Embedded insurance: Definition, examples, benefits

Embedded in health insurance typically refers to the inclusion of additional coverage within a primary health insurance policy. For example, a family health insurance policy may have embedded individual policies for each member of the family. This means that each member has their own coverage, but it is all included within the larger family policy.

An embedded deductible is defined as a type of deductible used in family health insurance plans where each family member has an individual deductible within the overall family deductible. This means that when a family member incurs healthcare expenses, those expenses count towards their individual deductible, and once that individual deductible is met, their health insurance coverage will begin to pay for their healthcare expenses.

Embedded vs. non-embedded in insurance refers to how insurance coverage is bundled and applied to policies. In the context of health insurance, for example, embedded deductibles refer to deductibles that are applied to individual members within a family policy, while non-embedded deductibles require that the entire family deductible be met before coverage kicks in for any family member.

In a general sense however, embedded insurance refers to insurance products that are seamlessly integrated into a customer’s buying experience, such as offering travel insurance when booking a flight or car insurance when renting a car. Non-embedded insurance, on the other hand, refers to insurance products that are sold separately from the primary purchase, such as purchasing home insurance separately from a mortgage or car insurance separately from a car purchase.

Aggregate insurance and embedded insurance are two different approaches to providing insurance coverage. Embedded insurance is a type of insurance that is seamlessly integrated into a customer’s buying experience, whether it be through a product, service, or platform. Aggregate insurance, on the other hand, is a type of insurance that provides coverage for multiple, related events or losses under a single policy.

Embedded insurance can be offered as an add-on at the time of purchase or as part of a subscription or membership package. The goal of embedded insurance is to provide a more convenient and streamlined customer experience while also increasing insurance uptake and coverage. In contrast aggregate insurance typically has a higher coverage limit than individual policies and is designed to provide coverage for catastrophic events that may affect multiple parties at once, such as natural disasters, cyber-attacks, or mass liability claims. The coverage limit for aggregate insurance applies to the total amount of claims made under the policy, rather than to each individual event or loss.

Embedded insurance works by seamlessly integrating insurance products or coverage options into a customer’s buying experience, typically at the point of sale. This can be done through partnerships between insurance companies and other businesses, such as retailers, travel companies, or car-sharing services.

As an example, when a customer is booking a flight, they may be offered the option to purchase travel insurance as an add-on at the time of purchase. The travel insurance is embedded into the buying experience, making it easy for the customer to purchase coverage without having to seek it out separately.

Embedded insurance is different from traditional insurance in several ways; some of the key differences are:

• Buying experience: embedded insurance is integrated into a customer’s buying experience, often offered as an add-on at the time of purchase or as part of a subscription or membership package. Traditional insurance, on the other hand, is sold separately from the primary purchase, requiring customers to actively seek out coverage.
• Customization: Embedded insurance can be customized to meet the specific needs of the customer based on their purchase history or other data. Traditional insurance is typically a one-size-fits-all product.
• Convenience: Embedded insurance is designed to be convenient for customers, providing them with a streamlined experience and reducing the need for separate insurance purchases. Traditional insurance may require more time and effort on the part of the customer to research and purchase.
• Accessibility: Embedded insurance can be more accessible to customers who may not have considered purchasing insurance otherwise. Traditional insurance may be seen as a luxury or a non-essential expense.
• Partnership: Embedded insurance is often provided through partnerships between insurance companies and other businesses, such as retailers, travel companies, or car-sharing services. Traditional insurance on the other hand is sold primarily by insurance companies directly to consumers or through insurance brokers or agents.