RGA provides quarterly updates on global product developments, which can be made available upon request. View the Q1 2021 digital newsletter.
The pandemic has highlighted the need for life insurance. We live in a world where the unexpected can happen.
This has sparked a renewed interest in life insurance and the importance of having a safety net. In the U.S., the MIB Life Index1 for Q1 2021 shows an increase in life insurance activity across all age groups. Indeed, all product types have experienced growth, with whole life increasing the most, followed by universal life and then term life. Consistent growth has occurred across all age bands.
Due to the heightened interest in life insurance, insurers have moved fairly quickly to innovate and are now providing products with simplified underwriting and a digital application process. Customers can apply for instant, affordable term life insurance in as little as five minutes, compared to eight weeks on average for the traditional process.
Their applications can be made via smartphone, with the use of application programming interfaces (APIs). Some insurers even have an AI chatbot that can answer any questions a customer might have, and policies can be approved in real time. Insurers have also linked up with start-ups, such as Bestow and Dayforward, that offer remote medical data services through which a cheek swab and finger prick can be performed under the watchful eye of a nurse at the other end of a Zoom call. Further, insurers have enhanced the customer experience by introducing remote online notarization. Life insurance products are now sold through fintechs, including JennyLife, parenting websites such as Happiest Baby, and insurance brokers who can offer a comparison of products online. LifeQuotes.com announced an “Instant Decision” selector on the desktop version at www.lifequotes.com that enhances the online shopping experience by showing life insurers that offer instant decision underwriting.
Because no one product fits all, some insurers now offer customizable and dynamic products to meet a specific clients’ needs. Ladder offers term insurance that gives customers the option to decrease or increase their life coverage in a few clicks to cope with life’s changes. Sprout, in partnership with SBLI and Afficiency, enables its customers to qualify for and buy a life insurance policy entirely online. Using its quality of Life (QLI) Index, it assesses the user’s lifestyle. The index looks at healthy behaviors in the areas of exercise, sleep, emotional health, nutrition, and overall lifestyle balance. This information is used to analyze the customer’s lifestyle and recommend the most relevant policies. The purchase of the policy requires no medical exam, phone calls, or offline appointments and can take no more than 10 minutes.
In Canada the pandemic has changed the way Canadians look at life insurance and the need to protect themselves from unforeseen circumstances. Many Canadians now have an increased anxiety about their financial security due to the pandemic. PolicyAdvisor, an online insurance brokerage produced The State of the Nation Life Insurance Trends 20202 report. It found that 63% of Canadians think having life insurance is now more important since the pandemic. The report also found that 44% of Canadians plan to purchase more life insurance due to COVID-19. According to this report, about 38% of respondents only have life insurance through their group or workplace benefits, while 14% stated that they have no life insurance at all. For those people who have life insurance coverage through their employer, the coverage is usually minimal, equivalent to only one or two years’ salary, and customers risk losing it when they leave their job. PolicyMe offers term life insurance online at an affordable price. The policy is reviewed as soon as it is submitted.
Some consumers feel that life insurance is too expensive, too complex to understand, and that the buying process takes too long. They also don’t want to participate in the exams or blood collection that can accompany medical underwriting. These are just some of the factors driving advances in tech-driven solutions. Goose Insurance offers life insurance for premiums as low as $5 a month. There is no medical exam required, and the product offers instant approval and 30-day money-back guarantee. Breathe Life is a digital distribution platform provider for the life insurance industry that enables carriers to deliver a fully branded user-centric experience that streamlines the online buying process. Other digital innovations include the development of apps like the Foresters Mobile app, which can generate quotes across some of its product lines. In Canada, RBC Insurance hopes to get 50% of its insurance products sold online within the next five years. Another major bank offers a simplified term life insurance that has fewer questions, no medical exam, and aims to insure the customer in 60 minutes or less.
Insurers in EMEA are also selling products using a purely digital experience. Some examples of digital offerings include the insurtech ritchee Life, which offers a life insurance policy that is 100% digital and available from €500. The “100 percent digital” Orange Seguros platform now includes a life insurance offer for families. Using the Orange Seguros by Zurich app, customers can apply for life insurance. In Ghana, Prudential Life, together with Enterprise Life, offers SafeNet. Customers will be able to pay as little as GH¢ 0.50 in premium to be a SafeNet policyholder. SafeNet will be offered to Vodafone Ghana’s more than 9 million subscribers as free insurance cover for the next six months. In South Africa Simply Life has a group offering for SMEs for up to ten employees with a digital process. Comparisure acts as a ‘digital broker’ specializing in distributing products on behalf of providers. They offer a chatbot which uses Facebook messenger. The chatbot remembers a customers’ relevant data points and can chat in multiple languages.
