Need to Resuscitate: The Life Insurance Industry and Its Future

Need to Resuscitate: The Life Insurance Industry and Its Future

The life insurance business is under stress today.

Policy ownership is down, historically low, yet events are spurring a reassessment among customers, and their actions – particularly those of the younger cohort – reveal trends for the future.

The idea is simple, yet recall the old bit about dictionaries: if you want to write anything, the words are all there – just get them in the right order. Clients today want a broader package than traditional: advice on longevity, healthy living, fruitful investment to fund enjoyment of those extra days. Digital is king: the online experience must be seamless, sweat-free, all tied to the cleverest gadgets. This is the insurance business’s lode star, its model for future prosperity and growth.

So we have our destination, yet no one has yet drawn a map. In a very real sense, we’re all on our own.

I have an old girlfriend – we were engaged in kindergarten, I mean – and we’re still in touch. She carries an air of the gothic and lives in a quirky old mansion, so common in Concord: rambling, full of odd chills, blind turns on the stairs, and women like Claudia, with their tales.

Before retiring, Claudia was a nurse. She started in emergency and her stories are not for these pages. Maybe one day I will share her narrative of the motorcyclist rolled in on a gurney with a suspension spring twisted into his head. I heard this every Christmas, for years. Is there a draft in here?

Surfeited with shock, Claudia switched to elderly care, where she learned this tidbit: rich people are healthier than the poor. While the obvious is present, something else accrues, she said: it isn’t just money and all that it buys, it’s a matter of access to information. How to eat healthy, the necessity of an active lifestyle, links between body and mind – as a rule, the happiest are healthiest. A holistic approach (we’ll come back to this soon) is what makes life bright, said Claudia, dropping her black veil for a time.

The wealthy do have a flaw, or rather a vulnerability. They work to excess. Dreams are put off, perhaps until wondrous retirement. Don’t wait, they’d tell her from sickbeds – live now, while you can. The future is unknowable, says Claudia from her dark tower, but the insurance men soon add: that doesn’t mean you can’t plan to greet it.

This gets me thinking. Life insurance, our endeavor, can be slightly off-putting: it’s pedestrian, yet hints at the eternal. An appealing contradiction, dark but liberating, this heralding our own deaths. Well, I like it. You’ve got to go, why not cover the tab? Nothing macabre here, folks. And we wonder why clients are so reticent.

The modern life product hails from the 18th century. While the insurance game is still alive, these are hardly our halcyon days. Decades ago, life insurance was far more widely held. The downward trend is worrisome and a turning point seems near – and perhaps it is here, brought on by computers and a virus.

In the late 1920s, just a step from Crash and Depression, some 120 million people lived in the US. I relate with amazement, finding it hard to fathom: the same number of insurance policies were owned by the populace. How? Were children buying life plans with their milk money?

Not quite. Rather, it was a time sorely lacking in services and safety nets. Some workers had pensions, but certainly not all. Those were dangerous times, too. I heard ghastly fables, of accidents, fire and tragedy, from family and others – those who were there and had remembered. I was born at a good time, I think: life seemed much safer, yet there stood the oldsters, reminding us all of its darkness. It’s not something to ever forget.

It was hard for them. Lose a limb and you couldn’t work; lose your life and the children might starve. Yet that’s how it was, so – top of the list – they bought life insurance: at least enough coverage to pay for the coffin. It made one’s skin creep, this morbid recounting, yet for the insurance industry, those were the happiest times.

No, we’re not ghouls, and we don’t want people fretful or vulnerable. How far fall the mighty, our industry, but it’s the customers who face the worst threat. Over a century, life insurance ownership has dipped dramatically. Some numbers: by the 1970s, 90% of households still owned life policies. Nowadays, just 59% have life insurance, and half of holders are underinsured, according to LIMRA data.

With our bright sun eclipsed by pandemic – stubbornly unkillable as the mythic undead (it only seems that way, thank Heavens) – we lament the trend and seek to reverse it. Dark shadows are cast, yet we know the future holds promise, as always, and the pandemic itself serves as driver.

Young working people, chronically uninsured, now see the benefits of insurance. They wear many stamps, these young folks – Millennials, Gen Z – a bad salesman’s patter that clouds individuality. Yet attend any seminar, virtual or otherwise, and this is the jargon you’ll hear. Whatever their classification, they are our audience and the industry’s future. After all, they have the longest way to go.

They know that life protection is vital now: 79% of these ‘groups’ said so in a poll conducted by Majesco. Meanwhile, just 60% of Gen-X and Boomers (tail-end charley, that’s me) think life policies are important. Why would the older audience be so sanguine? We’ve had more time to build portfolios, I guess, making insurance seem less crucial. Wrong – wrong! Learn from the young, why don’t we?

The young cohort likes shopping online; this no one disputes. Last January, as annus Covidius dawned, Forbes wrote that the most popular online life insurance apps, unsurprisingly, were those with the quickest interfaces. Agent-linked insurance sales are down, hard, while the online business is booming. I don’t think anyone needs convincing: this is the trend, in barest form.

Let my anecdotal surveillance add color: young customers are learning to sniff out the brimstone, the nonsense dreamt up by committees. They look for rich content from trustworthy custodians, human contact as needed, and welcome cross-selling into relatable areas – healthy living, for one. Insurance raises the specter of death, so they welcome ways to delay it. And they want it all personalized via innumerable factors – even their genomes need accounting.

My own experience, testing robo-insurance interfaces and living life in our phone-tree world, suggests digital interfaces are quicker than humans, but some problems require a living brain to resolve. Personal service, particularly as people age and their needs get complex, requires a human touch. I feel a hybrid industry coming on.

Somehow, young people have picked up a notion from the 1970s, a time fondly recalled if I erase bellbottoms and disco: holistic. This wonderful idea had just about died, though it is sometimes clumsily misapplied. A life policy’s value as a hedge against tragedy, or normal human expiry, is obvious. But as hinted, it hints at health, right living and lifestyle, just now being openly addressed. At last, the insurance business is encountering the New Age.

Insurers embracing the future’s infinite pathways should examine ‘holistic’. The apps and techniques to support healthy diets, active lifestyles and whatever else the clients demand are all in place. New ideas will spawn as momentum picks up and our agencies will need to invest. Right now, it’s all pretty general: go holistic and customers will follow. But the moment is here, and the boldest cartographers are set to map out the future.

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