How life insurers are transforming to deliver value for better living

The focus should be on solutions that combine protection, savings and investments and are designed to flex as customer needs expand and evolve across five critical life stages.

1. Getting started on financial wellness

Insurers, annuity providers and other firms have long recognized the need to engage younger consumers but have largely struggled to make the connection. The first step is to demonstrate the value of insurance relative to financial goals besides retirement savings. Meeting the rising post-COVID demand for protections against short-term economic shocks (e.g., the loss of income or unexpected hospitalization) is one opportunity.

Portable micro-policies and lifestyle insurance that evolve over time would suit many young people just starting their working lives. To gain traction, insurers must ensure they offer individuals full digital experiences through their mobile phones and that brokers and advisors are motivated to build and grow relationships with individuals with few assets to invest. 

2. Managing through a life’s work

With traditional pensions and defined benefit plans becoming increasingly rare and fewer workers able to access employer-provided benefits, traditional retirement is beyond the reach of a growing number of individuals. There is much insurers can do to bridge the gap and satisfy unmet market needs.

Flexible and affordable solutions are key. Integrated policies could automatically cover workers toggling between standard employment and side hustles. Portable coverage for full-time gig economy workers and the self-employed, as well as add-on features for employer-provided policies, could spur meaningful growth. So could products that support specific financial goals – buying a home, saving for children’s education, funding mid-career retraining and “sabbaticals.”

3. Caring for loved ones and family

Changes to family and household structures and uncertain macroeconomic conditions have created new savings and protection needs for consumers worldwide. Gaps in health insurance coverage and the social safety net mean that more people are serving as caregivers.

Women who have to look out for both their children and elderly parents feel less financially secure in the long term. That’s true despite their making most of the household decisions about discretionary spending, having a significant influence on financial planning and taking on responsibility for more assets. As wealth is being transferred to women, they are engaging more but don’t feel well-served by the industry. Better solutions and more personalized services designed for the unique needs of women are another opportunity for the industry.

4. Instilling financial resilience

Increased financial resilience is a common theme across all consumer groups, and that’s value that insurers can ultimately deliver via savings, investment and income-protection products and solutions that support different goals – rainy-day or emergency savings, home improvements, “a family trip of a lifetime,” accumulating assets for a comfortable retirement, or funding a sabbatical.

Again, flexibility in product design is key, such as retirement savings and pension plans that allow shifting levels of withdrawals and close monitoring of drawdowns. For some segments, the emphasis will be on providing access to advisory services via ecosystem partnerships. To promote financial confidence and resilience, consumers will be looking for holistic views of their financial situation via intuitive dashboards that integrate data from checking and savings accounts, investment positions, insurance policies, employee benefits plans and other sources.

5. Making the most of payouts and benefits

The payout of life insurance claims and the maturation of annuities are clear opportunities for insurers to build deeper relationships with beneficiaries. Advisors worry about losing this business, too. Insurers can keep beneficiaries engaged by reaching out proactively with timely guidance long before claims are paid and then provide a clear, non-stressful wealth transfer experience when they are paid.

Insurers engaged in strong ecosystems can expand their offerings to include access to life coaching and grief counseling. Smart decumulation strategies and multigenerational advice for managing inheritances are attractive to growing numbers of customers. Those services can help insurers engage with their customers’ families long before claims need to be paid.