A New Model of Customer Engagement for Life Insurance :: UXmatters

Life Insurance and the Purchasing Decision

Purchasing life insurance seems like a no-brainer, so why don’t more people do it? There are both hard and soft reasons for making the decision to purchase or not to purchase, as illustrated in Figure 1. For example, most people believe that life insurance is more expensive than it is—overestimating the cost by 300%—and many people have competing financial priorities. [3] But there are also softer concerns that influence people’s perception about buying life insurance, as follows:

  • Does the purchasing decision stir up positive or negative emotions?
  • Are the outcomes of the decision tangible or nebulous?
  • Are the outcomes immediate or long term?
  • Is the decision simple or complex?
Figure 1—Purchasing decision
Purchasing decisio

Figure 2 shows that decisions around purchasing life insurance are the most challenging mix of the above concerns: life insurance can stir up negative emotions because of its focus on death and the complexity of the products and services, whose benefits are intangible and long term.

Figure 2—Decision-making qualities
Decision-making qualities

But family or loved ones’ security is at the core of this purchasing decision.  Because the purchasing journey is complicated, you can see why creating an Amazon-like customer portal wouldn’t be a silver-bullet solution. Instead, insurance providers need to begin changing the core perceptions that influence people’s decision making and reinforce the characteristics that are opposite to what people think about life insurance today: simplicity, tangibility, positivity, and immediacy.

Let’s look at the policy-application process as an example: During a review of 13 large life-insurance companies’ online application forms and the 269 questions that they collectively asked prospects, researchers found the following:

  • 90% of the questions focused on coverage requirements, medical and health assessments, administrative details about beneficiaries, and financials and assets.
  • 7% of the questions asked about the policyholder’s future, including questions about burial costs.
  • Only 3% of the questions—or eight questions in total—were positive or goal focused in nature, focusing on the prospect’s future needs.

Therefore, during the application process, one of the first critical milestones in the customer’s service experience, these life-insurance companies focused predominantly on gathering information that would help them evaluate risk and set a policy price. The tone of these questions simply reinforces people’s negative perceptions of life-insurance companies. The questions were:

  • negative—Do you smoke? What are your funeral needs?
  • complex—What coverage do you want?
  • offered little value—There was minimal discussion about the benefits of the policy, so few reminders of their reasons for applying.

As a prospect, what this line of questioning says to me is that the company cares more about their own risk than helping me protect my family. These questions also communicate that the company doesn’t care about the fact that I’m trying to be healthier or might be concerned about what kind of policy I can afford. These questions simply reinforce the one-sided, transactional nature of life insurance and do not reflect the very human and emotional attributes of life insurance. Such questions do not attempt to invert customer attitudes about life insurance—simple versus complex or positive versus negative—or communicate the obvious benefits of having a life-insurance policy.

Reimagining Policyholder Relationships by Acting as an Advisor on Life

The life-insurance business model is ripe for re-invention. If insurance companies are to remain competitive in the evolving insurtech market, strategic service design that reimagines the insurance company’s relationship with policyholders is key to that re-invention. Life-insurance companies should function as advisors on life, not just life insurance.

Focus on the Life That’s in Between

A life transpires between a policy’s inception and a policyholder’s retirement or death. That life might include kids, college financing, health improvements and declines, salary shifts, second homes, or caretaking of parents or grandparents. Policyholders’ definition of security inevitably evolves, so all of these life milestones are potential touchpoints for reassessing a policyholder’s needs and determining potential upsell and cross-sell opportunities.

Redefine Who Customers Are

While policyholders usually pay the premiums, the insurance company’s customers also include the beneficiaries—who are just as important as the policyholders because they’re the ones who motivated the policyholders to do business with the company in the first place. When insurance companies think about how best to communicate with policyholders, they also need to consider the broader system of influencers and loved ones who are important to them and understand their goals and needs.

Only when life-insurance providers truly serve families in both life and in death have they developed the kind of relationship in which customers might engage with cross-sell and up-sell opportunities. They’ve also created loyal families and a pipeline of future policyholders. According to LIMRA, claimants who are extremely satisfied with a claims process are four times as likely to do business with the company themselves, in comparison to claimants who are merely satisfied with the process. [4]

Create an Advisory Service

Not everyone can afford to hire a financial advisor or wealth manager. The underserved life-insurance customer constitutes the largest market segment, and these customers need guidance to find the right policy. Life-insurance providers could play a valuable role in helping people understand what’s right for their family, what others do in similar situations, and what value and security they’ll get in exchange for their payments.

The goal of reimagining the insurance provider’s role and relationship with customers is to change their perceptions about life insurance. Adopting a people-centered customer-engagement model ensures a company’s decisions regarding business, technology, process, and communication support this goal.

