Term Life Insurance - Consumer Journey

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Term Life Insurance - Consumer Journey

The term life insurance industry is undergoing significant shifts. The customer journey for the industry still has significant issues which can be improved upon in order to enhance outcomes for both clients and companies. Most of the adjustments include incorporating new technologies, becoming customer-centric and being innovative with product design.

Pre-purchase Phase

  • Potential future clients should be aware of the brand prior to making purchasing decisions. Using innovative marketing techniques, some creative product design and digitally transforming the life insurance business model helps clients get a better perception of your business.
  • When most consumers tend to over-estimate the cost of life insurance, sometimes by more than triple the actual amount, the organization needs to ensure that this knowledge gap about pricing is covered. When 63% of the market believes insurance is too expensive, they may be discouraged from attempting to engage with the brand.

First Contact

  • Consumers hardly make the first move to procure any form of life insurance. Insurance providers have to make the first step towards the sale of policies.
  • Insurance agents should be provided with tools which can enable them to act at the right time. Two-fifths of life insurance purchase decisions in developed countries are driven by life events, such as a having a baby or moving into a new career, whereas only 28% of life insurance purchase decisions are driven by fear of accident or illness.
  • In order to assist insurance agents to be prepared for these life events, insurance companies can use data analytics and AI tools to the benefit of both the company and their clients.

Personal Research

  • Research indicates that more people conduct their own independent research after making the first contact with an insurance company. They seek advice online, compare prices and services and even consult agents.
  • Insurance should be more accommodating of multiple channels — digital agents, comparison websites, and even AI advisers can be just as effective or even more so than traditional face-to-face engagement with clients.

Mandatory Questions, Matching and Pricing

  • While insurance companies must ask certain personal questions about an individual, for example, their smoking and drinking habits, loss of privacy is a major concern at this stage. Providing multiple channels to conduct the questioning phase enables clients to choose their most comfortable means and increases the chances of onboarding.
  • Having no physical exam conducted would improve the chances of moving on to the onboarding phase; as many as 52% potential clients of life insurance companies said they were more likely to close the deal if it had not been for the physical exam.


  • The process should be simplified as much as possible. As many as 19 million people are believed to have not completed the onboarding process, partly due to the process being long and complicated.
  • Availing the document signing process online, including on mobile platforms, will encourage more people to sign up as more people adapt to the internet.
  • This process should be simplified and shortened were possible as a lengthy process is a deterrent for potential clients.

Claims, Retention and Renewal

  • Renewal of life insurance relies on customer experience. Customers are more satisfied when the insurance provider has an ecosystem that provides additional benefits or services. These include encouragement of good behavior, nudging them towards better practices such as helping them make healthier choices and to help customers with different situations, and even as far as behaving like a life coach.
  • The use of technology, both wearable tech and utilizing the Internet of Things (IoT) which can assist with health monitoring, hazard prevention and with handling an emergency are encouraged. Research shows customers are willing to share more data with insurers if it results in an enhanced experience and better outcomes.
  • Insurance agents who are motivated and inspire to care about their customers, and have procedures to deal with claims quickly and efficiently enable higher levels of satisfaction, which result in less customer churn and higher rates of retention and renewal.
  • This final step of the customer journey should be a priority as the loss of clients due to non-renewals is a leading risk factor to the profitability and sustainability of insurance businesses; as many as 34% of the total life insurance clients can switch providers in a given year.
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Term Life Insurance - Consumer Drivers

The number of Americans who currently choose life term insurance policies is increasing, compared to 2017. As of 2019, 71% of Americans who had life insurance policies were those who had term policies, rising from 63% in 2017. When it comes to choice, the top three factors that drive Americans’ adoption of term life insurance policies are affordability, flexibility, and recommendation.


