Ever more insurers are partnering with big-box retailers to develop new markets for life and health insurance in the US. Amy Friedman reveals how the concept works.
The annual premiums range from a low of $69 for the low age range customer wanting $10,000 in coverage, to a high of $429 for the oldest age range customer wanting a $25,000 policy.
The boxes, featuring Snoopy and Woodstock (who else?), are available for customers to grab off the shelf. Inside each box is a prepaid card, which is the key to obtaining the coverage.
A Walmart customer who decides to buy the insurance takes the box to the checkout line, pays the one-year premium to the cashier, then takes the box home.
Once there, the customer calls a toll-free phone number on the back of the card, responds to six health-related questions, and if all goes well, that customer then has a one-year term policy.
For those who are covered, coverage expires after a year. Individuals who want another year of coverage would have to reapply and answer the same six medical questions, and then will be covered for an additional year.
A novel discovery
If the customer is declined, an innovative event occurs: the card in the box becomes a prepaid Discover card, containing the same dollar value as the premium paid, and can be used anywhere Discover is accepted.
This is a novel direct distribution strategy for an underserved lower-income market in the US. The sell is very simple: Walmart presents customers with these boxes.
Without the agent, the customer is free to read the material and make his or her own decision. Those who choose to buy the insurance in a box become, upon the follow-up phone call to Metlife, members of Metlife’s database, and so are available for possible upselling.
Such a strategy can be effective with those potential customers who would rather not deal with an insurance agent, find the whole question of life insurance confusing and/or who believe they cannot afford protection cover.
Metlife’s research has found that simplifying the sale as much as possible, enabling convenient access from a store with which many consumers are comfortable, might make it easier for individuals such as these to consider making such a purchase.
It is also a novel way to acquire new leads: ones that may not have come Metlife’s way otherwise.
Amy Friedman a senior writer at reinsurer RGA
