The life insurance industry is antiquated in how it writes business. It takes too long, is too involved and too inefficient…and that is just the insurer’s perspective! This week, I look at how InsQuik is making the process of buying life cover quick and easy.
The United States life insurance market is the largest in the world and accounts for over 20% of all written premiums globally.
And yet an estimated 30% of households in the United States have no life insurance. And half of all households believe they lack adequate cover. For many (especially millenials), life cover is seen as a luxury, but in reality it is one of the most essential insurance protections we should buy.
As for the health of the nation, according to the Center for Disease Control and Prevention (http://www.cdc.gov) more than one third of US adults are technically obese (measured by body mass index, which is the relationship between a persons height and their weight).
And worse, almost 7 in 10 of them are classified as overweight (and/or obese).
The health consequences from being overweight or obese include death from heart disease, diabetes or a stroke. These are 3 of the top 10 causes of death based on 2013 data.
This is an equation that doesn’t match.
On the one hand there’s a massive shortfall in life insurance cover, and on the other, a significant health issue across the same population.
When the need is there, why is there an insurance gap?
It’s a distribution problem. Life insurance is in the sold, not bought category, defined so well by Maria Ferrante-Schepis in “Flirting with the Uninterested”.
Getting cover for medically underwritten life insurance takes time and effort with no guarantee of success. It can be a long process, up to 6 weeks if you are healthy, and longer if not! This is because the traditional, medically underwritten cover requires a lot of data. Hence, the endless questionnaires with (seemingly) irrelevant questions to establish that you are not a base jumper or a barman (both considered high risk occupations).
In the US, applicants need to be comfortable with needles too. The application process requires blood samples and medical examinations, often from a nurse coming to your house.
The market is changing
For life insurance, the traditional business model doesn’t work for the insurer, the broker or the consumer anymore.
Premiums are in a race to the bottom. The top 5 choices for term life are all priced within a few dollars of each other. This commoditization in the market squeezes the intermediaries and reduces the commission incentive for them…which means they have less time and interest to service their customer.
For carriers, they carry all the upfront costs and yet are vulnerable to applicants quitting before they close the deal (Editor’s Note; old sales adage – “time kills deals”).
And for consumers, this is just too hard in this digital, immediate and always on world. And for the tech-savvy millennial, this is simply too hard!
Not only do they not see the necessity of life cover, they simply won’t subject themselves to the traditional process. Millenials are frustrated when it comes to insurance. In a sold not bought economy, if it isn’t quick, easy and convenient, this demographic are not going to buy it…and this is nothing to do with price (the traditional battleground for insurers).
The Rise of No-Med Life Insurance
This is life cover that is issued without a medical examination. It benefits those that are more healthier than not. And those who are willing to pay a higher price for the convenience and simplicity of the product.
There’s plenty of evidence that millenials are willing to pay a premium for convenience, which makes online no-med life cover the perfect product for them. (See previous article here on “Engagement Insurance” and millenials attitude to convenience and pricing for insurance.)
There are already no-med life insurers in the United States who process an application over the phone, by paper or online. They all offer the same range of cover, typically $300-400k over a 10-15 year term. Where they differ most is in the time to make a decision and start cover, ranging from hours to 14 days!
The new kid on the block is InsQuik with their Insurance Tech platform for brokers. Having soft launched 5 weeks ago, I caught up with CEO, Ryan Toner. DF readers may remember my article with Ryan back in August when I featured BenefitVault.
Ryan explained that “InsQuik is simplifying life insurance. No paper, no medical exams and no complicated approval process. It’s a simple, 3 step process to get $350k cover on a 10 year term in 10 minutes or less. And we’re doing it with the support of the broker.”
How does InsQuik work for the consumer?
This is 100% online, digital application process that provides a quote, a decision and a policy in less than 10 minutes, from start to finish!
The process is very simple. First, there is the quote based on 3 very simple questions…age, location, smoker…and quote is issued there and then.
Stage 2 is underwriting and this involves about a dozen or so more questions over three more screens. Basic questions too.
And in the background, InsQuik is checking against national databases, such as the applicant’s pharmacy record, their motor vehicle report and the medical information bureau.
With satisfactory answers to the questions and the background checks, cover is confirmed and the consumer enters payment details. This can be either by credit card or through BenefitVault’s proprietary direct deposit method through their workplace.
Consumer then signs the policy agreement electronically using Docusign. The policy number is issued on the screen with cover starting immediately. Within 12 hours, the policy documents are emailed to the customer.
Start to finish…less than 10 mins. Simple, quick and convenient!
And how does it work for the Broker?
InsQuik is a platform for brokers. The first product launched on the platform is InsQuik10, a product designed for distribution through a digital brokerage. The product is simple – $350k cover for a 10 year term.
The platform enables brokers to create their own “store” on InsQuik. Ryan took me through the store set up process, which takes less than 3 minutes. Each broker gets a unique URL for their store, which are branded specifically by the broker and integrated into their own website or simply emailed direct to new applicants.
For new applicants, the broker sends them a link that takes them through the application process. The consumer does not see InsQuik. They have no idea that they are answering the application form on the InsQuik platform as it looks and feels like the broker they are dealing with.
Innovative or disruptive?
Whilst no-med life cover isn’t the right choice for everyone, it will appeal to the millennial generation. They want convenience, simplicity and a digital experience. And are willing to pay a premium for the premium.
If the life industry is ever going to close the insurance gap, then it will do so by making the buying (not selling) of insurance a quick and easy experience. Just as InsQuik have achieved with their InsureTech solution for no medical life insurance.
Daily Fintech Advisers provide strategic consulting to organizations with business and investment interests in Fintech.