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    Drones, the ACA, and You

    Remember when you rented your movies from Blockbuster and bought your books from Barnes & Noble?

    It seems like only yesterday – because it was.

    Today movies are still being made and books are still being written. But the delivery system for those products changed – seemingly overnight – turning companies that were once household names into vague memories and vacant storefronts. (Do you think UPS is just a little concerned about Amazon’s desire to deliver goods to its customers by drone?)

    drone

    When it comes to life insurance, the prevailing wisdom has been that it is a product that “is sold rather than bought.” Moreover, it was sold face-to-face by seasoned professionals at kitchen tables across the country.

    And while the majority of life insurance in the U.S. may still be sold that way, the times they are a-changing. The life insurance field force is aging, and the number of new agents doesn’t come close to the number of retiring ones. Many younger consumers believe the group life insurance coverage they purchase through their employee benefits programs provides more than enough coverage for them. Innovative insurers and agents are making inroads in the traditional marketplace by “commoditizing” term life insurance and mass marketing it using television ads and on-line platforms. These companies are responding to and/or anticipating the needs of the next generation of consumers, who are much more comfortable purchasing just about anything electronically.

    generation Y

    And on-line life insurance marketing may get a big boost from an unanticipated source – the Affordable Care Act. Within the next few years, millions of Americans – many of them under 40 – will purchase their health insurance from an on-line exchange. If these individuals are comfortable purchasing their health care coverage – ostensibly a much more complicated product than life insurance – on the Web, why would they hesitate to buy life insurance (or auto or homeowners for that matter) in the same way?

    To be sure, millions of consumers – young and old – will want the advice of a knowledgeable financial services professional before making a final purchasing decision. But these folks are likely going to come to the kitchen table – or whatever forum that replaces it – armed with much more information about products and pricing than any generation before them. They will be much more willing “buyers” who are seeking guidance – rather than a sales pitch – on which products best fit their needs and budgets.

    How is your society preparing to modify its delivery system to meet the needs of your next generation of members? Or do you believe that the “tried and true” method of life insurance sales will always be with us and alternative distribution methods are merely flashes in the pan?

    I’d love to hear your thoughts on this topic. Share them by posting a comment here or emailing me directly at jannotti@fraternalalliance.org.

    3 Responses

    1. I think the web will be the preferred source for insurance that must be bought; car, home and now health. For insurance that you are not forced to buy, life insurance, will still be sold face to face for some time to come.

      Some will buy it on line and most will confirm what they are told online but I think in most cases it will still take someone to persuade them to actually buy.

    2. People are going to go on line to shop for life insurance but it is a known fact that once they decide what they want they will go to an agent to review it, ask the questions and then buy. It doesn’t hurt to put your products on line so the shoppers can see what is available to buy before they seek an agent.

    3. While I agree with the value of the agent in the life insurance sales process, we should not underestimate the pace of change. As Joe indicates, the health exchanges will fundamentally change the way we purchase health coverage. I believe agents will be worked out of the health sales process within five years. Health insurance companies opportunity for profit will be limited by the ACA rules, which means they will look for profit through ancillary products they add on to the health sale. Products historically purchased through the fraternal system will be on the list!

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