In the time of COVID-19, we have been reminded just how precarious life can be and how crucial life insurance can be to protect against the unexpected.
A silver lining of the pandemic is that it has prompted families to take action on a number of financial obligations they had been putting off – like getting life insurance. In a survey conducted by the insurance industry group Life Happens, one in four people said the Coronavirus caused them to purchase life insurance for the first time.
Businesses were increasingly forced to rely on technology rather than personal interactions. As a result, consumers were able to get insurance quickly, easily, and more conveniently.
Recent studies show a decline in life insurance. Still, intent-to-purchase has never been higher.
Over the past decade, U.S. life insurance ownership has fallen 63% down to 54%, according to the 2020 Insurance Barometer Study. Despite this drop in life insurance ownership, plans to purchase it are at an all-time high, with 36% of Americans intending to buy insurance within the next year.
There have been many reasons as to why the decline in life insurance has occurred. Life Happens Barometer Study showed what people are often placing as a higher priority. Below is a list of expenses that have been prioritized over purchasing life insurance:
- paying for expenses such as WiFi, subscription services such as Netflix, and cell phones
- paying for recreational activities such as eating out, going to the movies, or shopping
- saving for vacations
Though Americans are aware of the importance of life insurance, they tend to prioritize other short-term expenses and fail to comprehend how affordable it can be.
Many people overestimate the cost of life insurance
According to Life Happens Survey, 44% of Millennials thought the cost of a term life insurance policy was more than $1,000. The cost of life insurance has been inflated by a belief system that has been misguided.
In spite of most consumers’ knowledge of how health and age affect life insurance costs, many are unaware of other factors that can affect how much they pay for coverage. One of the biggest myths around life insurance is that it’s expensive, but the majority of people overestimate the true cost of life insurance by 3x according to Life Happens Survey.
We have consistently seen consumers incorrectly believe life insurance is more expensive than it is, but now we are also seeing confusion about what determines the cost of life insurance. To clear up some confusion, here’s a breakdown of things that could impact your cost of life insurance.
- Lifestyle – Health and non-health
- Credit history
- Driving record
These are a few easy ways all Americans can lower the cost of their policies, despite the misperceptions about the cost and what factors determine the price of a life insurance policy. As life expectancy is calculated, life insurance companies consider health choices, including using tobacco, maintaining a healthy weight, and managing chronic conditions like diabetes.
Many people prefer to purchase their insurance directly online
There is more demand for online insurance purchases.
Life insurance is traditionally purchased in person through an agent or advisor. As people have become more used to using technology for everyday tasks and conducting more transactions online, in-person purchases have become less and less appealing.
Americans tend to shop for insurance online more than offline, with younger people more likely to use the Internet to shop. Consumers surveyed by LIMA indicated they had used social media to gather information about financial companies, topics, or advisors. 28% of millennials, 32% of Gen Xers, and 29% of baby boomers are happy to research and buy their policies online.
1 in 4 consumers is saying that they use it for this purpose, to collect information and find an advisor. Studies showed 80% of customers are willing to use digital channels to conduct transactions and perform tasks. This means there is a high percentage of potential customers are looking for your business online.
There are many ways to ensure you and your business are discoverable. Social media is a great way to gain attention along with an appealing landing page, and contact information. Insurance Technology like Finaeo can make your online presence easy to build and appealing to your potential customers.
Consumers have found it easier and faster to get insurance since the pandemic
Life insurance medical exams as part of the underwriting process were one of the biggest challenges insurers encountered during the pandemic.
Using data modeling, we can predict a policyholder’s life expectancy and get an accurate quote — this is called accelerated underwriting. Generally, since the pandemic, this method has been widely adopted as it is quicker, easier, and provides a more seamless experience.
Generally, accelerated underwriting can be as affordable as traditional underwriting with a medical examination. This means the process is not only just as affordable, but also efficient too. No more medical exams! Among the drawbacks of a no-exam accelerated underwriting, the policy is the coverage available. Although, since the pandemic, the standard limit of $1 million has gone up and has been predicted to continue to rise. Since accelerated underwriting has been deemed successful and accurate, it is safe to be on the lookout for increased limits on death benefits.
A growing number of companies began offering hybrid policies starting in 2020. As well as providing long-term care benefits, hybrid life insurance policies provide death benefits when the insured passes away. This kind of policy has peaked the interest of many due to the fact that it can be used if there is a living need or provides a death benefit if the policy isn’t used for living care.
Long-term care is one that is hard for people to see its use when it doesn’t cover an immediate need. The Urban Institute reports that only 11% of adults turning 65 today have long-term care insurance coverage that will help cover the cost of care, even though half of them will develop a disability serious enough to require daily assistance.
The worry about paying for long-term care coverage you’ll probably never need disappears with policies that include a long-term care benefit. The premiums on a hybrid policy are usually higher than those on a stand-alone plan. It is important to use discretion when deciding whether to pursue a hybrid policy, but it is something worth exploring.
Consumer perceptions of life insurance have been impacted by COVID-19
The pandemic has had a significant impact on the life insurance industry. People are actively seeking advisors and more information about obtaining life insurance. In light of the pandemic, 6 in 10 consumers said they had a heightened awareness about the value of life insurance. That also means 6 in 10 people weren’t aware of the benefits life insurance could have had on their lives during this unfortunate time.
Pandemics are not something people expect to happen in their lifetime, just as people have life insurance not expecting to need it at some point. However, we prepare in case we are unexpectedly in need. 31% of people said they were more likely to buy coverage in 2021 due to the pandemic.
A simple underwriting system increases the likelihood of Americans purchasing life insurance by nearly half (48%). Thank you for accelerated underwriting! Hopefully, by increasing awareness of life insurance, simplifying processes, improving online experiences, and eliminating exams, we can report a higher number of people who are covered with peace of mind.
Advances in technology have driven the health insurance market to new heights
The global health insurance market size is projected to reach 108.46 billion by 2026. New technologies will change how risk and pricing are calculated for insurance. Right now, insurance is generally reactive, resolving damage as it occurs. The system works this way because it is based on predetermined risk profiles. Technology is completely changing the approach of risk factors by analyzing thousands of records in seconds. This provides a more flexible approach and boosts interest in health insurance for the future.
Investments in the Insurtech industry have been increasing year on year since 2013. This is largely due to the benefits of insurance technology. Technology helps companies collect and analyze data more efficiently. The evolution of new collaborations could be fuelled by the growing interest of traditional insurance companies.
One of the biggest advantages to utilizing Insurtech companies is the automation processes. According to a study, automating claims could reduce costs for insurers by 30%. The collaboration between Insuretech and the traditional health industry could benefit not only the companies but any consumers as well. Spending on AI technology and software in the insurance industry is forecast to reach 571 million people by the end of 2021 according to this study.
Finaeo is an insurance technology company that brings prospect-to-policy through an online platform bridging the gap between the digital fabric to connect and power life and health insurance, globally. Automation processes can increase ROI by up to 200%. Finaeo provides a large marketplace with multiple carriers with over 150 products to meet the needs of every client.
Earlier, we discussed how an online presence is important for a successful business. Finaeo makes it easy by providing a customizable landing page to showcase information about your services and promote your offerings. No need to be tech-savvy. Finaeo provides demonstrations for onboarding new advisors to alleviate any and all questions. Finaeo provides a seamless white-glove experience, customized quotes which you can compare side-by-side, and personalized to fit your business design.