The majority of life insurance customers are unhappy with the transparency and clarity of premiums they pay while half are underwhelmed with the overall experience.
Encouragingly younger policyholders value life insurance highly but want more flexibility on claims payouts.
The research conducted by Phronesis Partners for CapGemini also highlighted the key pain points felt by customers in the retail and group environments at various stages of their interactions with life insurance.
The findings were published in CapGemini’s World Life Insurance Report 2025 and came from a survey of 6,186 life insurance customers in 18 countries from the Americas, Europe and Asia-Pacific.
Underwhelming
According to the study, half (50%) of all customers said their life insurance experience was underwhelming.
One of the biggest areas of concern was premium transparency where 59% of policyholders were dissatisfied with policy pricing.
However, it was not the cost of premiums that sparked dissatisfaction but the lack of visibility into the how and why of policy pricing.
Looking specifically at policyholders aged 18 to 40, the research found 71% of this group still perceived life insurance as valuable and trustworthy.
It said they showed higher Net Promoter Scores compared to older customers (18% vs 4%) and valued recommendations from family and friends highly (61%).
But they wanted more flexibility in how claims are paid with 42% citing inflexible payouts as a critical concern versus only 26% of older customers.
Younger customers particularly value simplified policy features and benefits (88%) such as flexible coverage, built-in critical illness, and cost-effective disability riders, and add-on wellness benefits (44%) like gym membership and pharmacy discounts.
This population were also more frustrated by a challenging experience than older customers, aged between 41 and 60, throughout their insurance journey.
This included slow and complex onboarding processes, lack of dedicated communication channels, and an inability to self-service policies.
Complex terms and long applications
When considering the key challenges identified by all customers at various stages of the life insurance journey, some significant issues were raised.
At the onboarding stage, one-in-three (35%) retail policyholders struggled with complex terms and 27% did not like the lengthy application process.
After purchasing a policy, 25% of retail and group customers expressed frustration due to long wait times, while 23% were frustrated by the inability to access self-service options for policy changes.
The claims process also posed challenges, primarily due to a lack of digitisation: one-third (35%) of retail policyholders said they faced a complicated claim application process, with 27% noting a lack of empathy during the claims experience. (See listings below)
Faced with high inflation, economic uncertainty, and waning interest, CapGemini said life insurers were at a critical juncture and the industry must shift to engage a new generation of customers.
“Life insurance is shifting from a must-have to a maybe proposition,” said Samantha Chow, global leader for life insurance, annuities and benefits sector at Capgemini.
“Carriers must shake off the perception that life insurance is just death insurance.
“They can achieve this by focusing on engaging the next generation of policyholders, moving beyond a product-driven approach to put the customer at the center of their strategies.”
Top three onboarding challenges
Retail customers
35% Complex terms and conditions
27% Complicated and lengthy application process
25% Delayed underwriting
Group customers
34% Unclear benefits and coverage
25% Limited add-on options
19% Lack of communication on enrolment deadlines
Top three service challenges
Retail customers
22% Long wait times to speak with customer support
21% slow processing for service and renewal
20% inability to self-service policy changes
Group customers
32% Long wait times to speak with customer support
28% inability to self-service policy changes
12% unsatisfactory resolution
Top three claims experience challenges
Retail customers
35% complicated claim application process
35% lack of clarity on claim status and requirements
27% lack of empathy
Group customers
38% lack of clarity on claim status and requirements
35% limited pay-out flexibility
34% challenging access to customer support