Young adults and insurance products are not well acquainted. As a generality, they distrust the financial markets more than their Baby Boomer parents and lump discretionary insurance policies in the same bucket.
One 2014 industry survey found only 36 percent of adults under 30 have life insurance, compared with 60 percent of those ages 30 to 49.
The rate of disability coverage is even less – 13 percent of those age 18 to 29 have disability insurance. Among consumers between the ages of 30 to 40, 37 percent have disability insurance. That’s a 24% difference!
However, their reluctance to carry insurance unfortunately does not match reality. There’s a gap in disability coverage according to the Council for Disability Awareness. They estimate that more than 1 in 4 of 20-year-olds will become disabled before retirement, which is almost double the number who currently carry coverage.
“Millennials” Look At The World Differently
Younger adults will inherit the assets of their parents but not the same view of financial planning. Compared with their parents, this group is waiting longer to buy homes, have children and, in urban areas with good public transportation and ride-sharing options, even cars.
Life insurance agents who want to win over this client base need to speak the right language.
Focus on financial independence – not retirement
To Millennials, retirement, isn’t a dirty word as much as it is a concept of historic fiction. Many adults born between 1980 and 1995 watched as their parents were downsized out of lifelong jobs. Their company pensions disappeared; their IRAs and 401Ks tanked just as they needed them.
In the Great Recession, to help make ends meet, they took and may still have jobs for which they are vastly overqualified.
Using the r-word won’t win trust among a younger client base. Talking about financial independence and freedom will.
Benefits of life insurance for Millennials
Many Millennials don’t buy a life insurance policy because they think it costs more than it really does. Nor do they see the benefit, especially if they haven’t purchased a home or become parents.
Yet buying life insurance as a young adult makes sense for multiple reasons:
Lower costs: Because underwriters calculate premiums based on life expectancy, Millennials in good health can get solid coverage for pennies on the dollar.
Easier qualification: Locking in a life insurance policy as a healthy person is easier because it means less risk for the insurer. Diagnosis of something chronic like diabetes, high blood pressure or cancer is a game-changer.
Debt coverage: Let’s say parents co-signed your potential client’s student loans and the balance is $100,000 or more. If something awful happens, the parents will be responsible for all that debt. Can they afford it? Should they have to?
Dependent security: Say “dependent” and everyone thinks children. But a dependent is anyone who relies on the income of your Millennial client to live – a spouse, a live-in partner who co-owns the home or an elderly relative who receives contributions from your client.
Savings boost: Depending on available products, a policy with a death benefit and savings component allows a client to both borrow against and use it in retirement.
Millennials value liquidity, flexibility and life balance. Framing discussions about life insurance with those values in mind will put agents back in the game with this important age group.