  • In the US, people overestimate the cost of a term life insurance policy by over three times the actual amount, according to a 2017 Insurance Barometer Study.
  • According to a 2017 survey of 1,000 respondents, 49% of those who had a term life insurance policy identified affordability as the reason why they purchased term life insurance.
  • Generally, a term life insurance policy costs around five to ten percent of the cost of a whole life insurance policy. Hence, the motivation to choose it over a whole life insurance offering when cost is a determinant of choice.
  • Karen Lee, a certified financial planner at Karen Lee Associates, disclosed that term life policies are inexpensive, and it is likely the best way to insure against premature death, especially for young people.
  • Fourty-two percent (42%) of American millennials wrongly estimate that a $250 life term policy would cost at least $1000.


  • From the 2017 survey, 30% of the respondents who had a term life policy identified flexibility as the reason why they choose term life insurance.
  • Term life insurance policies offer more flexible purchase options, compared to a whole life policy. Term life policies usually have purchase duration options of 10, 20 or 30 years, while whole life policies are usually fixed.


  • From the 2017 survey, 11% of the respondents who had a life term policy identified recommendation from a trusted source as the reason why they purchased a term life policy.
  • Of the 85 million American adults who consult social media when looking for a financial advisor, 51% are millennials.
  • Twenty-nine percent (29%) of millennials versus 17% of Gen X and nine percent (9%) of Baby Boomers are more likely to seek a financial advisor online.

Did this report spark your curiosity?


From Part 01
  • "It is a very unusual person that has a spontaneous and compulsive desire to buy life insurance – an unfortunate reality that spawned the observation that life insurance is sold and not bought. Thus, insurers face a perennial challenge to demonstrate their relevance to consumers’ aspirations and wellbeing. This ambivalence towards life insurance is reflected to some extent in the priority given to insurance spending out of discretionary income."
  • "Whilst many, if not most, of the purchases of life insurance are initiated by some form of human contact – whether from an insurance agent, a financial adviser, bank staff or a phone call from a call centre – the journey to the ultimate purchase decision is changing. Increasingly, consumers wish to have the facility to research their proposed purchase online."
  • "However, the data indicates that all generations show an appetite for online engagement at some part of the pathway to purchase and, in particular, the next theme shows that all generations will be happy to provide certain personal information in a secure online environment"
  • "Given the ease of access to such a wealth of information, there is no surprise that consumers take advantage of a broad range of advised and non-advised channels, underlining the importance of insurers accommodating as many channels to the consumer as possible."
  • "Life insurers are developing tailored, value-added products and services based on customer life events to offer the right products at the right time"
  • "Wellness programs and wearable technologies also have the potential to attract and engage customers as they age and health issues likely increase. Data from web-linked devices may help insurers promote fitness and preventive care among consumers. "
  • ""
  • "Life Insurance shows there are about 19 million “stuck shoppers” - potential life insurance buyers who start the process but never finish. To help combat this issue, many companies are implementing simplified underwriting processes to lower costs and improve customers’ buying experience."
  • "Fifty-two percent of potential life insurance buyers said they would be more likely to purchase life insurance if they didn’t have to go through a physical exam, according to the 2018 Insurance Barometer Study by LIMRA and Life Happens. "
  • "The number one reason consumers gave for not owning any or more coverage was cost, with 63 percent of consumers saying life insurance was too expensive. However, research shows that consumers tend to overestimate the cost of life insurance. Most consumers tended to overestimate the cost by three times its actual amount. Additionally, almost half of Millennials overestimate the cost of life insurance by five times the actual amount!"
  • "38% of life insurance customers evaluate new providers based on price"
  • "Targeting based on life events that create or highlight a need for insurance, such as a new job or the birth of a child "
  • "Digital consumers select and stay with brands that understand them and offer relevant choices at key inflection points along the digital journey. By building 360° customer views that balance privacy and compliance against personalization, insurers can manage the customer journey to attract high-quality prospects and transform them into sales."
  • "34% of life insurance customers switched providers in the last year"
  • "Life insurers are creating cultures where employees are motivated and inspired to care"