Life Insurance – A Disruptive Industry

Whenever you talk to clients about life insurance there is always a grimace on their face. Buying life insurance and talking about life insurance does not provide the protection it promises. It firstly costs money, which is an unnecessary evil and then ultimately deals in death or hardship. Two topics along with politics, sex and religion one should never discuss in public.

Life Insurance can make a difference in someone’s life however it is usually due to a traumatic event in a client’s life. Often there are a lot of term’s and condition’s (T’s & C’s) that apply to life insurance. The life policy document also has between 50-100 pages of important stuff that a client must read, if they even have the time to do in their hectic and fast paced lives. This leads ultimately to mistrust between the insured and the insurer which is not the best way to start a relationship. Insurers are often seen as the villains rather than the heroes in the partnership.

I have been in the industry for over eight years and I don’t read all the T’s and C’s that come with any insurance that I buy. There is too much writing and in a font size of less than six and its usually filled with jargon and legalese. This is unfair on the consumer and on the insurer. The insurer needs to protect what they are ultimately insuring at the expense of their customers i.e. higher premiums. The client feels that life insurance is out of their control, they mistrust it even though they must pay for it, they never seem to reap the rewards from their ongoing monthly premiums.

Insurtech

I have been fascinated by the talk of Insurtech, the new buzz word in the financial services sector. A lot of entrepreneurs (not tenderpreneurs) are talking about the insurance industry as the next thing to be disrupted. The insurance industry has been around for years and has dictated how insurance should be paid based on their terms and never on the client’s terms, who is ultimately paying for the insurance.

The exciting news is that there is change coming as the new start-ups (Insurtech’s) are looking to disrupt insurance for the good. This includes IT platforms to assist clients with streamlining the application process, to claiming from their insurance policy with a quick picture from their smart phones resulting in payment within 24 hours. This will allow for decreased administrative costs which ultimately will help the customer with decreased premiums and more transparent insurance cover.

In America and Europe, you can buy travel insurance with a quick click on your phone, whilst queuing to board a plane. Then cancel the insurance when you disembark and land safely at your destination. That is a very powerful tool and it means that the consumer holds the power, can buy cover that’s affordable and cover that meets their specific requirements.

Life insurance will start to become less complex in the future and there will be a need for simple products. The improvement in medical science will increase the need for more personalised cover and not a generalised cover. For example, will a client need to insure themselves for a loss of a finger when a 3D printer will be able to make one to replace the finger that was amputated? The world is changing at such a rapid pace, which means that insurance companies will have to adapt and change their products to meet the changing requirements.

An insurance partnership between the new tech savvy start-ups and the old insurance companies will become the norm. This means that the client’s needs will be met as there will be products tailormade to meet a client’s specific requirements with a well-known established insurance company backing them. This company will have the capital and the experience to make claim payments. This partnership will apply a resilience to the application and claims process, allowing both to occur at a faster pace and leaving the insured and insurer with a better customer experience. The insured life will feel more like a member of the club than an unwanted visitor who has paid for drinks and received no benefits for their participation.

As people live longer, outdated actuarial calculations for insurance policies, that run to age 65 (retirement age), will have to change and improve. People will work longer and will require cover until THEY are ready to retire and not when they are dictated to. Products will also have to be flexible and personal instead of the generalised cover that insurance companies now offer due to demographics, race, age etc.

With increase in medical advances, like genetic testing; applying a severe/critical illness for everything may not apply to someone who is not genetically pre-disposed to colon cancer. Why should a client pay a premium for colon cancer when
the chances of getting this type of cancer is 1/1000 for them, however the same client may be pre-disposed to breast cancer and would like cover to mitigate against that risk.

The uninsurable will now be insurable. The HIV endemic of the 90’s is no longer a concern in the insurance industry as insurance companies now insure HIV+ people as long as they are taking their medicine and their CD4 blood counts are good. People living with HIV can live long healthy lives. Taking regular and chronic HIV medication is the same process as chronic blood pressure medication. People living with high blood pressure are insured at standard rates if their blood pressure is controlled and managed and considered normal for them and HIV infected clients should have the same options available to them.

People can google and acquire general knowledge of what basic life insurance is nowadays. This means that clients will have to consult with Financial Advisors that provide them with high-touch advice, helping them to navigate the world of life insurance with confidence and assurance. Financial Advisors that provide a service beyond normal selling, is now more important than ever. Human interaction becomes essential beyond a robot that assists a client with standard life cover insurance. Clients are even more informed, have questions and want to understand how life insurance will benefit them and not how their life insurance benefits the insurance companies.

At Harbour Wealth this is the service we strive to provide. We offer knowledge and expertise to assist our clients in their financial journey. Ensuring that they get the assistance they need, that they get the cover they require and can afford, and that will benefit them when they need it most. We apply a holistic approach to life, wealth and financial planning assistance, partnering with you throughout your entire life.

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