Life insurance and annuities can provide financial security

Exciting new data from this year’s Insurance Barometer Study from LIMRA and Life Happens shows that today’s middle-income Americans (those with a household income of $50,000 – $149,999) face a life insurance coverage gap, despite more than half of them (54%) reported that they plan to purchase life insurance.

So what is the disconnect that prevents this cohort of 50 million adults from purchasing this critical coverage? Simply put, it’s a lack of information.

What was long considered a blanket for family health and security has now evolved into an investment tactic. This may also explain why there are fewer middle- and low-income Americans have life insurance compared to higher-income Americans.

Americans have recently lived through a period of time that will be remembered for its continuous disruption, crisis, and change, and today, they work, live, and spend money in a confused and contradictory economy. Rates for US life insurance coverage have been falling since 2011, but we are now seeing signs of normalization in the life insurance market, along with an expansion of the annuity business.

There are several reasons why I believe they have set up the life and annuity (L&A) market for sustained growth – as well as several strategies that can drive growth up the industry’s value chain while taking advantage of some of the more lucrative opportunities.

Pursuing a more consistent UX
Digital transformation has rewritten the textbooks and changed most industries forever. However, digitization is an iterative process that often introduces additional complexities as it matures and develops. For example, it was once revolutionary – for both customers and carriers – to launch a fully online and digital solution to buy insurance and generate quotes. But as startups emerged providing digital software solutions for case management, underwriting, applications and order entry, some manufacturers and distributors found themselves descending into pits of disparate systems that didn’t talk to each other, and getting insights from fragmented data it was close. impossible. Additionally, these types of combined insurtech stacks can often lead to inconsistent user experiences, whether the user is a customer, agent, or carrier.

Fortunately, connected technology has now advanced to the point where everything is moving towards an interconnected architecture that helps reduce complexity while increasing scalability, all while digitally integrating self-service offerings into a consistent and enhanced user experience .

Simplify the buying process
Carriers, BGAs and wealth managers have a lot to gain by making the path to purchasing L&A products much easier for customers – but that journey can be long and disjointed. Educational and informational gaps around L&A remain one of the most important obstacles, apart from cost. But if industry players can use technology to help consumers help themselves, they can turn the tide and demystify life insurance. For example, introducing clients to advanced data solutions and illustrations that provide clear visualizations of coverage scenarios and expected payments can help clients better understand their options during the application process.

This simplification gives customers the easy-to-digest information they want, when they want, where they want, and without stacks of paper forms. It also helps eliminate friction and blockages and shortens cycle times: i.e. speed.

Meeting the expectations of modern consumers
Modern life insurance is a speeding train, but it doesn’t have to be a runaway train. Today’s savvy consumers want—rather, they demand—speed, but they also want products tailored to their needs.

Consider Generation Z and Millennials; these generations were born into the digital world and online shopping has always been a part of their lives. They want more options and innovative products, and they want them instantly. This customer is all in on an online insurance shopping trip.

But it’s not just younger generations who are driving digital change. Gen Xers and younger Baby Boomers have also grown accustomed to digital interactions, which have only been accelerated by the pandemic. They have become digital savvy consumers who conduct businesses such as healthcare, banking and insurance online. Now, more than ever, they will flock to companies that offer them the easiest path to purchase, with apps and tools that provide personalized recommendations, product comparisons and scenarios, and most importantly, do it conveniently in one place.

Smooth flow of L&A data
Regardless of generation, today’s consumers want personalized workflows, personalization and user-friendly interfaces. Automating these and other workflows provides complete access to and ordering of data throughout the customer journey, creating an unobstructed path for the wealth manager or agent to accelerate data flow and access documentation for optimal customer management and transactions. This gives the customer a consistent, consistent experience that will build loyalty and keep them from doing business elsewhere. Data must flow seamlessly throughout the entire lifecycle, fueling the trend for end-to-end solutions, wealth management and insurtech that connect all lines and channels.

This speed of decision is not just about the customer and their decision making. L&A manufacturers and distributors accelerate critical risk management decisions and shorten cycle times with automated application, needs analysis and underwriting tools. By speeding up decision-making time at every touchpoint, carriers can capture distributors’ business. Failure to do so results in a longer decision time and risks losing a customer who is on the fence, indifferent, or in danger of losing.

Managing the volume of annuities
The growing annuity business shows no signs of slowing down so far, with a large transfer of wealth and arrival of peak 65 on the horizon, as more than 11,000 people in the US turn 65 every day in 2024. As this trend continues through 2029, the year all boomers will be at least 65, a strategy of “catch the flood in a paper cup”. it just won’t work. Additionally, with the largest generational cohort in history, millennials, in or approaching 40, carriers and distributors need more than hustle to capture their share of the pie. As annuities have a reputation for being complex, it will be essential to help clients achieve optimal decision and execution time in this notoriously difficult investment class. Without automation, there is no way to track or predict processing times, making the annuity ordering process daunting to navigate.

Automating the annuity process minimizes time-consuming calls and reduces emails with carrier support staff to alleviate bottlenecks and create indispensable added value for financial institutions. Automated technology solutions for financial and legal forms can help dissolve operational bottlenecks from complicated documents, while helping to clarify confusing legal jargon for the average consumer. Providing a transparent and accurate picture of a customer’s order and lifecycle data is critical to uncovering efficiencies and generating actionable analytics. AI and generative AI tools, well used, promise to significantly enhance and accelerate documentation, compliance, customer service, and probably most other processes.

Speeding up the movement of money
The champions of annuity growth will be those willing to accelerate their digital transformations—and do so with connected and integrated technology infrastructure. Those willing to continue digitization can also help lift the entire life insurance industry into a new era of growth, making L&A transactions faster and accelerating the flow of money for the entire value chain. The sooner the insurance and wealth industries can modernize in line with consumer expectations of speed, ease and personalization, the sooner we can fill the coverage gaps that have persisted for far too long and restore the relevance of life insurance.