Taking Friction Out Of The Life Insurance Buying Experience

Life insurance is generally sold and not bought. How can insurers change that?

By Susan Rupe

Sandeep Kharidhi thought he had discovered a good thing when his credit card provider advertised a deal giving him $10 back on a $20 purchase with a particular gasoline chain.

But the deal turned out to be more complicated than he anticipated. He had to log into his credit card account, download the gas company’s app, and enter his credit card details on the app. And that wasn’t all – when he went to the gas station, there was no app reader available at the pump and the employees at the gas station had no knowledge of the deal.

“Here we had two leading consumer brands that took a situation that could have been easily preventable and made it more complicated,” he said. “Why didn’t they test this to see how they could streamline the process from nine different steps down to two steps?”

Kharidhi is general manager, data and analytics platforms, for Deluxe Corp. He told a panel at Tuesday’s Society for Insurance Research annual convention that his gas purchase experience is similar to the complications consumers often face when purchasing life insurance.

“The life insurance buying process is still fraught with friction,” he said. He pointed to recent LIMRA research that revealed 48% of consumers who don’t have life insurance said they would be more likely to purchase it with simplified underwriting and 55% said they liked the idea of purchasing life insurance without having to undergo a medical examination.

Fill The Need

“When I’m aware I have a need for coverage, I should be able to go online and fill that need immediately,” said Adam Erlebacher, cofounder and CEO of Fabric, an online platform offering consumers a place to buy term life insurance from their phones. Fabric also offers services such as the ability to write a will from the phone, a digital vault that stores their financial account information, and emergency savings and college savings accounts.

Fabric partners with Vantis Life, a Penn Mutual subsidiary, to provide the life insurance, and has licensed agents available to chat online with consumers who have questions or need help.

The three keys to delivering exceptional customer experience, Erlebacher said, are technology, process and people.

Technology – It’s not easy to build the customer experience online unless you have the technology infrastructure to support it, Erlebacher said. “You need to start with a clean page or a new page and build that infrastructure from the ground up.”

Process - Most carriers have seen themselves more as manufacturers of product, Erlebacher said, and are addressing consumers through other channels. “A lot of carriers have lost touch with what consumers are looking for,” he said. “Products are becoming more complicated, so you need a more mediated process to get consumers to understand the product.”

People – Erlebacher said the people who join companies such as Fabric are “people who want to make things and build them and move very quickly.” But many carriers are challenged because it’s not easy to attract that kind of talent and difficult to create that kind of business culture, he said.

Timing Is Everything

Timing is everything when it comes to improving the customer experience, said Jen Linton, founder and CEO of Fenris Digital, which provides application programming interfaces that monitor life events and data on 255 million individual adults and 130 million households.

“We identify the right person at the right time to offer the right product in the right way,” she said.

Every month, about 5% of policyholders experience a significant life changing event, such as a move, new baby or change in marital status, she said. In these events, policyholders are anywhere from 2% to 14% more likely to purchase a product.

“The key is to tune into your policyholders moments that matter with relevant and timely messaging and offers, or risk losing out to competitors that will,” she said.

Susan Rupe is managing editor for InsuranceNewsNet. She formerly served as communications director for an insurance agents' association and was an award-winning newspaper reporter and editor. Contact her at [email protected]. Follow her on Twitter @INNsusan.