In addition to digital advances, insurers are also offering products with no medical underwriting required and instant decisions. Many of these products also offer value-added services like advance funeral payments, grief counseling, and estate administration. There are also tools for brokers, such as the Life Insurance Quote engine, that allow users to compare products based on specific requirements. Royal London offers a protection tool where advisers can input data on their clients (such as age, salary, and number of children), and the results give a menu of options and the likelihood of the customer experiencing a life event for which the insurer would pay a claim.
In Latin America, in Brazil there is great potential for growth in the life sector. According to data from Susep (Superintendence of Private Insurance), life insurance showed a growth of 11.4% in 2021 compared to 2020. At present only 15% of the economically active population has some kind of protection. The fintech NuBank in Brazil has teamed up with an insurer to offer the life product NuBank Vida. NuBank has reached 90,000 active life insurance clients since December 2020. Half of these clients have never purchased life insurance before. The product is fully customizable on a digital platform. The entire contracting process, including cost calculator and service confirmation, takes minutes using NuBank's app. Another product, Zurich for You, is an individual life insurance plan that offers customizable protections. The Zurich Financial analysis tool helps the broker choose the ideal protection for a customer’s profile.
In the U.K., the pandemic has brought into sharp focus the need to have a financial safety net. In the Drewberry Survey3, 60% of respondents agreed that the pandemic has made them think more about their financial stability, and 56% said that they were more likely to put money into savings each month. Another 18% of people said it made them more likely to consider buying life insurance. Many, however, still think coverage is too expensive and that insurers do not pay out when people make a claim.
The Manulife Asia Care survey4 conducted in November 2020 across Asia took a deep dive into customers’ concerns, priorities, and aspirations amid the pandemic. The survey polled some 4,000 people, across eight markets in Asia, covering mainland China, Hong Kong, Indonesia, Japan, Malaysia, Philippines, Singapore, and Vietnam. The survey found people are interested in life, health, and critical illness policies. The interest in buying new insurance across Asia has risen from 62% to 71% since the last survey in May 2020. Over 52% of respondents prefer to manage their policies through digital means using mobile apps for claims and payment. Insurance agents are also still in demand.
In Vietnam, a remarkable nine out of 10 (91%) people said they intend to buy new insurance in the next six months, higher than anywhere else in the region. The survey found that 71% of them had spoken to an agent about purchasing insurance. Large insurance players are working towards a 100% paperless target. This has led to some insurers stopping the issuance of paper contracts and the adoption of electronic signatures. Prudential Vietnam became one of the first life insurers to accept contactless payments via mobile phones in combination with a super-fast vendor approval solution provided by Visa and Sacombank.
According to the survey 87% of Filipino respondents expressed intention to buy new insurance in the next six months. The lockdown has meant customers are prioritizing their family’s health and financial security through life insurance. Indonesians have a greater appetite for buying insurance; 30% of existing policyholders plan to buy life insurance. In that market there are now flexible joint life insurance products that cover a husband and wife under one premium.
In Malaysia there is a strong demand for insurance as Malaysians focus on taking control of their physical and financial health; 32% had proactively undertaken research on insurance products and services in response to the pandemic. Digi Abadi is Malaysia’s first prepaid internet plan that comes bundled with free life insurance cover.
The Policy Bazaar survey, undertaken in India, found that 50% of the customers have bought term policies with a cover of 100 lakh and above to financially protect their loved ones. The IRDAI has directed that all life insurance companies have a standard, individual term life insurance policy called Saral Jeevan Bima. Saral Jeevan Bima life insurance is an individual policy that will offer a minimum sum assured of Rs5 lakh, with no maximum limit. Examples of other innovative products in India include: the Bharti AXALife Flexi Term Pro, which comes with a one-year term and tele-medical underwriting option, and an additional discount on their premium for customers who quit smoking; ABSLI’s Digishield, a hyper-personalized term product that offers multiple plan options, added benefits linked to life stages, joint life protection, critical illness covers, and rider options to tailor the protection package; and term life insurance plans from PhonePe, which can be availed instantly on the PhonePe app without any health check-up or paperwork through an all-digital process. Finally, Max Life launched a digitized payout services tool on its website, where customers can make changes in their premiums, loan against their policy, and make partial surrenders.
There is still a lot of work to do to close the insurance protection gap, and education is needed to persuade people that life insurance is an essential purchase. The pandemic has quickened insurers’ move towards digital life insurance offerings. And it appears that customers want simple-to-understand products, with minimal underwriting, digital payment options, and flexible offerings. Every customer is unique, and life insurance products must reflect this by being more customizable and personalized.
Stay tuned for future releases of our quarterly newsletter to see where the next innovations will take us.