Insurance Company Trying Online Sales
May 19, 2015 by Deirdre Fernandes, The Boston Globe
Massachusetts Mutual Life Insurance Co. is hoping that just as consumers buy car, home, and health insurance online, they will look to purchase life insurance by using their computers, too.
The 150-year-old Springfield life insurance company is launching its first online-only product Tuesday as it tries to appeal to younger, more tech-savvy consumers and ignite interest in a coverage that’s often seen as complex and for a graying demographic.
MassMutual will sell the policies through its Haven Life subsidiary. Haven will offer term-life policies only, which provide coverage for a fixed number of years, but will cost less than traditional term-life policies at MassMutual.
Instead of having to talk to an agent, take a physical, and wait weeks for results and for the company to approve the coverage, consumers can go online, compare prices, answer health-related questions, and get preliminary coverage immediately.
Applicants will still have to submit to a medical exam but will have 90 days to complete it and will be covered during that time, said Yaron Ben-Zvi, chief executive of Haven Life.
“It’s so frustrating that you can buy everything from your car insurance to tonight’s dinner seamlessly online, but you can’t do the same when it comes to term life insurance,’’ Ben-Zvi said.
Still, it is uncertain whether online life insurance sales will take off.
In studies, only about a quarter of consumers said they prefered to buy life insurance online, said Todd A. Silverhart, the director of research at Limra, a life insurance trade group in Windsor, Conn.
“It’s perceived as being a complicated product, and people don’t have the confidence to do it online,’’ Silverhart said. “They still prefer a face-to-face.’’
Some insurers have opened hip storefronts to lure younger customers, where they offer financial classes along with yoga lessons and wine tastings. MassMutual’s store in Brookline is called the Society of Grownups, and State Farm has Next Door in Chicago.
And last month, Boston-based John Hancock Financial announced that it would provide customers with wearable technology to track their fitness and reduce their premiums.
Household ownership of life insurance is at the lowest point it has been since 1960, according to Limra. The group found that 43 percent, or about 100 million Americans, currently do not own life insurance policies. While two out of three adults over 65 years old own life insurance, only half of those between 25 and 44 years old do.
Many of these insurance companies also sell other products, such as annuities and retirement plans. By engaging customers early, they hope to eventually sell them these other investments, too, Silverhart said.
Haven Life’s Ben-Zvi said the key to appealing to younger customers has been making the insurance policy simpler and cheaper and using plain language to describe the coverage.
The company is able to offer better prices because the policy has fewer options. For example, a $700,000 policy for a healthy 40-year-old that offers coverage for 20 years costs less than $500 annually with Haven Life, compared with more than $575 through MassMutual.
The price is lower because the Haven Life policy is in place for a certain number of years, and unlike the similar MassMutual policy, it cannot be converted to another policy as the customer ages and becomes riskier to insure, Ben-Zvi said.
“We’re trying to make it lower-cost, so it’s not a financial burden,’’ he said. “We are focused on folks who got married, bought a home, or had a life transition . . . and are thinking about financial security and protections.’’
Deirdre Fernandes can be reached at deirdre.fernandes@globe.com. Follow her on Twitter @fernandesglobe.
