Do I really need life insurance, and can I even afford it? says Samantha Chow, Global Leader for Life Insurance, Annuities and Benefits sector at Capgemini.
It’s a question I hear often, especially from younger generations navigating the balance between rising living costs and long-term security. The numbers don’t lie: According to our World Life Insurance Report 2023, 41% of adults under 50 believe they don’t have sufficient coverage. A separate LIMRA study from last year showed that 51% of consumers own life insurance, down from 63% in 2011.
This highlights a growing problem. For too long, life insurance has felt like a relic from our parents’ generation: complex, rigid, and irrelevant. But it’s much more than that.
Life insurance is about building financial resilience and ensuring your loved ones, and your future self are protected. It’s not just about affording it today; it’s about the cost of overlooking its importance for tomorrow.
As we witness the shift in wealth from one generation to the next, known as the great wealth transfer, it becomes evident that understanding financial products like life insurance is critical. Vanguard estimates £7 trillion to pass between generations in the UK alone, with the younger generation inheriting not only wealth but also increased responsibility. To effectively engage this demographic, it’s crucial to rethink how financial products are marketed and structured, emphasising both their value and relevance.
Recent industry reports reveal a stark reality. Swiss Re data shows that life insurance penetration in mature markets has fallen from 5.4% in 2007 to 3.6% in 2023. Younger consumers are increasingly seeking solutions that cater to their individual life stages. Modular policies that adapt to milestones such as starting a family, buying a home, or planning for retirement are no longer a luxury but a necessity to meet the evolving needs of today’s consumers.
Insurers need to rethink how they engage with customers and reframe the life insurance conversation in a way that speaks to the needs and expectations of today’s consumers.
There are five key trends that can help guide insurers through this crucial step-change.
1. Customer-first, modern experiences
The industry must transform to meet the expectations of today’s consumers, who demand more personalised, efficient, and transparent experiences. Technologies like generative AI are driving this change, enabling insurers to streamline customer journeys, offer tailored products, and enhance engagement at every touchpoint.
2. Customer centricity with transparency
Policyholders expect more than just a policy – they expect an experience. Insurers need to better understand customer behaviour by consolidating data and offering a clear, tailored approach to meet these evolving needs. Transparent, easy-to-understand policies, and flexibility are critical for building trust and fostering loyalty.
3. Non-insurance services and the silver economy
With the silver economy growing, life insurers have a huge opportunity to expand beyond traditional insurance offerings. More than 75% of the affluent segment of the ageing population desire relevant life products, yet only 27% of insurers have the advanced product development capabilities needed to rise to the occasion. Middle, working, and lower socioeconomic groups are also ready to invest in the right insurance products that can meet their needs. By integrating value-added services, such as financial planning or wellness programmes, insurers can cater to the ageing demographic, while boosting customer lifetime value.
4. Repositioning life insurance for youth segment
Many millennials and Gen Z don’t see life insurance as something they need right now. To grab their attention, carriers need to shift their marketing strategy. Focus on what matters most to them like flexible coverage for student loans, planning a family, or buying a home. Use relatable messaging and show how life insurance can evolve as their lives change, making it feel more connected to their personal goals.
Carriers should also offer policies that start small but can grow as their needs grow. Instead of traditional, one-size-fits-all products, highlight how these plans can adapt to their life stages and financial milestones.
5. Ease of doing business for agents
Sometimes we forget that a fundamental and basic requirement that drives business flow from independent agents and advisers is ease of doing business – this can be the ease of generating quotes, completing applications, etc. This significantly influences the efficiency of an agent or adviser – potentially producing more quotes or applications completed in less time – and serves as the crucial first touchpoint for transforming a prospect into a customer. People don’t want to waste time, and they will naturally prefer the insurer that is easiest to work with. This is very real and has a significant effect on flow and win rates.
Carriers are at a crossroads, needing solutions that are simple, flexible, and easy to navigate. Successful transformation hinges on reshaping the policyholder journey through intelligent and hyper-personalised solutions.
When insurers innovate with purpose, they build stronger relationships, earn lasting trust, and deliver the peace of mind that defines the industry’s very foundation.
By Samantha Chow, Global Leader for Life Insurance, Annuities and Benefits sector at Capgemini
