We take a closer look at some of the millennial mindsets that life insurers need to consider in winning over this significantly underinsured generation.
Millennials are quickly becoming an important customer base for life insurers to target, as they overtake baby boomers to become the largest segment of the US workforce. Millennials (defined as those born between 1980 and 1996, currently 22 to 38 years old) make up 23.4% of the US population, and research shows only 51% of them currently have life insurance - with a significant number of those who do not citing the perceived high cost of premiums as the biggest deterrent. Dispelling this belief of excessive cost is one area insurers need to focus their marketing efforts when trying to attract millennial customers. A survey which reported eight in ten Americans overestimated the cost of life insurance also showed many are willing to pay $120 annually for mobile phone insurance - and yet so many are unwilling to spend just a little more - $156 annually - on a level term life insurance policy instead.
Most millennials are so far removed from the world of life insurance that they have no idea what an actuary does, let alone understand the complex process and decisions that go into developing and pricing a life insurance product. This can make them unforgiving. The sheer length of time it can take to price a new life insurance policy makes it difficult to take advantage of the fast changing landscape that millennials inhabit.
Slow, complex, "one size fits most" products are so far removed from the digital-native, convenience-addicted, identity-driven sentiment echoed by most of this generation. In this article, we outline some other millennial mindsets insurers need to consider in winning the enormous opportunity of this underinsured generation.
“But I don’t have any dependents.”
The value of mobile phone insurance is clear to millennials - if this device which plays a significant role in many aspects of their lives is lost or damaged, their mobile phone insurance can ensure it is replaced. But without such a tangible benefit from life insurance, many millennials would struggle to see why they need to consider purchasing a policy at all - especially while young, healthy and dependent-free. Incredibly, a study by LIMRA also showed a significant misconception amongst millennials about qualifying for life insurance, with a whopping 41 percent believing they would be ineligible. For the majority of millennials, not only will they certainly qualify for a life insurance policy - but a 25 year old would pay around half the premiums a 45 year old would for the same amount of coverage.
As a generation, millennials are leaving milestones such as buying homes, marriage and starting families later and later - almost a third of US millennials still live with their parents. So the point of how beneficial it can be to purchase life insurance policy early needs to be emphasized - young, healthy millennials can lock in much lower premiums now, and be ready for a future where they perhaps do have those dependents and responsibilities to protect.
“Mom and Dad have got it covered.”
The other consideration that needs to be emphasized to millennials without dependents is whether their assets would cover the cost of a funeral and burial in the event of their early death, as a standard package can cost close to $10,000 and the responsibility would fall on their next of kin.
While some parents would certainly be able to cover this expense without a life insurance payout, it would be a significant relief to not only have the funeral expenses covered by a life insurance policy but also potentially enable a millennial’s family to take some time to grieve - without an added financial burden of lost income. And, while the majority of private or student loans are written off in the event of a death, this is not the case if the loan was co-signed by a surviving person, and repayment would become their responsibility.
“It’s too much of a hassle.”
Millennials are widely considered the quintessential digital natives, who have come of age as new technologies offer improvement in all aspects of their lives. For many millennials, the way they observed their parents spending money on goods and services during their childhoods became obsolete by the time it was their turn to manage their own budgets, with digital solutions such as Netflix, Uber and Amazon Prime sweeping away many traditional retailers and services.
This means ease of sign up is also a significant factor for millennials - the majority of web forms and apps they interact with are designed to gather only absolutely essential information as quickly as possible, and insurers need to make sure their website is optimized for mobile. The more in-depth legacy underwriting process required for a new life insurance policy to be approved can also be a significant deterrent, as it’s markedly different from the ease of signing up for anything else - whether the aforementioned cell phone insurance, a service provider contract, or even a new bank account. Insurers who can optimize this process and provide millennials with faster quotes and more easily digestible policies will be at a significant advantage over the competition.
“I just don’t like you.”
Finally, the branding of an insurer is also very important when it comes to selling life insurance to millennials. The widely held public perception of insurance is already quite negative, with many people believing it’s untrustworthy, or even a rip off, and millennials have an even keener sense for authenticity in advertising than most. Insurance innovator Lemonade has stated that 87 percent of their customers are first time insurance buyers, which demonstrates how their customer-centric approach with an emphasis on social good has resonated with the previously uninsured.
Sponsored content on social media can be targeted quite specifically towards millennials, and needs to resonate with their modern values. While there is also great need for marketing to be sensitive to diversity in family structures and gender roles, it again needs to be authentic, as millennials can detect the difference between real inclusivity and token minorities a mile away. Branding targeting millennials needs to have a significant emphasis on how a life insurance policy could also be a benefit to their own lives in the event of job loss or serious injury, to dispel the misconception of it being purely a payout to next of kin in the unfathomable event their own death.
Finally, a brand’s social media engagement and feedback also has a big impact on millennials’ purchasing decisions and willingness to sign up as a customer of a brand, and millennials on average check five sources to help their online purchasing decisions - as opposed to the average baby boomer who checks three - which can include online customer reviews. Not only can an effective social media strategy improve an insurance company’s favor with customers during the initial policy purchase, but those who can continually add value to social media feeds can cement themselves as an essential expense, and lower lapse rates among the most brand-loyal generation. Summarized by one millennial - “When a brand uses social media, I like that brand more.”
In our previous blog post, we shared a visual infographic of how millennials contribute to a $12 billion opportunity for life insurers.
