Life Insurance is a form of contract between the insurance company and the individual. The company promises to pay a sum of money to the beneficiary on the death of an insured person. Depending on the type of contract, incidents, accidents, and terminal illnesses could also trigger the payment. Today, we’ll discuss the PESTLE analysis of Life Insurance; it focuses on external environmental factors like; political, economic, social, technological, legal, and environmental factors.
Political Factors Impacting Life Insurance
Some of the main political factors in the Life Insurance PESTLE analysis are as follows;
I-Government Regulations
The government regulations are tight and strict for the insurance companies. In fact, the government offers tax incentives to individuals for buying life insurance plans. The government regulations focus on the authenticity and credibility of the insurance company to keep up and fulfill financial obligations. The objective is to protect the interests and rights of individual customers and users from any type of potential threats.
II-Political Stability
The stable political environment of the country plays a key role in the sale of life insurance plans. When a country has a stable political environment and the people trust the government, they would buy life insurance plans. In case of political turmoil and the people don’t trust the government and the system, they won’t invest their capital in the life insurance policy.
III-Insurance Industry Lobbying
According to an estimate, ACLI (American Council for Life Insurance) invests a significant amount of capital resources in political lobbying efforts. The objective is to bring and push insurance reforms, changing policies, tax incentives on Life Insurance, and others. Collectively, the insurance industry invested approximately 81 million USD in political lobbying.
Economical Factors Affecting Life Insurance
Some of the main economic factors in the Life Insurance PESTLE analysis are as follows;
I-Interest Rates
The country’s interest rate is the key economic indicator and it directly impacts the cost of Life Insurance plans. When the federal government the central bank increases the interest rate, they encourage consumers to deposit their money into the banks rather than savings. However, it is not good news for business loans, but it amplifies the spending and investment on the life insurance plans.
II-Growing Insurance Industry
The life expectancy rate has increased significantly in developed countries due to the advancement in the medical industry. As a result, people are buying more and more Life Insurance plans to enjoy their life and secure the future. According to an estimate, the investment and spending on the Life Insurance plans increased by 2.3% from 2023 to 2030.
III-Impact of Inflation Rate
The country’s inflation rate is also the key economic indicator and it directly impacts the retail sales of products and services. When the federal government starts printing more currency notes, then it amplifies the retail prices of products and services. As a result, the price of a Life Insurance policy would also increase, and it becomes expensive and costly to buy the life insurance plans.
Social Factors Impacting Life Insurance
Some of the main social factors in the Life Insurance PESTEL analysis are as follows;
I-Growing Awareness
The awareness about the significance of Life Insurance plans has been increasing significantly for the past few years. It encourages people to invest more in insurance policies and reduce the risk factors. According to an estimate, approximately 54% of the millennial are willing to buy Life Insurance policy.
II-Financial Security
Financial security and life insurance policies have great relevance to one another. According to an estimate by NEFE (National Endowment for Financial Education) showed that 76% of Americans believe in the fact that the Life Insurance plan plays a key role in their financial security. The other study showed that 61% of the people said that they were willing to invest their capital in life insurance.
III-Family Structure
The American family structure has changed a lot in recent years. According to an estimate, 23% of single mothers are raising kids, and 8% of single dads are raising kids, and it is completely different from the traditional stats of family structure. 37% of Americans believe in the fact that the traditional family doesn’t define the need for a Life Insurance policy.
Technological Factors Affecting Life Insurance
Some of the main technological factors in the Life Insurance PESTEL analysis are as follows;
I-Digital Platform
Life Insurance companies are investing a significant amount of capital resources in the development of e-commerce and digital platforms to connect with their customers. According to an estimate, approximately 36% of the people prefer to manage their insurance plans online; and receive updates and notifications online.
II-Data Analytics
According to a study by Accenture, 90% of insurance companies believe in the fact that data analytical technology would help them to offer more personalized and customized services to customers. The data analytics help insurance companies to offer customized and personalized services to users based on their needs and preferences.
III-Mobile Applications
According to a study, approximately 70% of people want to manage their Life Insurance policies and plans on their mobile devices. The mobile application would help them to read the latest notifications and updates about their plans. As a result, it amplifies the customer satisfaction level and user engagement rate.
Legal Factors Impacting Life Insurance
Some of the main legal factors in the Life Insurance PESTEL analysis are as follows;
Regulatory Compliance
Life Insurance companies need to comply with the government regulations and policies of different countries. They comprise terms and conditions of the life insurance plans, regulatory requirements, minimum standards and requirements, and others. Regulatory compliance would help insurance companies to smoothly perform their operations without any disruptions and delays.
Environmental Factors Affecting Life Insurance
Some of the main environmental factors in the Life Insurance PESTEL analysis are as follows;
Sustainability Initiative
Life Insurance companies should make a strong commitment to environmental sustainability initiatives. They comprise investing in renewable sources of energy businesses, recycling projects, and healthy food items to decrease the carbon emission rate. The environmental sustainability initiative would help them to keep up with the growing sustainability trends.
Conclusion: Life Insurance PESTLE Analysis |PESTEL Analysis of Life Insurance |External Environmental Analysis of Life Insurance | Strategic Analysis of Life Insurance
After an in-depth study of the pestle analysis of Life Insurance; we have realized that Life Insurance is highly beneficial to individuals and the beneficiaries. If you are learning about the Life Insurance PESTLE analysis; then you should keep in mind the abovementioned external environmental factors like; political, economic, social, technological, legal, and environmental.
Ahsan Ali Shaw is an accomplished Business Writer, Analyst, and Public Speaker. Other than that, he’s a fun loving person.
