Study: 4 in 10 consumers shop for life insurance online or using app

Life insurers, welcome to the 21st Century.

More than 4 in 10 consumers go online or use an app when shopping for life insurance, according to a new TransUnion report, a significant shift as most people still buy life insurance policies through an agent.

While the TransUnion survey aligns along with the industry trend toward digitalization across all segments, it also underscored that life insurers generally were slow to adopt technology innovation.

“Life insurance industry’s journey to digitalization has lagged behind other forms of insurance and financial services,” said Mark McElroy, executive vice president and head of TransUnion’s insurance business.

McElroy pointed to statistics from the Insurance Information Institute that show more than 65% of personal lines policies were sold direct in 2021, while only 6% of life policies were.

Carriers target digitalization

“However, we know carriers have devoted resources toward digitalization, including more streamlined quoting and underwriting processes,” he said. “These investments are starting to pay off, as our survey found 41% of consumers received a life quote online.

The increase is likely partly due to companies streamlining what previously was a cumbersome underwriting process, where applicants typically had to submit to blood draws, physical exams, and other in-person procedures to obtain a basic quote. More insurers now access data sources that include medical scores and credit-based scores that speed up underwriting and eliminates home and office visits or invasive testing.

“The industry has improved its ability to give quotes in a timelier manner, including via online quotes.” Mark McElroy, EVP TransUnion

“The industry has improved its ability to give quotes in a timelier manner, including via online quotes,” McElroy said. “Many carriers have told us they expanded the limits for accelerated underwriting programs, from previous caps of around $250k to, in some cases up, to $1 million.”

Not all consumers qualify for the accelerated underwriting process based on indications from their risk profile, McElroy said. “But when they do, it creates a much better buying experience.”

That’s good news for consumers already in the market as the survey found more than one-third of consumers do not have a life insurance policy. The top reason given was they don’t believe they need one.

“So, the industry continues to have an opportunity to better educate consumers on the need and benefits of having life insurance for financial protection for their families,” said McElroy.

91% willing to get quote online

Among commercial insurers, TransUnion’s survey showed that 91% of respondents would be willing to get a quote online, however, only 28% have actually done so. This represents a gap in offerings from commercial insurers and a huge opportunity for companies willing to invest in a more streamlined and automated process.

TransUnion surveyed more than 2,900 adults,18 years of age and older between October 20-28, 2022.

“Across the board, we are observing consumers increasingly looking for digital experiences when it comes to engaging with insurers,” said McElroy “Importantly, we’re seeing the life insurance industry making strides to meet consumer expectations.”

Doug Bailey is a journalist and freelance writer who lives outside of Boston. He can be reached at [email protected].

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Doug Bailey is a journalist and freelance writer who lives outside of Boston. He can be reached at [email protected].