Broker Check

Is the On-Demand Economy Good for Financial Services and Insurance?

| May 07, 2019

The on-demand economy (ODE) has made many products and services available at more competitive prices for anything ranging from groceries to legal services. It has also created new skilled jobs and forced many millennials into the entrepreneurial space or the “gig economy.”

While there are some advantages to the financial services and insurance industries entering the ODE, there are just as many disadvantages. However, having a background in international business and economics, I know that industries need to change with consumer demands, and failing to do so has been the cause of many multi-million-dollar business going under.

So, we have decided NOT to go the route of Blockbuster, Kodak or Tower Records and have dipped our toe in the ODE by given consumers the ability to determine their life insurance needs and apply online. We’ve even created an app that allows our clients to contact us, login to their investment accounts, view our videos, contact any of our partners, and even schedule an appointment. In fact, there’s a chance you may be reading this article/newsletter in our app.

We should ask the loaded question; is the ODE good for every industry? And the answer is “”

There have been phenomenal advancements in artificial intelligence (AI), but we are only in the infancy of this new technology. AI is a key factor in the success of a product or service that enters the ODE. Simpler products and services with less variables and need for personalization have done well, and the demands of the consumer are being met. But for more complex industries like financial services and insurance, AI just hasn’t made the necessary advancements yet.

While you may be able to open investment accounts, retirement accounts and purchase life insurance online. The variables and complexity of the products and services are too vast for AI to place everyone in the right product and/or service. There are hundreds of life insurance products and just as many investment vehicles and options. They each have their own advantages and disadvantages, and determining which of those products suits each individual’s circumstance still requires the input of an experienced professional.

This doesn’t mean that financial services entering the ODE hasn’t had its benefits. In 1992 55% of American households had individual life insurance. In 2010 only 44% of American households had individual life insurance, which was the lowest it had been in 50 years. However, as of May 2nd, 2019 nearly 63% of American households now have individual life insurance, and the number of Americans considered to be underinsured has nominally decreased. Some studies show that more than 70% of American households are underinsured, but the decrease in those households that are underinsured may be due to financial services entering the ODE.

While it’s difficult to find definitive data that proves this increase is due to people now having the option to purchase life insurance online, there is data showing that 45% of consumers prefer to buy life insurance online. There has been a 7% increase of online life insurance purchases every year since 2010.

The biggest factor to individuals not purchasing life insurance is an overestimation of the expense. 83% of consumers said they had not purchased life insurance because they believed it was too expensive. That same 83% also estimated that life insurance would cost three times the amount it was.

Consumers now have the answers to these concerns in the palm of their hands via mobile devices. The ease of acquiring one of the products to alleviate their concerns is now also at their fingertips.

The second largest factor for people not buying insurance is medical underwriting. 70% of consumers are interested in buying life insurance that doesn’t require medical underwriting, and most consumers do not know that many insurance providers now offer products that don’t require it.

The reality is; the easier something is to purchase, the more likely it is to be purchased. The ODE has done this for financial products and services. So, the ODE has been good for the financial services industry and some consumers, because it has provided an option for people to purchase important and/or necessary products and services that they wouldn’t have otherwise.

While I still am under the belief that you should contact a professional to discuss personal financial matters and concerns. I am on board with the idea that determining your life insurance needs and buying online is better than not doing so at all.

If you haven’t clicked on any of the highlighted links to determine how much life insurance you may need, what it may cost, and how you can buy it online, you can do so here. OR, if you’d like to speak to a professional about any of these concerns you can contact us through our website here, download our app here, or reach out to me directly at my contact information listed below.


Warmest Regards,

Dan Nuwash

Founder, Managing Partner

Finance For Thought
C: (910) 546-5463
O: (212) 534-1200