Millennials: “You Need Life Insurance for You”
BY RICH WHITE
According to LIMRA, U.S. ownership rates for individual life insurance have declined from 72% in 1960 to about 44% today. This rate, the most important long-term measure of life insurance industry success, will continue to decline unless companies figure out a better way to reach one important audience, the notorious Generation Y (“Millennials”).
Millennials are now in the prime household-forming, family-starting years – mid-20s to mid-30s. Surveys show that they have low interest in individual life insurance for a variety of reasons – heavy student loan debt, job insecurity, free-spending ways, mistrust of financial salespeople, etc. To avoid losing a whole generation, life insurance companies are devising new messages designed to lure Gen Y.
For example: “Your parents have taken out heavy student loan debt to fund your education. Since it is in their names, they will remain indebted if you die, all because they love you. Buy life insurance and name your parents beneficiaries.” (Note: This is being called the “guilt sale.”)
Or: “Your 401(k) is invested in the stock market. Whole life insurance isn’t really life insurance. It’s a guaranteed plan for diversifying and de-risking your portfolio.”
Or: “If you are unsecure about your job and retirement plan at work, or the future of your Social Security benefits, cash value life insurance is a great way to start a low-risk personal retirement plan.”
All of this is beating around the bush – and it won’t solve the life insurance industry’s Gen Y problem.
Millennials needs to be told, simply: “You are now a responsible adult. Most responsible adults take care of financial priorities. You need life insurance for you, now.”
Level-term insurance, with guaranteed convertibility to permanent, is a good fit for many Millennials, and it’s never been more affordable than today. It’s a simple, budget-able, inflation-proof product that drives home to Millennials the need for an adequate amount of death benefit protection, acquired while they are young and healthy. Level-term life insurance can supplement the limited coverage of group life plans at work, and then go with young people as they change jobs in an uncertain labor market. It won’t build cash value, but it will build lifetime personal-responsibility habits.
It’s easy for Millennials to tune out sales messages that don’t hit them where they live. It’s easy for life insurance companies and agents to focus on their older, affluent customer base and ignore the next generation. But one person’s ignorance can be another’s opportunity.
There is great opportunity to offer Millennials simple, straight information about life insurance – through sales people, social media and targeted marketing campaigns.