Seeking to appeal to Generation X and millennials who value speed and convenience, Lincoln Financial has introduced a term life policy that aims for approval in as little as 20 days. That's half the time it takes to underwrite traditional term life coverage, the company said.
The company’s TermAccel — short for term accelerated — offers face amounts from $100,000 to $500,000 with terms of 15, 20 and 30 years. Issue ages range from 18 to 50 years old.
The traditional, fully underwritten review of a life insurance policy can run as long as 45 days between the time an agent submits the application to the time the policy is issued. TermAccel aims to cut that to an average of 20 to 22 days, a Lincoln executive said.
“It’s a whole new capability for Lincoln,” said Heather Milligan, senior vice president of underwriting and new business with Lincoln Financial. “We’re making the advisors and the client experience as simple possible.”
Lincoln spent the past year piloting TermAccel with a handful of agents and agencies. The carrier rolled out the product to other distributors last month, executives said. TermAccel joins the company's LifeElements family of fully underwritten term products.
Term life sales represent a low-margin business for agents, so selling more policies helps them generate more income. But the experience of buying term life insurance is changing as internet-based retailers exert more influence on consumer preferences and buying habits.
In offering to accelerate the issuing of term coverage, Lincoln is responding to consumer research indicating how best to reach younger buyers. The carrier also is responding to agents who have asked for new products to fit the needs of people starting out or of young families, Lincoln managers said.
“The industry as a whole is coming under pressure from the consumer and the expectations of that consumer, Andrew Bucklee, senior vice president and head of insurance solutions distribution with Lincoln Financial Distributors, said in a conference call.
“We’re being ‘Uber-ed’ and ‘Amazon-ed,’” he said.
During the past 12 months of the pilot program, applications that did not require medical lab work were issued in as little as 48 hours, Milligan said.
Major insurers have been rolling out faster term life underwriting processes over the past three or four years. Some industry experts have even gone so far as to predict that in the future, the only way to buy term will be online.
Sales Stagnant, but Room for Growth
Bucklee said insurers in the future will have to create an experience that younger buyers are familiar with. That experience is based on speed, simplicity and convenience — which life insurers aren’t especially known for.
Independent industry consultants recognize the effect of internet-based retailers on the buying habits of the younger consumers. These experts point out that people in their 20s and 30s simply will not do business with organizations that can’t deliver products within days or even hours of placing an order.
A long period of low interest rates also has weighed heavily on life insurance sales, even when surveys indicate consumers recognize the protection value of life insurance products and industry experts say there’s particular room for growth in the middle market.
Term life sales last year rose 2 percent compared to 2014, underperforming sales in the overall life market, which rose 6 percent last year compared to 2014, according to LIMRA data.
Sales growth projections for term life over the next two years expected to be tepid at best, LIMRA also said.
At the same time, term life insurance has plenty of room to grow.
Surveys find many families in the U.S. are uninsured or underinsured for life insurance, even as people indicate they understand the need for the protection.
Only 60 percent of Americans report owning some sort of individual or group life insurance product and 34 percent said they are at least somewhat likely to purchase life insurance in the next year. That's according to the 2016 Insurance Barometer Study issued by LIMRA earlier this year.
Faster turnaround times represent only some of the strategies with which insurers are experimenting in order to boost sales.
Over the past two or three years, major insurers have experimented with adding living benefit riders to term life products, lowering premiums in some markets, trimming death benefit amounts and cutting the time from submission to approval.
InsuranceNewsNet Senior Writer Cyril Tuohy has covered the financial services industry for more than 15 years. Cyril may be reached at firstname.lastname@example.org.
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