Embedded Insurance for Personal Life Products—The Next Frontier
By Dennis Li
NewsDirect, April 2025
"Embedded insurance enables customers to engage with insurance as part of a narrative or use cases that they care about or are familiar with so that they don't have to deal with insurance separately. " —Dennis Li
The Rise of Embedded Insurance
Embedded insurance is rapidly gaining traction across global markets, with its share of global gross written premiums (GWP) expected to surge dramatically over the next decade. While early progress has been most visible in P&C insurance, the life insurance space is beginning to embrace this shift as more players explore B2B2C and affinity models. According to the 2024 Embedded Insurance Landscape,[1] embedded insurance, including life insurance, is projected to grow by an astounding 600% over the next eight to 10 years. This growth is fueled by advancements in digital integration and personalized customer journeys, making insurance more accessible and seamless for consumers.
In today’s digital age, consumers expect convenience at every touchpoint, and embedded insurance is perfectly suited to meet this demand. Rather than requiring customers to purchase insurance as a standalone, an often cumbersome process, embedded insurance integrates coverage directly into products and services they are already using. Thanks to mature insurance APIs and accelerated underwriting technologies, insurance is now woven into non-insurance digital platforms—from e-commerce checkouts to mobile banking apps—offering a more intuitive and user-friendly experience. This evolution is transforming how consumers interact with insurance, shifting it from an isolated transaction to an effortless part of the overall customer journey.
However, much of the conversation around embedded insurance has so far still focused on the P&C space—and for good reason. Unlike P&C products such as warranties, renters’ insurance, or auto insurance, life insurance presents unique challenges. Life insurance is non-compulsory, doesn’t typically align with a specific purchase or use-case, and requires a long-term financial commitment that can span decades. Its complexity and the often-intangible nature of its value make it harder to seamlessly integrate into everyday transactions. These hurdles have led to shorter-lived partnerships for life insurance in the embedded insurance space. Yet, as digital ecosystems continue to evolve, life insurance is now positioned to explore new ways to overcome these barriers and tap into the growing momentum behind embedded solutions.
The First Principle of Embedded Insurance
Before losing hope, let’s return to the first principle of embedded insurance. Contrary to popular belief, embedded distribution isn’t meant to challenge brokers and agents. Rather, it complements these traditional channels by reaching customers who are otherwise inaccessible and offering simple, digital products that may not provide enough incentive for brokers and agents to prioritize. In other words, it right-sizes distribution economics while expanding the market opportunity.
Strategically, embedded insurance revolves around partnerships with third-party service providers that possess: (1) Strong lead-generation capabilities, (2) a large customer base, and (3) significant brand equity. Embedded enablers leverage these partnerships to seamlessly integrate relevant and straightforward life insurance products into the service providers' digital ecosystems, allowing consumers to purchase insurance with minimal friction. When executed properly, this approach reduces acquisition costs for insurers, boosts revenue and retention for third-party providers, and ultimately ensures end users are protected before they even know they need it.
At its core, embedded insurance is about creating a win-win-win scenario: Opening new distribution channels, delivering insurance products more efficiently, and offering value to all parties involved. (See Table 1)
Table 1
Benefits of Embedded Insurance
|
Benefits for consumers |
Benefits for channel partners |
Benefits for insurers |
|
Convenience |
Monetize customer touch point (more revenue) |
Lower acquisition cost |
|
Trusted customer relationship |
Increased customer retention and loyalty |
Reach middle/mass market underinsured customers |
|
Personalization |
Increased competitiveness |
High conversion and lower anti-selection |
|
Integrated experience |
Increased customer conversion |
More data to inform product decision |
Why is Embedded Insurance Different for Life Products
Embedded distribution touches many aspects of the insurance tech stack. The following is a simplified framework, assuming a basic understanding of digital insurance distribution in the U.S. market.
Let’s begin with the similarities between embedded insurance for personal life products and P&C products. Both require similar foundational building blocks and deliver comparable value to consumers and partners.
For both life and P&C products, modern technologies and insurance stacks are essential to making the embedding process practical. API connectivity is highly preferred, and offering a white-labeled solution quickly is a must. Additionally, the embedded insurance product must be contextually relevant—it needs to align seamlessly with the primary service or product offering, and the underwriting process should meet customer expectations. Access to existing data is another key driver of success for embedded solutions. However, this is where the similarities between embedding life and P&C products end.
Unlike P&C products, which have undergone years of digital transformation, life insurance is still at the beginning of this journey, hindered by significant legacy burdens. Beyond simple risk-based products such as term life, few other life insurance products have developed the API connectivity necessary for embedding.
Another major difference is in the underwriting process. While many P&C products involve little to no underwriting, life insurance still requires a far more complex underwriting process, even for simplified issue and instant-issue products. This adds uncertainty, which is a key concern for embedded partners, as it can negatively impact the customer experience.
Additionally, unlike most P&C products—typically short-term, compulsory, and tied to specific use cases—life insurance is non-compulsory, more complex, and involves a long-term commitment. Consumers often struggle to fully understand the value of life insurance, which makes it harder to embed successfully.
Furthermore, unlike the neo-insurers in P&C, such as Lemonade or Root, which own the end-to-end solution stack and can develop their own embedded solutions, life insurers often outsource distribution. Due to the fragmented tech stack and operational constraints, life carriers are unlikely to develop in-house embedded solutions, making them more reliant on third-party enablers to bridge this gap.
By now, it is self-evident that despite the similarities, the difference in life products mandates unique ways of implementing an embedded strategy.
