Lizeth GeorgeThe gap between those who say they need life insurance and those who say they have it is growing. In fact, it’s more than doubled since 2011.
There are two factors at play.
First, the desire for helping protect what matters most with a life insurance policy grew significantly during the pandemic. Thirty-one percent of American consumers surveyed said they were more likely to buy life insurance because of COVID-19.
Second, consumers have lost tolerance for long, drawn-out buying processes. Especially since the pandemic streamlined so many day-to-day experiences, people have raised their expectations of simplified customer service.
The Problem: Heaping Worry on Top of Work
Life is busy, and only getting busier. A quarter of respondents to a recent survey explained that they didn’t have life insurance simply because they “haven’t gotten around to it.” Heap worry (and the discomfort of contemplating death) on top of an overloaded schedule, and it’s easy to see why people put off shopping for life insurance.
Even as more people recognize the need, obtaining a policy remains an overwhelming task in the minds of many. They are worried it will take too much time to research options and find a provider, too much back-and-forth with a broker, too many medical questions – or worse, an exam.
And after all that, they worry about being able to fit costly premiums into the already tight budget. Nearly half (49%) of survey respondent without life insurance named “too expensive” as a reason.
The Solution: Digitalization Upends the Old Insurance Paradigm
No one can blame consumers for thinking this way. After all, getting a life insurance policy hasn’t been easy in the past. Fortunately, digital technology and transformed processes have turned the old paradigm upside down.
Credit unions have the distinct opportunity to show off this new paradigm with the integration of simplified life insurance offerings.
Here are three ways your credit union can help simplify life insurance for members.
- Choose partners that prioritize the experience. Work with a carrier that has proven success reaching the underserved market with simple, digital-first experiences. TruStage® Insurance Program recently found in its 2022 What Matters NowTM research that young, multicultural members are daily digital users of financial tools. It’s one thing to sell more insurance to existing policyholders (still an important need to fill as members build wealth). It’s quite another to persuade first-time buyers to engage in the process. Carriers that are doing this well are your ticket to faster change for your members.
- Offer uncomplicated options. Meeting members where they are is important across many financial products; it’s critical in life insurance. Consumers often believe life insurance is much more expensive than it actually is. Show you understand that each person is unique by offering choices that alleviate distinct worries and fit individual budgets.
- Integrate automated underwriting and decisioning. Technology has transformed a once-arduous process that could take as long as 90 days into an enjoyable 7-minute interaction either through a phone conversation between a member and a trusted representative or online.
The Results: Good for Members and CUs
Putting life insurance into the hands of more members benefits credit unions as much as members. Aside from helping boost the overall sense of financial security of a membership, the products introduce much-needed non-interest income amid fast-shrinking margins. It also moves the credit union closer to earning primary financial institution relationships with more members.
Offering a simplified life insurance experience also could have a direct impact on a credit union’s diversity, equity, and inclusion (DEI) initiatives. The 2022 What Matters Now research also found that Black and Multiracial consumers are most likely to purchase life insurance in the next five years. Research from LIMRA’s Life Happens study echoed those findings, uncovering that the perceived need for life insurance is highest among respondents identifying as Black (75%), Asian (72%) and Hispanic (69%).
The Future: A 60 Million Member Opportunity
Forty-four percent of people surveyed say if their household’s primary earner died, they would feel financial hardship within a single week. Life insurance policies can help remove much of the fear and anxiety that contributes to feelings of financial insecurity. Unfortunately, too many credit union members are putting off the buying process, moving through life weighed down by anxiety and without critical protection. Eliminating the stress of obtaining life insurance is one way your credit union could affect meaningful change in the lives of the millions of U.S. adults without life insurance.
