embedded finance will help fill the life insurance coverage gap
The Untapped Potential of Life Insurance
Approximately 41 million individuals in the United States recognize their need for life insurance, yet haven't actually acquired a policy. This indicates a significant level of consumer awareness.
However, the Life Insurance Marketing and Research Association identifies a substantial $12 trillion coverage gap. Roughly half of all millennials are intending to secure life insurance coverage in the coming year.
Addressing the Coverage Gap with Embedded Finance
A considerable, currently unmet demand for life insurance exists within the financial services sector. Embedded finance presents a viable solution to bridge this gap.
It is crucial for businesses to evaluate potential product expansions and strategic alliances. This will allow them to broaden their market reach, generate new income, and enhance the value offered to their customer base.
The Benefits of Integrated Insurance Solutions
Providing consumers with access to necessary products through familiar and trusted platforms represents a significant revenue opportunity.
Furthermore, it serves a valuable social purpose by bolstering the financial stability of families during critical times.
Financial resilience can be greatly improved through this approach.
- Connecting consumers with needed products.
- Leveraging existing trusted channels.
- Providing crucial financial protection.
The Advantages of Bundling Life Insurance
While the practice of offering packaged financial products to customers isn't novel, its application within the life insurance sector is relatively recent.
Embedded finance leverages technological infrastructure to integrate financial products and services into platforms that aren't traditionally financial institutions. Consider embedded finance as a form of convenient, on-demand access; customers gain advantages from both the financial protection itself and the ease of access through their preferred platforms.
Just as Amazon streamlines the shopping experience, saving consumers considerable time, the bundling of life insurance can return valuable time to individuals and positively impact their overall financial well-being.
The benefits of embedded finance extend to banks and various fintech companies. Even established financial institutions, like traditional banks and life insurance providers, can profit from this approach.
By adopting adaptable solutions for frequently sought-after products, companies can effectively seize market opportunities without the extensive investment required to develop complete business divisions.
Consequently, industry experts predict that embedded finance represents the future of the fintech landscape. Lightyear Capital, a private-equity firm, forecasts that financial product bundling will yield $230 billion in revenue by 2025, a significant increase from the $22.5 billion generated in 2020.
The Rise of Integrated Financial Solutions
Financial products are increasingly being integrated directly into the customer experience across a diverse range of industries. Numerous established businesses are either entering this market or significantly expanding their existing initiatives.
For instance, Tesla vehicle owners now have the capability to secure appropriate insurance coverage for their cars with remarkable speed and convenience.
Tesla states that this coverage can result in savings of up to 30% for vehicle owners. This is achieved through a deep understanding of their vehicles, the associated technology, safety features, and repair expenses, as well as the elimination of fees typically charged by conventional insurance providers.
Apple generated considerable attention when it initially collaborated with Goldman Sachs to introduce a credit card specifically designed for users of Apple products.
Following the success of this card, which contributed to record-breaking earnings for the technology company, Apple recently announced a new feature. Co-owners of the card, frequently family members including children, will now be authorized to make purchases, allowing both parties to establish or improve their credit histories.
Lemonade, a leading insurtech company, has introduced a white-labeled life insurance product powered by the platform offered by Bestow.
By incorporating life insurance into its existing platform, Lemonade is focused on maximizing customer lifetime value. This is accomplished by adapting its product offerings to align with customers’ evolving needs throughout different stages of life, such as the transition from renting to homeownership or the arrival of a child.
The Disruptive Potential of Embedded Finance in Life Insurance
The complete digitization of life insurance applications and purchases presents a significant opportunity for the industry. This modernization allows for expanded distribution and the development of products better suited to contemporary consumer needs.
Continued innovation and the creation of advanced solutions are poised to instigate substantial change throughout the life insurance sector.
Historically, the adoption of life insurance has been gradual, hindered by factors such as a lack of trust and products that didn't fully address customer requirements. The traditional acquisition process has also been unnecessarily complex.
Previously, securing even a simple term life insurance policy could take weeks and typically involved a mandatory in-person medical exam. However, platforms like Bestow now enable users to acquire life insurance via their smartphones in a matter of minutes, and their technology can be integrated by almost any business.
With wider implementation of these modernized approaches, life insurance companies will gain the ability to broaden their product offerings. They will also be able to customize coverage to more effectively target specific channels and customer demographics.
Embedded finance is key to this transformation, allowing life insurance to be offered seamlessly within existing customer journeys.
Benefits of Embedded Life Insurance
- Increased Accessibility: Products become available to customers where and when they need them.
- Streamlined Processes: The application and underwriting processes are significantly simplified.
- Enhanced Customer Experience: A faster, more convenient experience builds trust and satisfaction.
- Expanded Reach: New distribution channels open up, reaching previously untapped markets.
The shift towards embedded finance isn't merely about speed; it's about fundamentally altering how consumers perceive and interact with life insurance. It’s about removing friction and making financial protection more accessible to all.
As the industry embraces these changes, we can anticipate a more dynamic and customer-centric future for life insurance. This evolution will be driven by technology and a commitment to meeting the evolving needs of policyholders.
The Advantages of Accelerated and Improved Life Insurance Access
The growing prevalence of embedded finance solutions is creating a favorable environment for consumers to acquire necessary insurance coverage with greater ease. Technology firms are uniquely positioned to utilize their existing customer base to introduce new business areas.
This can be achieved without the challenges of independently building and managing the technology, adhering to regulations, and handling the operational complexities inherent in developing complete financial products.
A continued increase in embedded finance collaborations is anticipated throughout the year. These partnerships will involve integrating traditionally intricate financial products, such as life insurance, directly into existing platforms.
Ultimately, more rapid, efficient, and accessible life insurance options will prove advantageous for a wide range of individuals. This will bolster financial security for countless families by providing crucial financial protection.
The integration of life insurance into existing ecosystems offers a streamlined purchasing experience.
This approach bypasses traditional, often cumbersome, application processes.
Key Benefits of Embedded Life Insurance
- Increased Accessibility: Reaching consumers where they already are, within familiar digital environments.
- Simplified Processes: Reducing application complexity and accelerating approval times.
- Enhanced Convenience: Offering insurance as a natural extension of existing services.
- Wider Reach: Expanding coverage to underserved populations.
By leveraging the power of embedded finance, the life insurance industry can overcome longstanding barriers to access. This will result in greater financial stability for households across the board.