Great article!
Invoking emotions in consumers takes an agent motivated about what they are offering - usually someone whose experienced the benefits of life insurance. Being that life insurance is becoming more of a commodity sold by call centers, painting a word picture of lifestyle continuity for someone over the phone is a tough thing to do, albeit the most important thing an agent can do. I wouldn't even talk product unless I understood why they need the insurance. I believe you have to find a way to let the consumer tell you what would happen if they DIDN'T have life insurance and something happened to them. If that doesn't invoke the emotion you need, they aren't a good candidate anyway.
Is the Life Insurance Industry Really Losing Relevance?
Categories: Culture Innovation Discussion Financial Services New Products, Services, and Business Models
Death … it isn’t what it used to be.
As the life insurance industry reaches its 50-year record low for life insurance ownership in the U.S. (LIMRA 2010) and companies continue to struggle with how to reach the underserved middle market, one can’t be shocked at why the government is so hell-bent on taxing the cash value. Nobody’s talking about death these days.
A recent article in the Pittsburgh Tribune-Review took this statistic and shoved something in our faces. The consumer would rather go without life insurance than other “necessities.” Some experts in that article are suggesting that the point is limiting risk to survivors. If your spouse has a degree and can work, the risk of destitution is far less than it was in the past when women were barefoot, pregnant and without Facebook.
While this could certainly play a role in the decline, I also think other factors are at play here. Not only is the consequence of the death of a breadwinner gentler than it used to be, the likelihood is also less. And that’s not just actuarial cocktail party talk — the average consumer knows it too.
Let’s look at a few facts. According to the National Center for Health Statistics, Life expectancy in 1930 was 59.7 and in 2007 it was 77.8. In the early 1900s, the risk of influenza and tuberculosis was significant. Today it is near zero. Workplace fatalities were more commonplace due to the lack of safety standards. Today it is far less. And the incidence of death in the four years it took to fight World War II was quadruple that of the 12 wars fought in the 50 years hence.
So death is not exactly top of mind anymore.
And life insurance sits squarely in the box we call a “crisis category.” The consumer is barely involved with the product, and when he/she is, it is a stinky experience.
But does that mean that life insurance should be irrelevant? I don’t think so. It is irresponsible to consider self-insuring a risk that can be hedged with pennies on the dollar. I don’t care what Texas Tech’s Center for Financial Responsibility says about it.
But there is a message in here. The consumer is looking for “lifestyle continuity,” not life insurance. Just like when they buy a drill bit. They are not looking for a drill bit, they are looking for a hole.
This is classic myopia that almost put the movie industry, the railroads and dry cleaners out of business. Redefining the business you are in and innovating around that definition is the key. And in the case of a crisis category, improving the emotion and involvement level of your product would make someone less likely to choose unlimited text messaging over their life insurance as a monthly expense.
So if you were trying to improve involvement and emotion, and recognize that death is not top of mind, what would you do? Where would you start? How about with the consumer?
To learn more, check out Maria's recent webinar: Why Gen Y is Just Not That Into You.
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April 6, 2011 5:01 PM
Maddock Douglas
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April 7, 2011 7:01 PM
Great points. The job at hand for the industry is to create more engagement so that consumers WANT to tell you that. Any ideas about how to do that "en masse" ? Maybe a way that disconnects it from the idea of life insurance, but connects it to just "life" ?
April 21, 2011 4:15 PM
I think Jeffrey indirectly proposed an idea when he asked, "What would happen if they DIDN'T have life insurance..."
What about calling it, "What if?" insurance and taking the words death and life out of it?
What if the worst happens... are the people you love prepared?
Life insurance is just giving those you leave behind assurance that they will have financial benefits. "Just pennies a day can keep your loved ones secure long after you're gone." Then cue in Sally Struthers and those feed the starving children commercials that used to make me bawl and wish I could call in.
Ok, my lunch break over. But interesting post, Maria, as always! :)
Maddock Douglas
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April 22, 2011 5:18 PM
LOL! I always love to hear from you, Aly!
And on the "if", Met Life did a good campaign on this. Taking the if out of Life...remember that? It was a few years ago. But I think what you are saying is that call the product "what if" insurance. I like that, because it is clear.
Tell me more about the Sally Struthers thing...did you ever donate, or did you just cry? The reason I ask is that there is a distinction between an ad that moves people, and one that moves them to action. Sometimes negative emotions can backfire. I have seen the ads for ASPCA where there are these starving, abused animals that are being shown to Sara McGlaughlin's "I will remember you", and I bawl my eyes out but never donated a penny...because I can't watch it. I would have to turn it off..
What do you think about that?
May 2, 2011 3:04 PM
Hmmm, I do not remember the Met Life taking the "if" out campaign, but I like it...
No, I did not donate. I just cried.
I think you are correct. Negative emotions can backfire, and the ASPCA campaign is a good example. I wonder how you can create ads that move people and still present a compelling call to action.
Maddock Douglas
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May 3, 2011 2:05 PM
I think that there are ways to do that, but "move" has to be defined more literally...as in "move" to action and not just move them emotionally to tears. Infomercials are a good example. They move people to action because of other emotions like desire or even rage, but not tears. I think tears create awareness for sure, but I don't know if it causes action.
May 24, 2011 3:05 PM
I think the idea of Life Insurance needs to hold up to its name. Start with "Life" the company AFLAC seems to have the right idea to insure a families monthly income in the case of emergency. If that were combined with a total death coverage to help to insure quality of life for the survivors then you would have end to end "Life Insurance".
Maddock Douglas
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May 31, 2011 9:45 PM
RobertCburn said: I think the idea of Life Insurance needs to hold up to its name. Start with "Life" the company AFLAC seems to have the right idea to insure a families monthly income in the case of emergency. If that were combined with a total death coverage to help to insure quality of life for the survivors then you would have end to end "Life Insurance".I like the way you are thinking. It's not about selling a policy, it is about selling a result.
September 28, 2011 2:24 PM
What an excellent piece. Off the top of my head I can think of a few changes that the life insurance industry can make to help improve middle market awareness.The way life agents are compensated it is not profitable for agents to serve middle America. This is why call centers have taken over. Serving the middle market is a volume play that only a call center can handle.. Since most call centers are not providing sophisticated design work the premium should be more competitive. Rebating would create more competitiveness in pricing. Agents are taught from the minute they enter the business to go after the high net-worth business owner. Agents are compensated handsomely in this marketplace.
Level commission would also provide better on-going service and will also increase the chances of an agent placing a product that is in the best interest of the client and not the insured.
If your interested in exploring a new way to place your life coverage take a look at www.premiumshare.com. They believe the that the design and the placement of life insurance should be handled by two separate entities.
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