Online tools with life insurance and annuity sales are important to increasing client satisfaction, according to new research by J.D. Power.
The research and data analytic firm surveyed a combined 9,167 life insurance and annuity customers between May and July of this year and found that digital interaction played a large part in increasing overall customer satisfaction for both life insurance and annuity customers.
According to the study, customers who used digital channels registered overall satisfaction of 823 points on a 1,000-point scale, 79 points more than customers who did not interact via digital. Similarly, overall satisfaction among digital annuity customers was about 35 points higher than customers without digital interaction.
“Customer satisfaction and engagement have generally declined the longer customers hold onto these products,” Breanne Armstrong, director of insurance intelligence at J.D. Power, said in a statement. “Now, however, with more customers than ever engaging with life insurance and annuity providers more frequently via digital channels, we’re starting to see a real evolution. Customers who interact with the digital offerings of their providers are more engaged, have higher levels of satisfaction, and are more likely to incorporate their life insurance and annuity products into their overall financial plans.”
Americans’ perception of life insurance is changing.
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According to the report, more Americans now see life insurance as both a way to plan life after death and a financial planning tool with the proportion of life insurance customers who purchased their policies for both financial and final planning reasons increasing from 30 percent in 2022 to 39 percent in 2023. Overall satisfaction among customers who purchased it for both reasons was also higher than those who purchased it for one or the other reason.
According to the report, 72 percent of annuity customers and 62 percent of life insurance customers now interact with their insurers via digital channels, including a website, email, chat, text, or mobile app.
Digital tools are not just beneficial to life insurance providers but also to financial advisors.
J.D. Power found that adding digital interactions to products purchased through agents or advisors also increased customer satisfaction. Life insurance customers who purchased through an agent or advisor and only interacted non-digitally had an overall satisfaction rating of 795. When digital interactions were added, overall satisfaction increased to 821. Annuity customers who purchased their annuities through an advisor and had digital interactions had a satisfaction level 25 points higher than those without digital interaction.
A J.D. Power study published in April found that investor satisfaction with their investment advisors had fallen 17 points year-over-year, with the average score at 727 on a 1,000-point scale.
For a fourth consecutive year, State Farm ranked the highest among individual life insurance providers with a customer satisfaction score of 843. Nationwide ranked second and MassMutual ranked third. F&G —formerly Fidelity & Guaranty Life— ranked highest among individual annuity providers with a score of 843. MassMutual ranked second and Nationwide ranked third.