The Considerations of Effective Embedded Solutions for Life Products
Life insurance products, by nature, are more complex, high-value, and low-frequency, making them more challenging to embed seamlessly into customer journeys.
Implementing life products requires careful attention beyond a modern and flexible tech stack. Life embedded enablers should consider several key factors to ensure successful integration.
Typically, embedded solutions aim to deliver insurance as part of a point-of-sale (PoS) process, such as at the close of a mortgage transaction, or as part of a non-purchase customer journey, such as within a digital experience offered by distribution partners like neobanks. Each method distinctly influences how the insurance value proposition is presented to the customer, shaping the broader embedding strategy.
On one hand, embedding insurance into the PoS process requires the product to be closely tied to the primary purchase. Unlike group life or health insurance, where hard-embedded (opt-out) offerings are sometimes feasible, individual life products typically need to follow a soft-embedded (opt-in) approach due to regulatory requirements. This means the customer must actively choose to purchase the insurance when it is presented alongside another product. A relevant example is when airlines offer travel insurance just after a customer books a ticket, leveraging the moment when the buyer is already thinking about potential risks. In the case of personal life products, contextual relevance and simplicity are essential. Customers are often making quick decisions, and adding life insurance on top of an already significant financial commitment can feel overwhelming. To complicate matters further, PoS embedding often occurs in low-touch business models, limiting the opportunity for re-engagement if the customer initially opts out.
On the other hand, embedding insurance as part of an ongoing customer journey—such as within a banking app—requires a different approach. Without the immediate sales motion seen in PoS transactions, customers may not "notice" the insurance offering or may lack the awareness to take action. Therefore, strategic consideration needs to be given to where and how the embedded solution is presented. The benefit of this approach, however, is that insurance sales can occur at any point in the future, as long as customers regularly interact with the platform.
Understanding these nuances is crucial when selecting embedded distribution partners. For PoS embedded partnerships, both parties must have a robust tech stack to enable seamless integration. Leveraging existing customer data to pre-populate insurance offerings can drive higher conversion rates. Insurance products in this context should be simple, affordable, and closely aligned with the primary purchase.
In customer journey-focused partnerships, the key to success lies in taking advantage of frequent customer interactions (high-touch models) to gradually build awareness, generate interest, and prompt purchase decisions over time. This method allows insurers to engage customers before they begin actively shopping for insurance, enabling cost-effective entry into the customer lifecycle and addressing different needs at various stages.
An effective embedded solution for life insurance must be data-driven, seamless, cost-effective, personalized, transparent, and flexible. Not all partnerships labeled as "embedded" truly meet these criteria. For example, merely embedding a link that redirects customers to an external website is not a true embedded solution, and past results over the last years have shown that such strategies fail to deliver the expected business outcomes in a sustainable way. Instead, a well-executed embedded strategy should be viewed as the evolution of bancassurance 2.0, where insurance is embedded into FinTech platforms, such as challenger banks. For instance, LatAm challenger bank Nubank launched its life insurance offering in December 2020 in partnership with Chubb, demonstrating the potential of this approach.
A successful embedding partnership leverages the distribution partner's customer data to identify needs, pre-underwrite policies, attract customer interest, and enable ongoing engagement for future upsell and cross-sell opportunities. Of course, the specifics vary depending on the type of channel partners, but those technical details are beyond the scope of this paper.
Why do We Need Embedded Enablers for Life Products?
Consumer shopping behavior is evolving faster than ever before. Despite innovations in life insurance products and distribution technology, these efforts alone have not been sufficient. While the pandemic heightened awareness of mortality, leading to a short-term surge in life insurance demand, this effect has proven to be temporary. According to a LIMRA survey, the life insurance coverage gap continued to widen since 2021, reaching new highs. Clearly, something needs to change, and the key lies in meeting consumers' evolving expectations.
In the life insurance space, carriers have been pivotal in driving digital transformation, particularly in underwriting innovation. Recently, they’ve begun developing more digitally-friendly products. However, due to their long history of outsourcing distribution to third party distribution entities, most life carriers understand the operational and logistical limitations of disrupting distribution themselves. As a result, they are increasingly looking toward partnerships for digital distribution solutions.
This is where embedded enablers come in. Embedded enablers can take various forms—whether as MGAs, BGAs, or pure technology platforms. They act as the bridge between new digital distribution channels and insurers. Beyond distributing insurance products, embedded enablers play a crucial role in using data to build long-term digital relationships with customers.
The strategic value embedded enablers provide lies in their ability to rapidly test different distribution channels and embedding methods, find the right product-channel fit, assess market appetite, and bring these insights back to carriers to inform product development. Each distribution channel has unique embedding requirements related to data privacy, technology integration, and placement models, all of which entails a various set of economics. This shift also means that product requirements are no longer solely driven by insurers but are increasingly influenced by third parties, facilitated by embedded enablers.
Most life insurance products today have not been designed to target broad market segments with the level of personalization that modern consumers expect. Embedded enablers serve as a conduit, allowing insurers to finally meet these demands. Through these partnerships, life carriers can leverage data and digital tools to create more relevant, personalized products that resonate with today’s consumers and align with their changing expectations.
Statements of fact and opinions expressed herein are those of the individual authors and are not necessarily those of the Society of Actuaries, the newsletter editors, or the respective authors’ employers.
Dennis Li, FSA, director of business development and partnerships. Dennis can be contacted at https://www.linkedin.com/in/dennisxli/
Endnote
[1] “Embedding Insurance in Digital Platforms and Marketplaces: A Comprehensive Analysis” published by The Open and Embedded Insurance Observatory in 2024.