Digital Term Life and the Middle Market

Let's face it, when financial professionals who don't specialize in selling life insurance are talking with clients and prospects, life insurance is usually last on the priority list.

This is primarily true for term life insurance, especially among affluent clients who probably already have policies in place from when they got married, purchased a home or had kids. Not to mention, some will have (albeit limited) coverage offered through their employer.

But, for the millions of Americans who comprise the middle market — broadly defined as having $100,000 in annual household income — term life insurance is an urgent need and often a tipping point purchasing decision.

For advisors looking to grow their book of business in 2022, this presents a win-win opportunity. Not only can they use life insurance to attract new clients, but they can help deliver financial protection to millions of Americans.

Every advisor knows that generating new business requires time, financial resources and attention. Selling clients what they clearly need can often be easier said than done.

How can advisors efficiently and effectively leverage term life insurance to grow their middle market books of business in 2022?

By changing the way they sell.

Get Comfortable With Disruptors

There is no shortage of large, legacy insurance carriers offering quality term life insurance coverage.

But, no matter who within the middle market advisors are trying to attract — from millennials a decade into their careers and who are used to on-demand services or frontline health care workers who are short on time — the idea of having to work with an agent, go through a lengthy paper-based application process and complete lab work to get life insurance is simply a non-starter.

To bring middle market customers into the fold, advisors need to be well-versed with digital life insurance offerings that provide the same quality coverage, but often at lower price points and available to purchase online — either through an advisor or directly by the customer. In some cases, these policies can be issued in minutes and without the need for a medical exam.

We know that there are 41 million Americans who actively need life insurance, according to LIMRA's Insurance Barometer Study. While this gap cannot be closed by a single advisor or single carrier, solving this market need can be done by advisors willing to embrace realistic solutions — including digital life insurance — that meet prospects where they are, when they are ready and in the way they want to engage.

Understand Who Can Serve Your Prospects

Once advisors are familiar with the variety of digital insurance offerings, they can start to identify what each brings to the table — whether the flexibility of higher limits, the assurance of no medical exams, the convenience of same day coverage or the promise of affordability. From there, advisors can determine how these offerings compare with legacy carrier products and how they can benefit various middle market prospects.

What really matters, however, is whether digital life insurance offerings will actually cover middle market clients, which is a bigger concern than many advisors first realize.

For example, many digital carriers rely on binary, algorithm-based underwriting decision making that generates decisions without any human input. While that enables speed, it allows no room for nuance.

Consider a middle market prospect who works in the construction industry — but has an office job. Because there is no human oversight, they might still be denied by some algorithms on the incorrect assumption of working in a high-risk industry. Imagine a different scenario where only limited — or even no — data is available on an applicant. No information means the algorithm can't make a determination, and an applicant will subsequently be denied.

Ultimately, if an advisor recommends a digital life insurance offering that denies a prospect coverage, that lead vanishes in an instant (not to mention making it harder for the prospect to purchase coverage in the future). It's therefore critical that advisors become familiar with which digital life insurance offerings are actually designed and equipped to protect middle market prospects — namely ones that marry digital processes with sophisticated underwriting to increase offer rates. Otherwise, it doesn't matter how sweet the "perks" are.

Lay the Foundation for Long-Term Relationships

Getting middle market prospects through the door is one thing, maintaining them as long-term clients is another. For advisors, ensuring that transition is key to generating return on new business investment.

Fortunately, life insurance can be the tip of the relationship iceberg. That's why it is important advisors understand what, if any, other types of policies or coverage — whether annuities, disability insurance or otherwise — are available when advising on digital life insurance offerings. Simplifying how many financial institutions clients have to work with for various insurance needs can go a long way toward building relationships.

Additionally, it can also be useful to see whether digital life insurance offerings provide any other wealth and health resources. This could include trust and estate planning, end-of-life directives, critical document storage or otherwise. As prospects look for a single tool, whether human or otherwise, to help address their holistic financial needs, being able to provide a single recommendation can be a differentiator.

The opportunity the middle market affords advisors is well established. What's new is the simplicity of which it can be served. Focusing on meeting their specific market needs, understanding how they want to be engaged and providing tailored corresponding recommendations is the key to unlocking business growth in 2022. With digital life insurance, what can be simpler than that?

Wade Seward is head of distribution strategy at Haven Life.