industry has been aware that re-engaging with younger market segments, while also continuing to serve its traditional customer base efficiently, will require a wholesale adaptation to more advanced technologies and digital forms of distribution. Technology and digitization – and taking full advantage of the new opportunities and business models they enable – will be key to taking long-term advantage of this renewed interest in life insurance.

It’s good news, then, that on the insurer side the pandemic has dramatically accelerated existing trends. As with many other industries, the chilling effect of lockdowns and other emergency measures on physical, face-to-face interactions has forced life insurers to dive headfirst into technology-driven approaches in underwriting and distribution methods. The transition to digital marketing, digital distribution and automated underwriting and digital policy insurance leveraging new forms of data was already inevitable before anyone had heard of COVID-19. But from early 2020, what was once a priority for future growth has become an immediate non-negotiable. New approaches to underwriting, business processes and distribution models made commercially viable by automation technology are higher up the insurance industry’s agenda than ever.

See also: 6 Megatrends Shaping Life Insurance

While nearly half of agents have reported a collapse in in-person business since the onset of the pandemic, life insurance companies across the industry have leapt headfirst into new digital technologies, tools and channels to compensate for the sharp drop in traditional methods of doing business. For example, embracing new technologies enabling real-time access to medical records and other forms of advanced data allow insurers to underwrite policies accurately even without face-to-face assessments or interactions. These advancements in the underwriting and distribution process are pivotal in future-proofing the industry, and in creating massive efficiencies at the same time.

The life insurance industry has always, by nature, been cautious in embracing technological change. But the pandemic has entirely removed the luxury of time from the equation. New technologies, new data sources and new approaches to automated underwriting that may have spent long periods in planning and testing are already live and gathering momentum. A transition to digital technology that prior to the pandemic could have spanned the next decade will now likely be complete in just a year or two.

This is no bad thing. If the industry is to take advantage of the new interest in life insurance among the young, as well as continue to service its traditional customer base in a more efficient and sustainable way, the sooner the better. The sector was already facing a challenge of modernization; COVID-19 is unlikely to change the future shape of life insurance.

What it does mean, though, is that the future is going to be here much earlier than expected. For those carriers keen to acquire first-mover advantage, the window of opportunity just became even narrower. The time to embrace new technology is now.