While Valuable, Riders Create Challenges For Marketers

The use of riders on insurance policies can create some interesting, and perhaps unanticipated, consequences from a marketing perspective.

First, an insurance contract is an intangible and potentially intimidating compilation of legalese, and the use of the word “rider” can further fuel any negative perception. Why not use a more customer-friendly term such as “additional benefit” or “supplemental feature?”

After all, for whose benefit is the term really used?

The term also implies something has been added to the policy, presumably for an additional cost, therefore suggesting this is something the customer must separately understand and also something requiring an additional decision.

So, would it be better to incorporate the riders benefit into the base policy? Or, is a separately needed decision consistent with the sales tactic of avoiding one big decision in favor of multiple smaller ones?

Another point: How riders are positioned in the market may determine whether the underlying product is sold with conviction or only on price. The very existence and separateness of a rider risks highlighting the plainness of the underlying base product to which it is attached, almost begging for a spreadsheet comparison.

Furthermore, the value-added flexibility intended through the availability of riders may, instead, be a value-detractor in the eyes of the buyer.

Consider the similarities when buying a car. Some cars have window stickers enumerating lengthy lists of optional features with corresponding additional costs included in the total price. However, stickers on other cars list all the same features, but with an annotation that they are simply “standard equipment” or just plain “included.”

From the perspective of the buyers perception, which car is a better value?

Few can dispute the value enabled through riders. But perhaps the insurance industry could strengthen customer perceptions of the total offering by paying more attention to the labeling, structure, positioning, and overall marketing of riders.

Bruce W. Gordon, CLU, is senior vice president and chief marketing officer at Kansas City Life, Kansas City, Mo. He may be e-mailed at bgordon@kclife.com.


Reproduced from National Underwriter Life & Health/Financial Services Edition, September 10, 2001. Copyright 2001 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.


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