September is Life Insurance Awareness Month and it was created to address the growing concern about the large amount of Americans (approximately 100 million) who lack adequate life insurance. That’s staggering considering more than 90 million people are offered life insurance through their employer. But only 80 percent participate. Why do these people chose it? The main reasons are: covering burial and other final expenses (49 percent), replacing lost income (41 percent) and paying off the mortgage (30 percent).
Let’s take a deep look at one large, specific demographic that is lacking life insurance: millennials.
I get it, life insurance isn’t as fun as talking about the latest iPhone, but what are some of the specific reasons millennials are not buying life insurance? According to a survey by LIMRA: fewer than 20 percent of millennials say they’re likely to buy life insurance. Why? Well, 60 percent say Internet, cable and cellphone bills are higher priorities, and about three out of 10 say saving for a vacation is more important. Of course those are all understandable reasons, but since it’s Life Insurance Awareness Month let’s look at how to get millennials more interested.
Gaining Financial Independence
I think millennials, and likely anyone who isn’t purchasing life insurance, don’t understand or know about the other living benefits offered through life insurance, benefits like paying for mortgages and debts, paying for college or borrowing money. Millennials may also want to be encouraged to think about what would happen to people that may depend on their income, like siblings, parents, and friends. And, anyone that’s co-signed a loan is obligated to pay off that debt if something happens.
Millennials should start thinking of life insurance and other voluntary benefits as part of their financial independence. The standard employer paid coverage is certainly not going to be enough, so looking at buy up options or independent life insurance makes sense. Life insurance needs to be seen in the context of planning for the future. These topics are much more engaging for millennials.
A recent survey by Bankrate.com found that the biggest retirement fear among 18- to 29-year-olds is running out of money. Because millennials are already paying a lot of their income towards debts, they hardly have an opportunity to save. This makes them much more susceptible to endangering their financial independence. According to an AFLAC study 72 percent of millennials would not be able to adjust to the financial costs associated with a serious injury.
With this in mind, life insurers should consider renaming or co-naming some of their products. Think about how “disability insurance” sounds to a millennial. What about “paycheck protection insurance.” Why not “financial independence insurance” or “lifestyle insurance?” You decide which one you would rather learn more about.
Insurers have two options, in my opinion. They can try and hard sell millennials or they can offer them a more age appropriate product and gradually up sell that customer as they age.
Let’s look at the hard sell.
Selling the value of a life policy face-to-face to a millennial isn’t going to happen. Millennials want to communicate on their terms, which includes SMS and social media – not face to face. That’s like asking them to carry cash. Millennials’ expectations have progressed alongside the rapid acceleration of new technologies and they have redefined the customer experience.
Insurers need to understand this and should have a plan to engage with millennials on their mobile devices first. The best way to get in front of this group of buyers is via laptop/tablet or on their mobile device.
Now, the second option: more age appropriate products.
Insurers need to offer a clever opportunity to put voluntary benefits in front of the millennial. For example, try placing an avatar in front of the millennial to explain why life insurance or other voluntary benefits matter to them. Another option is to prioritize the portfolio of voluntary benefits. For example, a millennial driving a motorcycle to work may be sold on the value of an accident product rather than on a life product. Offering up accident products before life insurance products may help you get the accident sale now and the life sale later. You have time to build a relationship over years that leads into selling, critical illness, life and other products.
To reach this educated, technology savvy consumer, it’s important to make use of digital tools to provide a customer experience that will appeal to customers. Avatars are a great example of digital tools that will help life insurance stay visible and top of mind. After all, millennials can probably get a good policy for a bit more than what a dinner at Chipotle costs.
Bottom line: insurers should have a plan, since in 2020, half the workforce will consist of millennials.
About the Author
As Director of Healthcare Consulting, Ray is focused on CodeBaby’s healthcare specific customers and delivering on CodeBaby’s mission of customer centricity. With over 20 years of experience in medical devices, healthcare and technology, specifically: ehealth, health insurance, and software, Ray is a subject matter expert who contributes to industry articles, and speaks at trade shows and events.Follow on Twitter More Content by Ray Catudal