How UX can make or break a legacy
Matters of user experience design are rarely, if ever, a case of life or death. Nonetheless, the way users are influenced by an interface can be a large factor in the results of life altering decisions. This is especially relevant as more government services and financial institutions transition to meet expectations of the digital age– whether it’s being able to sign up for food stamps or applying for a mortgage to buy your first home, more and more people rely on online and mobile applications to accomplish increasingly impactful tasks. In the (sexy) world of life insurance, the most discrete nudges in the experience can mean the difference between financial wellbeing or despair post mortem. With the rising costs of death– funerals, certificates, and complex state-specific legislation — it’s only becoming more important that people are prepared for the consequences of their own sudden death, but life insurance providers are experiencing growing pains as they adapt to the expectations of the 21st century.
Collaborating with one of the largest life insurance providers in the US, my team was tasked with evaluating the existing experience of purchasing additional coverage through a group-provided plan and assessing the industry landscape to uncover pain points and unmet needs. In a space that’s quickly gaining traction and becoming saturated with mobile-first startups geared towards the millennial market, we wanted to make sure we were getting a holistic view of the industry to see the differences between what older, legacy providers were offering compared to the new kids on the block. Our work began with qualitative research interviewing policyholders and ended with an expert review of several startups to evaluate the enrolling experience. We used what we found to make a case for change at a century-old company, with the hopes of inspiring them to shake off the dusty ghost of life insurance past.
If you’ve ever had a job with benefits, you’re probably familiar with the notion of enrolling when on-boarding or simply checking boxes every November to make sure you’re still covered. Many employers that offer their employees life insurance and other benefits rely on third-party benefit administration portals for their employees to enroll themselves. Each employer’s set up is different, and the experience employees have with their insurance provider can vary wildly from workplace to workplace. Most companies that include life in their benefits plan offer basic coverage for their employees automatically– all the employee has to do is list a beneficiary and they’ll be enrolled in a policy at the full value or a percentage of their annual salary. When it’s all taken care of behind the scenes, many people don’t think twice about it (or even know who their life insurance provider is). With little control from client to client, the provider is left with very few opportunities to define and reinforce their brand with policy holding employees. Unfortunately for providers, their name may not even be listed, and the experience of opting into additional life insurance through their employer based plan is simply not always shown in the best light.
Our initial qualitative research plan focused on current policyholders to determine the main motivations in purchasing (or opting out) of life insurance. We found that providers often try to send supplemental material to new employee policyholders to get them engaged and onboard through several channels: email, snail mail, and phone calls. We also found that there’s a very fine line between being thoroughly informative and coming off as invasive. Most of what gets sent to policyholders in the mail ends up in the trash, and not a single participant in our study reported ever checking on their group policy online. More often than not, people who enroll in a new life insurance policy through work would rather just set it up one time and never have to touch it again.
If our our initial research told us anything, it’s that people just don’t like to think about dying.
Research done in the last year shows that 84% of Americans agree that most people need life insurance, yet when asked only 70% said they thought they needed it themselves. 41% of Americans do not carry any life insurance at all, and of those who do, nearly a third have just a basic employer provided policy that only covers a percentage of their full salary. At a marginal cost for employees, it should be a no brainer to get extra coverage added to their baseline group policy at a discounted rate, especially if they have families or people that depend upon them financially. Despite all this comparable affordability and ease, enrollment in additional coverage through group policies is generally on the decline.
When agents that work for legacy providers (think Prudential, Mutual of Omaha, MetLife) connect with policyholders, they often try to frame daunting facts in a compelling way to help people decide how much their policy should really cover. For instance, most people that have never dealt with death don’t realize that the average cost in the US for a funeral alone costs between $7,000-10,000. Outside of that initial cost on your loved ones, there’s everything else that your income might support, like a mortgage, student loans, car payments, every day expenses like bills and groceries. Once people are forced to step back and consider the true cost of their death, they’re often more willing to fork up the monthly cost for a higher pay out in the end. This method has proved tried and true when working with someone who is already motivated to make sure they’re covered, but we found that many uninformed users interpreted it largely as scare-tactics and slimy salesmanship.
After completing three phases of qualitative research with people that had group policies through their employer, individual policies of their own volition, and those enrolled in both, we had one consistent finding: experiencing a personal loss was the greatest factor in policyholders opting into additional life insurance. These people are the ones that become advocates and make sure that their family is taken care of in the worst-case scenario. Their commitment to getting the best plan possible is powerful and built on their past impression of being taken care of (or not).
If living through the aftermath of someone dying is the primary influence in decision making when it comes to purchasing life insurance, you might think there’s little hope for increasing sales. But, considering the shifting expectations of the aging millennial market, it’s no surprise that mobile-first term life insurance startups are selling policies to like $5 lattes and avocado toast.
Insurtech startups focused on health, home, and auto insurance have already established their footing as the future of their respective industries. Much less attention has been given to new tech companies focused on life, as a strong sense remains that life insurance is “sold not bought”. Though this concept is slowly being laid to rest, it’s still been an uphill battle for industry disruptors in life insurance. The industry, on the whole, is suffering from a dying model of distribution, overly complex products, and ancient infrastructure that limits product innovation. In this case, we can see that necessity certainly has bred innovation as plenty of startups have already invested in the white space.
With some independent term life startups focused on building strong brands and providing on-demand policy changes, others are partnering with long term life insurance incumbents to give their brand a trustworthy backbone and provide excellent customer care. Both are starting to capitalize on higher consumer expectations and meeting the strong need for clarity and ease in something people never want to think about.