niche Life Insurance: One Answer for Being Successful In 2020

niche Life Insurance: One Answer  for Being Successful In 2020


The good news about the future of the life insurance 
industry is that life insurance is a product that will always 
be needed. The bad news is that many, if not most, life  
insurance products already have or will become commod-
ity products. Therefore, one of the key questions facing 
much of the life insurance industry in the year 2020 is how 
to survive in a commoditized market environment.
Companies that do well in a commoditized market tend 
to be very efficient operators or niche players. If a com-
pany elects to compete on price, then it must be a low cost 
manufacturer or it will not make money. However, in niche 
markets, price may not be the only or even the major fac-
tor driving a prospect’s purchasing decision and being able 
to identify and connect with a particular niche market be-
comes of paramount importance.
While both the efficient operator and niche player 
approaches will work, they require different skills and  
attitudes in order to be successful. Efficient operators will 
probably be larger companies that can afford to invest in 
volume-related technology and are able to obtain volume- 
related  price  discounts  from  suppliers.  The  efficient  
operators will also use very specific operating targets and 
have the discipline to stick to their plans.
On the other hand, the niche players will be more mar-
ket-oriented and will probably tend to be more creative. 
The niches don’t have to be large to be profitable. In fact, 
the larger the commoditized companies grow, the more  
opportunities may be presented for the niche marketers  
because life insurance has traditionally been characterized 
as a product that is “sold rather than bought” and large 
companies tend to abandon markets.
The potential for achieving higher returns on invest-
ment would seem to be more likely for the niche players  
than the commoditizers because if they’re successful,  
they won’t be competing on price (or commission). So 
how does a company become a successful niche player? 
And, is there any way to predict which niches will be the 
most attractive?
Any life insurance company that operates as a successful 
niche player in the year 2020 is likely to possess:
•  Foresight,
•  Focus,
•  Discipline,
•  Market intelligence,
•  Innovation, and
•  Luck.
Practically speaking, all of the niche player factors are 
interrelated. Moreover, the interrelationships between these 
elements are dynamic rather than stable. 
Foresight means having vision to identify those niche 
markets that have a high potential for success both in terms 
of sales and profits. Weeding out the many interesting but 
unworkable or inappropriate concepts that are present in 
the marketplace is a talent in itself. To do this well requires 
both a view of the current and future market trends and a 
grasp of consumer attitudes.
Focus means having a clear picture of a company’s  
future plans and directions. Particularly smaller companies  
cannot  extend  their  companies’  talents  and  resources  
beyond the company’s ability to concentrate its efforts on 
what it can and needs to do best. 
Discipline must be present and follow focus. Once 
a company becomes focused, it needs to make certain it 
has the discipline to keep working at its plan. The road to 
success is hardly smooth and will face many potholes and 
detours. The trick is to learn to readjust plans while at the 
same time not losing sight of the intended end goals before 
they have been thoroughly vetted.
Market  intelligence  is  one  way  that  a  company  
increases its odds for making the right decisions. Knowing 

more about the market environment than the competition 
makes it easier to be confident that a company is on the right 
track, not only at the time of the original decision to pursue a 
concept but also while the concept is being implemented. 
Innovation refers to making something happen. Simply  
having a new idea does not mean that the concept will 
work. Often people mistake innovation for invention. These 
are two related but different concepts. An inventor is a  
person with a new idea who usually doesn’t devote the 
energy or have the ability to make the idea a commercial 
success. Putting an idea into an environment that works  
requires a different talent and this is referred to as innova-
tion. Having innovation skills is extremely important for 
niche players because they will likely see many business  
opportunities  in  uncharted  waters  that  require  practical  
solutions in order to generate and sustain profitable operations.
No  matter  how  much  foresight,  focus,  discipline,  
market intelligence and innovation a company is fortunate 
to have, success usually includes some element of luck.  
Of course, a company can work to make its own luck by  
being the player that understands the total picture better 
than its competitors. 
Even with all the basics in place, if a company wants to 
be a long-term niche player, it needs to start by recognizing 
that finding new niches is not a hit-or-miss process. Finding 
niche markets can be a programmed process if it becomes 
ingrained in a company’s operating philosophy. Locating 
new markets is, in itself, a full-time job, and so the  first 
step is to assign someone the responsibility of developing new 
niches.
The next basic element of operating as a successful  
niche  marketer  is  to  understand  that  a  company  that  
believes in a niche marketing philosophy doesn’t have to 
have too many niches to be successful. On the other hand, 
having only one narrow niche could be precarious because 
markets emerge and disappear with great rapidity in today’s 
economic climate. Understanding the balance between too 
many and too few areas of activity is a critical step in building 
a niche company.
One of the best sources for identifying niches with the 
most potential is to create communication directly with  
the people who see the needs and wants of insurance  
markets. In other words, you need to keep open lines of 
communication with those individuals who have the ears 
of producers and prospects. These individuals tend to be  
a breed unto themselves although they often describe them-
selves as engaged in some form of insurance distribution.
The problem that many life insurance companies have 
is that they don’t go out of their way to be attractive to 
these creative minds. It is not uncommon for life insur-
ance companies to reject outside marketing input out of 
hand or fail to respond quickly to concept proposals. The 
result is that people with niche concepts tend to work 
closely with just a few life insurers that recognize how 
to efficiently evaluate new concepts. Ironically, if asked,  
almost  all  life  insurers  will  tell  you  they  want  new  
markets but the simple fact is that they aren’t prepared to 
react when approached.
So which niches will be active in terms of both volume 
and profitability in 2020? Here are some thoughts:
•  Electronic  marketing  will  eventually  become  much  
  more targeted and sophisticated with discernable niches;
•  Longevity  products  will  gain  acceptance  and  
   some life insurers  will specialize in providing products  
  and services to this growing and important need niche;
•  Favorable lifestyle-based life insurance  products will  
  emerge as a niche among those people who want to be  
  rewarded for living a healthier lifestyle;
•  Niches will develop for  special needs children and  
  adul ts because traditional life products don’t adequately  
  address their particular circumstances; 
•  A group of  products that are designed to perform  in a 
  low-interest-rate environment will become a niche; and


niche Life Insurance: One Answer  for Being Successful In 2020 
•  Markets  abandoned  by  large  insurers  often  offer  
  potential for a more hands-on operational environment,  
  particularly when they are  not burdened with large  
  layers of corporate overhead costs.
Undoubtedly, there will  be several strategies success-
fully used by life insurance companies in the year 2020. 
Among these will be both broad market and niche life  
insurance players. But for many companies there will not 
be an option to be a broad market operation because they 
will lack the capacity (including capital) to play against 
the “big boys.” The alternative will be to become a niche 
player. Companies may actually like this approach better 
once they understand how to operate as a niche marketer 
and taste the fruits of their labors. 
For a life insurance company to be a successful niche 
player, it will not only have to follow the factors described 
in this paper but accept this approach to doing business. 
It might behoove many current life insurance organiza-
tions to take a glance at what the future might look like and  
consider  moving  to  a  niche  strategy  on  a  proactive  
basis rather than waiting until many of the more delectable  
avenues have closed.