Trends in Life Insurance: What Consumers Want Impacts Insurers

It’s hard to think of any company as being on the cutting edge of the insurance industry. Why? Because of so many rapid advances in every economic sector, the modern insurance organization struggles to keep up. Since the institution of Obamacare, insurance companies have struggled to update their information systems and business practices to adapt to a consumer-driven environment. They also face stricter government regulations. In reality, life insurance companies belong to the same group as health insurance companies in the sense that they collect medical information about subscribers. You might be wondering how all of this ties together. In a nutshell, these kinds of insurance companies must deal with the fact that 21st-century seniors are living longer!

Consumer

Consumers Always Want More

Today’s seniors and middle-aged consumers planning for retirement share a common concern. They want to ensure that their life insurance policies and annuities will stand the test of time. Quite frankly, we just aren’t sure if we might live to be a hundred years old. If we retire at 65 and live to that age, we need money to survive for 3.5 decades. Recently, we were reading Greg Ostrowski’s piece on the U.S. News & World Report website. From the standpoint of trends in life insurance, we believe it offered some helpful insights for insurers trying to understand what consumers want, which should always drive their designs for new or improved customer service platforms.

1. Consumers want to take stock of their existing collection of retirement products. Ostrowski explains that this can include considering their 401K plans from former employers, their stock portfolios, and their retirement savings accounts. He recommends that people evaluate their assets and liabilities. Anyone who has tried to buy a home or to refinance student loans has thought about this at some point. What about everyone else? We would add that insurers marketing to consumers must address the concern of having enough retirement income. They must shape their financial products, including life insurance policies and annuities, to fit this environment.

2. Consumers must plan for retirement savings and for retirement spending needs, says Ostrowski. This is a no-brainer for insurance companies. A good life insurance website includes financial tools for consumers to use to make calculations, especially estimating future payments and retirement expenses. At a minimum, retirees require some money in their budget to visit their grandchildren.

3. Consumers can plan a budget that takes into account the timing of different retirement payments. In the same month, this could look like Social Security income, dividends from stocks, payments from annuities, and payments from employer-based retirement plans.

4. Consumers should understand the tax implications of different types of accounts, not just the timing of payments (i.e. IRAs and annuities). Information about these kinds of questions are ripe for featuring on insurance websites and subscriber account management platforms. These should be updated when the federal government creates new tax regulations.

If consumers take into account all assets and liabilities, formulate a budget, and then purchase financial instruments that provide enough retirement income, they will still have other worries. A big one, says Ostrowski, is what they will do with their cash. Some might think of this cash as “running-around” money, and others might think of this as money to save for their heirs. There are so many options for spending cash, everything from playing the stock market to acquiring more real estate.

We have many ideas on how to build consumer-friendly information systems that fit a life insurance company’s existing infrastructure. We aren’t necessarily tied to the wraparound approach. We can go to the drawing board and create entirely new information systems upon request. If you have questions about how to build web-based systems that benefit subscribers and prospects in the consumer-driven economy, please¬†contact us.

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