Original article appeared in Insurance Thought Leadership July 2023
Carriers do not intend to upset life insurance beneficiaries, but the rigidity of processes often frustrates policyholders.
KEY TAKEAWAYS:
–In the wake of a death, beneficiaries have questions that carriers typically do not address, such as: “How do I close my loved one’s accounts?” and, “What am I supposed to write in the obituary?”
–Insurers have begun using an app that streamlines end-of-life bureaucracy and automates estate administration processes. It features to-do lists that suggest action items, such as contacting government agencies and filing claims for IRAs and pension plans. The app addresses self-care, too, with online resources and referrals to local counselors.
The old saying goes, “When you file a claim, it’s not a good day.”
When you file a life insurance claim following the death of a loved one, it’s a wretched day.
More than 10 million Americans died between 2020 and 2022, according to the Centers for Disease Control and Prevention and the U.S. Census. Assuming each person left behind the average number of three family members, at least 30 million Americans have experienced terrible grief in the past three years.
When carriers can verify the death, beneficiaries receive checks in a reasonable timeframe. In some cases, despite missing paperwork, many insurers issue emergency checks to handle funeral costs and other urgent fees and settle the rest of the policy later.
Even as exceptions are made, the industry is focused on process. Streamlining work methods and catching fraud are important. Becoming more efficient helps management focus on achieving business targets and saves everyone – carriers, clients, beneficiaries – money in the long run.
Process can frustrate policyholders
Yet, as companies experiment with digital engagement, they can inadvertently push their interaction with beneficiaries to the background. Carriers do not intend to upset beneficiaries, but the rigidity of the new processes has frustrated policyholders: Only 30% of Americans have high confidence in life insurance companies, according to a January 2023 LIMRA U.S. consumer sentiment study.
Let’s be honest: Policyholders don’t care about the process. They do care about being heard. And in the wake of a death, they have questions that carriers typically do not address, such as: “How do I close my loved one’s accounts?” and, “What am I supposed to write in the obituary?”
Younger generations might turn to Reddit or Discord for answers, but the information from an online community may not be accurate. Older generations who have gone through this life event before can rely on experience, although there might be new regulations that they are unaware of.
Adding more humanity to insurance
Life insurance is designed to help people in their darkest hour. Now, technology is putting people back into the center of insurance.
For example, FINEOS recently formed a partnership with Empathy, a platform that helps families navigate the emotional and logistical challenges of a loved one’s death. The team at Empathy has found that death in America is an expensive and complicated business for the survivors. Families are faced with an average of $17,000 in costs for funeral expenses and financial and legal matters. On top of that, it takes 13 to 20 months for families to settle their loved one’s affairs.
Most U.S. employees are managing these tasks at work. In its 2023 annual report, Empathy found that 76% of employed respondents said that dealing with loss harmed their performance or work status. Roughly 20% of the workforce at any given company will be grieving a recent loss.
Providing practical support
Many of the issues Empathy deals with are beyond the scope of an insurance company’s claims process but critical to support the beneficiary experiencing a life event. So, the Empathy app streamlines end-of-life bureaucracy and automates estate administration processes. It features to-do lists that suggest action items, such as contacting government agencies (Social Security, Veterans Administration, etc.) and filing claims for IRAs and pension plans. The app addresses self-care, too, with online resources and referrals to local counselors.
On an individual level, providing comfort when people are grieving is a kind gesture. From an insurance perspective, it is both humane and makes good business sense. There is a business in ethically helping to build community, especially because traditional support networks are gone. Carriers that demonstrate concern when people are at their lowest point are not just ensuring favorable Yelp reviews. They are reinforcing brand loyalty in those families, quite possibly for generations.
Demonstrating compassion
The benefits of demonstrating compassion outweigh its costs. Life insurance companies are in business to protect people. By extending themselves beyond putting a timely check in the mail, savvy life insurers are providing practical support to give their policyholders a soft place during an extremely hard time.
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Article written by Chuck Johnston at FINEOS, the leading provider of core systems for life, accident and health insurers globally.
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