D2C Digital Life Insurance in 2022: Reducing Friction and Increasing Customer Centricity

In the U.K., people search for life insurance on Google every 18 seconds.1 Life insurance–related keywords and phrases are searched for even more often – roughly every four seconds. Customer demand exists, and these searches represent a tremendous opportunity to reach new customers through direct-to-consumer digital life insurance sales.

But buying life insurance is a complex process filled with points of friction that can cause customers to simply give up. Any company that wants to sell more in the D2C space first needs to attract customers (not a simple task) and second, make it easy and compelling for them to buy a policy.

At RGAX, we’ve learned how to optimize digital journeys through experimenting with Money for Them, our in-house digital distribution brand. We’ve also explored several other digital initiatives focused on specific customer segments, including millennial women, and pairing D2C life insurance with digital mortgages.

Over the next few months, we’ll share more on each of these initiatives, but here are a few of the lessons we’ve learned so far:

6 Key Learnings in D2C Digital Life Insurance

#1. Every part of the journey matters. Even the parts you think are tried and tested. Reducing friction in D2C sales is all about creating a superior experience for your customers – making it easier for them to progress to the next step. Underwriting is part of this and a good example of where a well-designed, customer-centric experience can make a difference.

The reality is that many underwriting journeys are problematic for customers. There is stigma attached to some of the basic questions, such as those concerning smoking and drinking, as people, consciously or not, aren’t always fully transparent in their answers. Our experiments show that customers even struggle with some of the basic questions, such as height and weight – wondering “do you mean today’s weight?” “on average?” and “in what measurement?”. Both examples require the customer to stop and think, thus causing friction.

By experimenting with several different underwriting journeys, iterating based on performance, and working with behavioral scientists to design an optimal experience, we’ve developed an underwriting journey that enables an almost 100% completion rate.

#2. Measure everything. Using Google Analytics and other tools in our D2C sales experiments has allowed us to track how customers respond every step of the way and develop strategies to iron out any points of friction.

For example, we know that customers value being given choices on a D2C journey, but we also know that choices can create unintentional barriers. In our initial experiments with Money for Them, we saw more than half (~60%) of high-intent customers dropping out of a sale when it came time to select the amount of insurance they wanted.2 Again, this is an important piece of information, as acquiring customers is expensive, and losing them at this point is a wasted opportunity.

Of those who did select an amount,

  • 43% selected the first quote,
  • 30% selected the third quote,
  • 17% selected the second quote,
  • and 10% selected “see more quotes,” but then typically selected the highest one offered.

Our role is to understand what’s going on with the customer: Was it a design issue? Were the choices confusing? or Were they not appealing? Data gives us these insights and provides opportunities to experiment with ways to make the process easier for our customers.

#3. Deploy behavioral science. Dying isn’t an immediate concern for most people, so buying life insurance doesn’t solve a problem that is a high priority for most buyers. Asking customers to acknowledge the financial consequences of their deaths without any context is almost impossible. This is what’s called “psychological distance,” and behavioral science can help us close this gap.

Plan V Care, our female-focused experiments in D2C life insurance provide a unique example of reducing psychological distance. Our research found that women tend to think less about life insurance than about risks such as cancer.3 Cancer is a health condition that everyone is aware of; everyone probably knows someone who has received a diagnosis. Not only is it a real risk to customers, but it also resonates emotionally and thus makes the connection back to insurance easier and less abstract. By offering insurance protection for something relatable and high priority, such as cancer, you can close the psychological distance and see higher conversions.

#4. Every word matters. Especially when you think that, according to recent studies, the average reading age in the U.K. is nine. Life insurance is not a neutral term for most people, and most people are good at finding ways to avoid topics that make them uncomfortable. That’s not a great starting point, but if we also add in unfamiliar language or too much industry jargon, we make it difficult for customers.

But simplifying language isn’t enough. It also helps to use terms that customers are familiar with and would use in everyday conversation.

For example, many people don’t know what life insurance is or what it can do for them, but if we phrase it a differently, calling it a financial backup plan, for example, it becomes much more approachable and easier to quickly understand.

#5. Give customers a reason to trust you. Whether selling life insurance online or in person, building buyer trust is vital because we want customers to feel confident in their decisions. Our experiments have shown that an effective way to do this is to let your customers hear from other satisfied customers via testimonials. People want to buy products their peers are buying, so testimonials from people who look and sound like them can be powerful.

#6. Incentives will only get you so far. Whether they are Amazon vouchers or cinema tickets, sales incentives are often used to convert more sales, persuading customers to purchase. In our experiments, we found them to be effective at filling the top of the funnel but less so in closing sales. For instance, since the core target audience of Money for Them is families with children, we ran an experiment using Lego vouchers. These vouchers increased call-to-action conversions approximately one-and-a-half times, making our offer more attractive and bringing more people to the site. However, we didn’t see any evidence that vouchers lead to more sales. That’s not to say they should be disregarded, as getting customers in the front door is half of the battle.

Continuing to optimize the digital D2C life insurance journey

I’ve just scratched the surface of the learnings from our D2C digital distribution initiatives, and the team and I are excited to dig even deeper into some of these concepts. In the meantime, if you have any questions or want to discuss your next digital D2C move in life insurance, feel free to reach out to me directly.

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1. Google search statistics & trends, source: http://ahrefs.com/

2. RGAX Money for Them Campaign (December 21, 2020–January 24, 2021)

3. RGAX – WOOM Survey, 2021. Based on data collected from 1,043 responses

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