[Editor’s note: This is a blog post from Liz Langlois, strategic partnerships lead at Haven Life. Haven Life is a Bronze Sponsor at LendIt USA 2017 which will take place on March 6-7, 2017 in New York City.]
It’s 2017, and suddenly life insurance is sexy.
Remember, it was just a few years ago that the fintech space underwent a similar transformation, and now that industry is among the best in the world when it comes to product innovation and customer service. Budgeting became a breeze. Investing lost its intimidation factor. Lending was made simple.
Well, that same shift and growth is happening to life insurance – and it’s slated to rapidly scale in 2017.
Before we launched Haven Life in May 2015, there wasn’t a way to buy a term life insurance policy entirely online. Our CEO Yaron Ben-Zvi came to the industry as a customer first, and after his experience trying to buy a policy of his own, was inspired to create a different kind of purchasing process.
Haven Life was founded with the goal of taking a typically frustrating, several-week long process and turning it into one that could be confidently and transparently completed online: and at no added cost to the consumer.
We joked it was life insurance for introverts, but really, it was life insurance for a new type of on-demand customer, the kind that was being underserved by an industry that had become synonymous with complex products and antiquated sales processes.
Partnering with Life Insurance
Recently, a New York Times article was published about the financial moves all experts can agree on. One of them is, you guessed it, buying life insurance.
What remains a vital product to people with financial dependents can also be a great partnership opportunity for those within the fintech industry when you consider that only 6% of Americans say they don’t plan to have kids. That means almost all of your customers will, at some point, have someone who relies on them financially, and if they don’t have significant savings and assets, will need some type of life insurance protection.
Insurtech is a partnership that can be personalized to fit many fintech business models in a way that actually makes sense to your customer. You can explore:
- Content partnerships
- Lead generation/affiliate relationships
- Policy sales
- White labeling educational tools like a life insurance calculator or quote comparisons
Of course, no partnership is really a one-size-fits-all relationship, and it’s imperative that you are well-versed when vetting partners and deciding on the one that might be the best solution for your customers’ needs.
How to Properly Evaluate a Life Insurance Partner
Agencies versus Companies
The majority of startups in the life insurance space (ourselves included) are going to be life insurance agencies, not companies. Why? Simply put: it’s because this is the easiest way to enter the highly regulated life insurance space.
An agency serves as a broker for selling a company’s policy. While this may not sound like the most intuitive solution, it actually allows for greater flexibility and benefits to the customer. That’s because in order to be a life insurance company, and to be able to offer a strong rating (more on this later), you need to have a history of paying out claims and substantial reserves through your company and reinsurers. To put it bluntly, insurance is a 30 year promise – a startup may not be able to provide the same type of financial strength and track-record that a larger company can. In Haven Life’s case, we’re backed by MassMutual, a more than 160-year-old life insurer. Working with MassMutual allows us to focus our attention on modernizing the customer’s buying process while confident that our policies are in good and trusted hands.
This joint venture allowed us to bring a level of authority and reliability to our groundbreaking online process of real-time algorithmic underwriting that would have been impossible to achieve without MassMutual’s support.
Take ratings into consideration when you buy a life insurance policy. An independent company, such as A.M. Best does the homework on an insurer’s financial strength and record to help assess its claims-paying ability.
The higher the rating, the better the indication of the company’s financial strength. Our parent company MassMutual is rated A++ by A.M. best, which is the highest rating possible from that ratings agency.
When vetting the policy or policies offered by a life insurance startup, ensure that it’s the best for your customers.
Transparency and Educational Tools
When Haven Life launched, we were told multiple times that life insurance is sold not bought. Conflicting, considering recent research conducted by Deloitte found that “Consumers of all generations, but particularly the younger demographics, want to research and buy through multiple channels, with emphasis on easy access to real-time information through digital channels.”
When considering a life insurance partner, make sure it’s one that offers self-driven, DIY-ways (with help when the consumer needs it, of course) for determining the right amount of life insurance coverage and how much it will cost.
Online life insurance calculators and quote comparison tools are becoming the norm for life insurance companies and startups alike. Check to make sure your partner offers educational solutions to promote transparency.
Process for Coverage
The processes offered by life insurance startups (sorry, we mean “agencies”) is drastically different from the traditional one.
In our process, for example, you can expect the following:
- Calculation and quote comparison tools
- End-to-end online application
- An instant decision on coverage – yes or no (versus several weeks)
- Temporary life insurance coverage to start immediately, contingent upon completion of a medical exam
- A medical exam may not be needed for customers who achieve the best rate class. In this case, they won’t receive temporary coverage but will have their final offer ready upon submission of the application
Life insurance regulators are tough for a good reason. But, when you’re a company or agency that’s offering a new life insurance policy and process, the wait for approval to sell can be a long haul. Even more so when you understand that these approvals need to happen on a state-by-state basis.
Haven Life has been in operation since 2015 and we still have two more states waiting on approval until we are fully nationwide. So, yes, it takes awhile.
Before getting too far down the negotiation paths and discussions with a potential partner, you might want to find out where the startup you are vetting is in terms of nationwide availability, based on where your customers live and if that’s a deal breaker for you – at least in the short term.
The Life Insurance Industry Can Be a Valuable Business Partner
Strategic business partnerships are invaluable to all fintech startups, but this is especially the case for the life insurance industry, where partnerships will be key to startups getting a leg up in their business.
Life insurance will remain an important form of financial protection for consumers. With innovation within the industry changing both the process and consumer perception of the product, it’s the ideal time to be considering which startups might be the right partner.
We are personally attending LendIt to understand what kinds of products and services align with our business. We’re excited to think about new and creative ways to help our partners add value to their client relationships. If you haven’t done so already, I would recommend considering where life insurance education and partnerships could support your fintech startup’s business plan and revenue model.
MassMutual and its subsidiaries C.M. Life Insurance Company and MML Bay State Life Insurance Company are rated by A.M. Best Company as A++ (superior; top category of 15). The rating is as of January 31, 2017 and is subject to change. MassMutual has received other ratings from different rating agencies.