How insurers will serve personalized solutions across generations

By Samantha Chow

As we step into 2024 and consider the impact of what may be on the horizon, a more personal paradigm shift is on my mind – a trend that affects everyone. In 2021, one in 10 people worldwide were 65 or older. By 2050, the United Nations projects that this age segment will account for one in six people globally.

In the United States alone, $72.6 trillion in assets will likely be transferred to children and successors by 2045 as part of “the great wealth transfer.” In the UK, this generational wealth transfer will likely impact GBP 5.5 trillion (more than $6.8 trillion) over the next 30 years. This transfer of wealth will be highly concentrated, with more than $53 trillion (63%) originating from the baby boomer generation.

As someone who has spent their entire career in this industry, I foresee a significant impact of aging populations and intergenerational wealth transfers on the insurance industry and policyholders of all ages. Our own recent research found policyholders over the age of 65 own 40% of insurers’ assets under management, totaling $7.8 trillion for the 40 largest global life insurers – funds likely to transfer to beneficiaries by 2040.

The time is now for insurers to safeguard their assets, establish long-term relationships, and secure future business by actively supporting beneficiaries throughout the lifecycle of the policy, from purchase to claims.

Life insurers taking note with aging-well solutions

Did you know that families spend more than a year resolving post-death financial matters? Although life insurance payouts offer financial relief, there is a heightened demand for additional services to assist during this trying period. By supporting beneficiaries, the industry not only can enhance the claims experience, but also demonstrate a commitment to providing families with more than just financial assistance.

There is a strategic shift in recognizing the significance of beneficiaries in the insurance process. It gives me hope to see insurers strategically innovate by shifting their business models, form winning ecosystem partnerships, and take a 360-degree look at a policyholder needs. Insurers are actively engaging with them throughout the lifecycle by providing them access to policy details, making sure their personal information is always up to date, sharing relevant policy information, and offering personalizing services. Life insurers can also drive growth by creating comprehensive aging-well solutions while aligning with customers’ aspirations for long, healthy lives.

For example, in early 2023, Guardian Life SafeGuard360. This comprehensive product seamlessly combines whole life insurance, long-term care protection and disability income insurance within a single policy. It simplifies the purchasing process with guaranteed premiums, death benefits and cash value through a single digital application. As a result, it supports policyholders not only in death, but in life as well, if needed.

A new generation of policyholders is emerging

Although two-thirds of U.S. citizens say their lives have essentially returned to normal following the COVID-19 pandemic, a 2023 study by LIMRA and Life Happens indicates a record-high proportion of consumers (39%) who intend to purchase life insurance within the coming year. The report found that the intent to buy is even higher among millennials (50%) and Generation Z adults (44%).

As interest in life insurance grows, advanced technology is helping carriers redefine their role in policyholders’ lives. This shift extends beyond death benefits to coverage for college education, dependent care and retirement. Virtual health consultations, fitness club membership discounts and personalized financial planning are becoming integral to many life insurance solutions. Thanks to generative artificial intelligence (AI) algorithms, we can now analyze customer data to provide services at critical life stages.

More life insurers have prioritized value-added services and innovative customer solutions to support policyholders during their lives. For example, Federal Life teamed with Swiss Re and Reframe Financial to introduce Reframe Life Stage, which caught my eye. The team developed a hybrid digital-first policy offering long-term care benefits and digitally indexed universal life insurance with fast-response cash benefits. The partners aim to serve the evolving needs of Generation X and millennial employees squeezed between child and elderly care.

Partnerships and acquisitions set to drive wellness-as-a-service solutions

Given the events since the start of this decade, it should come as no surprise that policyholders are placing a premium on both physical and financial well-being. Forward-thinking life insurers are proactively weaving together coverage and wellness by establishing partnership and ecosystems and acquiring suitable service providers.

We are seeing a movement towards insurers adopting wellness-as-a-service to more deeply understand customer behaviors, engage frequently and offer personalized services likely to improve policyholders’ physical fitness, overall health and financial security. WaaS also helps insurers boost retention, reduce or extend claims, and increase the accuracy of risk assessment and pricing. In other words, robust wellness strategies and programs are a win-win for consumers and insurers.

The year ahead will see life insurers not merely adapting to change in 2024, but actively present in driving innovation. The convergence of aging-well solutions, innovative value-added services, and wellness-as-a-service prepare insurers to move beyond risk management and position themselves as comprehensive solution providers.

Samantha Chow is global leader for life, annuity and benefits sector with Capgemini. Contact her at [email protected].