Shifting to a New Customer-Engagement Model

Professionals in UX and service design understand that people-centered design methods can help insurance companies better understand their customers and their interactions with them, allowing them to engage with customers in more meaningful ways. For many life-insurance providers, the development of a customer-centered mindset is less mature than at companies in many other domains. Therefore, insurance companies need guidance on where to begin. Here is my advice on the steps insurance companies should take to transform the way they do business with their customers:

  1. Develop personas for prospects, policyholders, beneficiaries, and agents. Many insurance companies already have policyholder and prospect profiles, but they should also develop personas for agents and beneficiaries. Remember, the goal is to illustrate a holistic representation of the life-insurance journey for all personas, not just the policyholder who pays for the policy.
  2. Create journey maps and touchpoint maps. Use these to determine customers’ painpoints, service gaps, and opportunities to improve the insurance experience. Figure 3 shows a symbolic journey map. Maps of customer journeys and touchpoints
    • connect customer-experience key performance indicators (KPIs) to business metrics—It’s easy to trace hard metrics such as quotes, written policies, and renewals to the indicators of a positive customer experience. Journey maps should reflect this relationship between business impact and customer experience.
    • should be living, breathing project documentation—It’s necessary to evaluate and iterate them over time, not just create them once when designing a portal, then leave them on a shelf.
    • should be based on the insurance company’s actual customers—There is no such thing as a generic life-insurance customer.
    • reflect the actual experiences of customers and agents—Employee behavior relates directly to the customer experience, so insurance providers should document and understand both.
    • incorporate input from internal stakeholder workshops—The purpose of these workshops is to elucidate internal processes and technologies that impact the employee experience.
    • start small with a particular use case—Over time, expand these use cases to represent the life experience of policyholders and their families or beneficiaries. Developing use cases helps stakeholders to discover touchpoint opportunities that connect their milestones to the insurance company’s products and services.
  3. Research how the insurance company communicates with both prospects and policyholders. Determine how to streamline and enhance cross-channel touchpoints, including customer support, insurance agents, mailings, email messages, and Web sites. Once you’ve documented the customer journey, aggregate all of the relevant communications and post them on a wall. Begin walking through these materials, keeping the customer personas top of mind, and ask:
    • Does this communication make sense given where it occurs during the customer journey?
    • What does it communicate? Is the tone representative of the company’s goals of simplicity, tangibility, positivity, and immediacy?
    • Does it represent the new model of customer engagement: serving as an advisor on life for the family?
    • Does it address painpoints and barriers across the journey?
  4. Review the data on policyholders and their families. Tap into social-media channels and other publicly accessible data to gain new information about policyholders and their beneficiaries.
  5. Define an analytics and data strategy. Address gaps in understanding, focusing on the new model of customer engagement.
  6. Explore investment in technologies and process improvements. Providing better support to employees enables them to interact with customers in new ways. If you fully embrace customer service for the life that’s in between, IoT and wearables can play a role in health monitoring just as they do for the health-insurance industry. Moreover, product accelerators allow reduced speed-to-market for new, truly customer-centered products that enable agents to interact with prospects in real time.
Figure 3—High-level journey
High-level journey

The goal should be to change people’s perceptions about life insurance. The customer’s decision to engage with an insurance provider should be simple, tangible, immediate, and positive. Adopting a people-centered customer-engagement model ensures that an insurance company makes business, technology, process, and communication decisions that support this goal. Moreover, by gaining a better, more holistic understanding of prospects, policyholders, and their loved ones, insurance providers can serve them more effectively and build a trusted, advisory relationship that presents more cross-sell and upsell opportunities and fosters customer loyalty.

Service Design and Business Impact

Service design provides a great example of how UX design professionals can have broader, more strategic impact through the experiences they design. By practicing service design, you can create new customer-engagement models and define new services, as this life-insurance example has shown.

Conduct business-oriented discussions with stakeholders that connect to what they care about—for example, growth, revenue, or efficiency. But always place the customer and employee experience at the center of the service.

Savvy UX-design professionals are adept at functioning as the fulcrum between business and information technology (IT), leading discussions about the goals for an experience and tying these goals to design execution. With service design, you’re simply expanding your expertise to mapping these business goals to the service experience that can deliver the desired outcomes. 


LIMRA’s Industry Trends. “Simplified Underwriting Is One Way Life Insurers Can Reach the 19 Million ‘Stuck Shoppers’.” LIMRA, April 17, 2018. Retrieved February 20, 2019.

LIMRA’s Industry Trends. “LIMRA: Life Insurance Coverage Gap Substantial and Growing.” LIMRA, September 8, 2015. Retrieved February 20, 2019.

LIMRA News Releases. “Consumers Overestimate Cost of Life Insurance by Nearly Three Times.” LIMRA, April 25, 2012. Retrieved February 20, 2019.

LIMRA News Releases. “LIMRA Study Reveals High Satisfaction Rates by Life Insurance Claimants.” LIMRA, June 10, 2013. Retrieved February 20, 2019.

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