Life insurance carriers are keenly aware of the “protection gap” and the millions of Americans that need life insurance coverage to help protect their families and loved ones. Carriers recognize the potential of serving the next generation of consumers and that embracing modern technology solutions will help facilitate market expansion and increased profitability.
Yet, several challenges prevent carriers from doing so, including inflexible legacy systems, labor-intensive product and sales experiences, and perceived risks of disrupting decades-old ways of doing business.
The reality is that digital-native Millennials and Gen Zers have already entered the major life stages that create a need for coverage. As a result, it’s time for carriers to innovate rapidly to meet the buying preferences of these generations. Here’s how.
Embrace end-to-end digital experiences
These generations grew up with smartphones, and their desire for instant-everything will not diminish. This expectation certainly carries over into tasks related to their financial security, including creating a will or securing life insurance coverage. To meet this expectation and secure customers, carriers must embrace sophisticated life insurance technology that powers streamlined end-to-end digital experiences without sacrificing affordability.
Design new products
While, on the surface, it may seem more straightforward to take an existing product and copy it into a digital world, this approach can often result in a disappointing experience for both carriers and customers. Not only do traditional products involve complexity not well-suited out of the box for the digital experience, but historical approaches for determining risk on existing products also may not translate well into the digital space. For example, application questions that ask about several medical conditions in one question may be better to split into multiple questions or streamlined with reflexive logic.
The best approach is to design from scratch and to build with the customer in mind. As an example, if the target customers are Millennials and Gen Zers who need a simple term life insurance solution, you may want to focus on instant decision underwriting and lower face amounts to meet the most basic needs. This approach could mean that many historical riders and features are actually not necessary. It likely also means that the tools used in underwriting need to focus on information that is available instantly as opposed to traditional methods that could take weeks or even months.
Marry digital with advisor expertise
Let’s talk about the elephant in the room: many carriers are leery of disrupting their primary distribution — agents. Carriers may fear that embracing digital solutions will be seen as a threat to agent-based distribution. On the contrary, when done correctly, embracing end-to-end digital solutions enables agents to focus on what they do best: educating clients and building trust.
Investing in digital innovation helps advisors save time with less paperwork and case management, removes barriers to collecting information and keeping track of policies, and ultimately, results in a better customer experience.
Modern life insurance platforms enable constant learning, iteration, and innovation for agent-facing items. By embracing modern tech, carriers can constantly launch and test new agent tools that support onboarding, new case management, and managing in-force blocks of business.
Recognize the long-term potential
Currently, term life insurance will likely be the best fit for most young millennials and GenZ. Securing these customers today can help to build loyalty and trust so that, down the road when they have more robust financial needs, you already have a relationship with them and can be there to meet their needs.
Innovation can be tricky, but it does not have to be complicated with the right mindset and partners.
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Jeremy Bill is Chief Insurance Officer (CIO) for digital life insurance company Bestow. As CIO, Jeremy leads innovation for Bestow's product suite, designing new products that reach more customers. Originally published on ThinkAdvisor.
