In an increasingly complicated world, it is easy to be lost in the jungle of complexity. There has been tremendous hype on Insurtech in the hopes that it will revolutionize, and even revitalize this industry which has shown resilience against change.
As if to make up for lost time, companies and insurers have come up with apps and programs and various attempts to make people more interested in protecting their own lives. There is much talk about blockchain technology and on-demand insurance being dominant in the future.
Really, no one stopped to think about the reason why till this day, Life Insurance still needs to be sold instead of bought.
Our key assessment: There is simply no personality in the product.
It is lifeless. It is without soul. It has no flavor.
How do you take something that is perceived as boring, convoluted, opaque: to be repackaged?
Is it possible to inject some freshness into this age-old product to make it palatable?
The solutions are simpler than you think – and probably more effective than you can imagine.
1: Everything In Plain English, for God’s Sake!
There is a reason why this is top of our list. Life Insurance has been notorious for being wordy, convoluted, and generally ladden with fine print. Actually the fine print portion is not really true, since most of the stuff is printed in normal font size these days.
But lets not sugar coat the fact that Policy documents are just bloody boring and confusing. Ok we get it, Policy documents are legal documents in nature, and each word or phrasing can have profound consequences when it comes to claims.
Still, nothing is stopping insurers from simplifying documents – given the army of lawyers they have – or at least just try! For a hilarious (but totally accurate) example of how communication should be simplified – read this.
For argument’s sake, if the existing policy wordings have to be retained at all cost, why not come up with a “Plain English” version too for people to have a better grasp on the first reading? The original documentation set can still supersede the Plain English version.
To prove that is is entirely possible, we did up a plain English version of Life Insurance’s most famous clauses too, right here.
2. Allow customizable names for each policy – or at least use creative names!
If the 1990s were the golden age of mass production, then now is the age of mass customization. Think about it – we customize our houses, cars, phones, clothing, so why not policies?
Because Life Insurance policies theoretically only exist as a piece of paper, it can sometimes be hard to have the same sort of attachment to it compared to say, Buddy (shown below).
Personally, I think that this simple tweak alone will tackle the issue of premature surrenders or policy lapses. Totally worth a shot. Check out a sample Policy Certificate we’ve prepared:
In all seriousness, Life Insurance Policies are long term commitments – and we should really be able to have something to remember them by, and the purpose they were bought in the first place.
Ok, if custom policy names are too much of a stretch, then at least come up with nice names for policies. Right now we have to choose between “remarkables” like:
My Whole Life Plan
HealthShield Gold Max B Lite
Savings Accumulator Plus
Yeah, these are all real names. Good lord, just shoot me already.
3. Separate Insurance from Investment. Please.
Q: What is the number 1 reason that people are disappointed with Life Insurance?
A: When Insurers try to do too much, and mix Insurance with Investment. They do it partly to generate more returns for themselves, partly also to make plans more palatable to consumers by providing “cash value”. It works beautifully, except when it doesn’t. Check out this famous case on FB here.
Information asymmetry is a thing of the past. We are not going to accept it anymore, not in this day and age. The yearly bonus statements are about as useful as a wet matchstick, and as informative as year-old tabloids.
Insurers should stick to what they are supposed to do, which is to insure. If they really want a slice of the investment profit pie, then make it 100% transparent and separate them both clearly – we want to see how much our insurance costs – and also how our investments are doing.
In case you are wondering, this concept is hardly radical. Universal Life Insurance separates both Insurance cost and Investment return clearly, but currently it is more popular among high net worth individuals.
Life Insurance in a nut shell
Life Insurance isn’t complicated. We sum it up succinctly in 2 words: Risk Pooling.
Do we really need fancy Insurtech (or lots of Charlatan companies branding themselves as such) to improve it? It certainly won’t hurt provided the tech is really revolutionary – but we haven’t really seen any thing that wows us yet. (People love to throw big words around for the sake of it, which is unfortunate.)
Instead, there is literally of world of difference to be made by the insurers themselves.Without undue effort and threat to their bottom line, they can do so much more to make Life Insurance personable, friendly, and transparent.
Let the make-over begin. Its easy.
www.ClearlySurely.com aims to eradicate the knowledge gap between consumers and Life Insurance. Our Vision is that one day, every Man, Woman, and Child will be properly insured.