Changing Perspective towards Life Insurance

Life insurance Companies have come a long way in the perspective of life insurance distribution methods. A few years ago, in some parts of the country even today, life insurance market was primarily dependent on push, tax incentives and mandatory buying. There was little customer pull. However, this has started transforming as customers are becoming financially more aware. Better saving and higher disposable income have also made people look at insurance more as a solution.

A large number of people now understand the need for insurance and they generally want to look at that as specific solution for the individual. One of the examples in this is the growing popularity of online protection solutions and the variety of life planning solutions available for offline products.

The biggest advantage of such a solution oriented sale is customer’s ability to judge the merit of the product and decide accordingly.

Higher ticket size, better conversion rates are just some of the advantages of insurance that has made it more as a solution.

Among all the products sold in the financial domain, insurance have a distinct feature – intangible and not for immediate consumption.

In the true sense, insurance protects people from various financial uncertainties. In many cases, (term life covers), financial benefit of insurance may not be realized during the lifetime of the insured. However, he can be mentally contended knowing that in the event of misfortune striking, he and his family is protected. Thus, it is a life solution.

A solution approach allows life insurers to understand customers better and, build longer term relationships and retain them longer. For instance, there is a distinct correlation to persistency and child plans. Parents understand why they bought that product and will not do anything to jeopardize their child’s future.

Insurance coverage should not deem as an investment or tax saving tool; rather they should be viewed as a necessary life solution.

A shift in push to pull is happening on the back of change in regulations, company’s planning, needs of the customer or a combination of all these.

Traditionally, life insurance was considered as a push product primarily sold through intermediaries for financial protection and systematic savings. However, over the period of time this has evolved with life insurers offering sharply defined products and solutions targeting specific customer needs.

No single life insurance company can offer all products that can meet all needs of the customer and therefore the need for customizing existing products to tailor-made specific solutions. Life insurance solutions act as an enabler for the seller to bridge the gap between the product suite of the life insurer and needs of the buyer helping him to customize a solution by combination of one or more products/riders offered by the company or by creating a customized wrapper over the product that specifically talks to the customer needs.

Research shows customers who bought insurance products as a solution had a higher recall of key benefits and features than who bought life insurance products sold through traditional conversations. This in effect would impact long customer retention as well. Also, customers who bought products through solutions had more realistic expectations of returns. This in effect should result in to lower customer complaint rates.

These solutions positively impact productivity of the sellers on account of higher conversion and higher ticket size. The higher conversion is a result of sharper proposition customized for the client and the higher ticket size results from improved customer willingness to pay when a life insurance product is showcased as a life insurance solution.

The solutions have to be practical and well defined too. Solutions can help an individual cover many of his life’s solutions – financial assistance to dependents in case of premature death, continuing support for children’s education, and regular pension in the old age.

Source: https://www.policymantra.com/blog/changing-perspective-towards-life-insurance/