Embedded life insurance is characterized by its integration into existing customer journeys, real-time coverage at the point of need, and reliance on advanced technology, particularly APIs and digital platforms. This model allows insurers to deliver tailored life insurance solutions within the context of significant life events, such as applying for a mortgage or enrolling in employee benefits. This report focuses on the emerging landscape of embedded life insurance, highlighting its unique characteristics, benefits, challenges, and real-world applications. The report also discusses embedded annuities.
The adoption of embedded life insurance offers numerous advantages:
- Improved Access and Reach: Insurers can tap into non-traditional channels, reaching underserved populations through fintech apps, payroll services, and digital wallets.
- Enhanced Customer Experience: By offering life insurance at critical decision points, insurers can reduce friction and improve conversion rates.
- Lower Distribution Costs: The digital nature of embedded insurance minimizes reliance on traditional sales agents, leading to reduced operational costs.
- Increased Product Relevance: Customer engagement and trust are enhanced because insurance offerings are tailored to the customer based on user data.
Developing embedded life insurance products requires a fundamental shift in thinking for a life insurance. One must enhance the traditional policy value chain to support digitally native, customer-centric solutions. That means leaving behind the lengthy applications, underwriting processes, and agent-driven sales that support conventional life insurance. The report highlights several successful case studies of embedded life insurance, including partnerships between fintech companies and insurers. Examples include SoFi's integration of life insurance into its financial wellness app, CaixaBank's offering of life insurance at the point of sale, and SNACK by Income's microinsurance model linked to everyday transactions.
