Recent announcements have surfaced saying that both Amazon and Google are kicking around the idea to sell life insurance. Are we worried that this going to bring some stiff competition to the life insurance market? Do agents (like us) have to worry?
We think not.
They both will focus on selling term life insurance policies and previous online ventures to the life insurance market has shown that people spending small amounts of money on a policy are just fine purchasing this way.
And perhaps this is how that particular segment of the market can be best served?
The reality is that most agents aren't all that excited about selling $100,000 death benefit policies. Why? Because it's awful hard to make a living selling that sort of insurance.
Certainly there is a large segment of the population who need that sort of policy and there should be a place that they can purchase it. But those sorts of purchases don't really warrant the time of a highly skilled professional.
If a person needs a 20 year term policy with a 100k death benefit, the only discussion really is if they are willing to pay the $15/month premium. Yes or no. Of course the premiums can vary depending upon the age and health of the person but I think you all understand what I'm saying.
There's just nothing complicated about it.
So have at it Google and Amazon…we salute you.
It could work
If they really focus on the smaller policies, that have a much shorter turn around through underwriting, it might work for them. Although, we do scratch our heads as to what they really hope to accomplish?
Will Amazon or Google ever sell enough life insurance to actually impact their bottom line at all? Maybe, but I would think they'd almost have to start their own life insurance companies to make it really worthwhile for them.
Either way, they will really have to focus on high volume, low touch and very transactional business. It is a business model that can certainly work, but hardly poses any threat to us or agents who do the type of business that we do.