Why the traditional approach to life insurance no longer cuts it
By Mark Neil, Chief Distribution Officer at Bidvest Life
The life insurance industry has traditionally revolved around products that offer lump sum benefits. However, as the socioeconomic environment changes and people’s risks change, bespoke solutions that meet real needs are more critical than ever.
The events of recent years have profoundly impacted South Africans, reshaping both how we work and how we earn a living. As individuals grapple with reduced disposable income amid a prolonged cost-of-living crisis, life insurers must evolve to meet these shifting needs. This requires adapting products to cover a broader range of risks while providing innovative, tailored solutions that align with today’s financial realities.
“In a world where consumers need new life insurance solutions that meet their real risks, traditional products are falling by the wayside.”
We have found that great ideas often come from unexpected places, casual chats, and anecdotal evidence from people in the business and the industry, especially those who are client-facing – and who better to report on your customers’ actual needs than your sales and claims teams, and your network of financial advisers, who talk to your clients every day.
Combined with data, these qualitative insights are crucial for taking product development out of a silo and into a collaborative space; aiding an understanding of how a product is going to land with your financial advisers and their clients. By creating a continuous feedback loop involving everyone in the value chain – including employees and financial advisers who interact with clients regularly – and then interrogating the results, insurers can identify trends and develop products that fill the gaps.
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Life insurers that want to provide more value for clients need to find ways to differentiate and personalise their offerings. Innovation is key. Gaining a competitive edge lies in enhancing existing products or developing new products that enable advisers to suggest cover for specific needs, rather than choosing from a bucket of similar products whose only real differentiating factor is price. This is especially true for life cover, where short-term needs are typically underserved.
Take Bidvest Life’s new Life Priority benefit, which addresses the often-unexpected financial pressure that beneficiaries experience after a loved one passes away, by providing for immediate needs like groceries, rent, and school fees. The Life Priority benefit reduces the checks that need to be completed for non-disclosure for deaths that occur after the first two years of cover. This means that, where the payout of the main life insurance benefit is delayed because non-disclosure checks need to be completed, the Life Priority benefit will be able to pay out earlier, easing the financial strain on the policyholder’s family. This is particularly relevant in South Africa, where every working person supports themselves as well as an average of three dependents, according to the SA Institute of Race Relations.
In a world where consumers need new life insurance solutions that meet their real risks, traditional products are falling by the wayside. Going forward, offering solutions based on real insights, and which can be tailored to individual needs, is what will make insurers and the financial advisers that partner with them, stand out.
1 The SA Institute of Race Relations