For many life producers, the Generation Y market segment, comprising those born between 1978 and 1994, represents a singular paradox. This younger generation represents a massive business opportunity with a substantial lifetime value. With approximately 70 million people, it is the largest generation since the baby boomers. Yet, those in Generation Y communicate and do business in unique ways, which can make them elusive as prospective life insurance buyers.
Editor’s note: There is no single universally accepted range of years to define when members of Gen Y or the Millennial Generation were born. Using different time periods can greatly alter the generation’s total population.
As a first step, life producers must realize that members of Generation Y are facing fierce economic headwinds as they struggle to build financial momentum. A Pew Research Center survey conducted in December 2011 found, among 18- to 34-year-olds, nearly a quarter (24%) had moved back in with parents and nearly half (49%) had taken jobs they didn’t want just to keep up with their bills. And according to a recent study commissioned by ING, those bills can be significant. More than half (52%) of survey respondents between 24 and 34 years old reported having outstanding student loans, and close to half (45%) said they had consumer debt.
See also: Infographic: Meet Joe Gen Y
For Generation Yers, these significant financial pressures can contribute to a belief that life insurance is something they can’t afford. By contrast, in our industry, we believe such protection is something they can’t afford not to own. However, our methods for reaching Generation Y with this message — and our processes for serving them as clients — need to be updated if we are to break through to them and achieve success.
Based on ING’s research efforts into the habits of Gen Y and our experiences working with successful life insurance agencies across the nation, here are a few ideas to help you more effectively engage and serve Generation Y clients — and tap into the largest market opportunity of the coming decades.
Direct, but don’t dictate. Members of Generation Y want to feel as if they are in control — whether this involves learning about life insurance products or making key decisions about what types or amounts to buy. To be clear, they don’t claim to be experts. A 2010 LIMRA study found 31% of Generation Y respondents admitted not knowing which insurance products they needed, a far cry from the mere 13% of baby boomers who admit such a knowledge gap. Still, members of Generation Y typically do not like to be told what they need. Rather, they would like to be coached through a process that lets them discover what’s right for them. Producers who can play the role of “driving instructor” — encouraging and informing from the passenger’s seat — will be positioned to build strong relationships with Generation Y clients. Gen Yers tend to use technology for most of their communications and social interactions. If a producer uses technology screens to walk through insurance information, these clients will likely be more comfortable asking questions and sharing information. Even though the interaction is in person, it is using technology as a central part of the dialogue.
Make your web experience simpler. Like it or not, the life insurance sales process is being judged against that of other financial and non-financial products. It’s being judged against the elegant and speedy process offered by many online retailers. It’s being judged by how easy it is for them to gather information about insurance products through social media outlets. Generation Y tends to prefer to hear the end result first, followed by the explanation in simple, short sentences, bullet points, or just a few key words or phrases that get the main points across quickly. Generation Y wants to go online and instantly understand what you’re selling and why it’s something they personally should consider buying. Then, with a few clicks, these prospects want to be able to narrow down options to see what they’ll get for their dollars. To see where your opportunities for improvement might lie, perhaps you might engage a sampling of Gen Y members to test drive your website and give you feedback. The tips they’ll provide will be invaluable.
Don’t make them wait. It seems the younger people are, the higher their expectations for speedy delivery of services. Thus, the delay between application for life coverage and issuance of the policy can be frustrating. Clearly, because life insurance is predicated upon purchasing dollars of death benefit with pennies of premium, insurers must demonstrate enough underwriting diligence to avoid adverse selection. While, for now, some delay is inevitable, producers can provide updates — like the progress bar we see when downloading programs — so the Generation Y client knows things are moving forward. They will be happier if the process seems to be automated — even if it requires decidedly un-automated, manual work behind the scenes on a producer’s part.
Let them know what peers think. Generation Y may have an independent streak, but that doesn’t mean peer opinions don’t matter. Think of the way many consumer sites provide buyers’ reviews of various products. When you apply this concept to life insurance, it makes sense to show younger prospects examples of people in similar situations. “People like me” comparisons are very relevant to Generation Y purchasing habits. Generation Y takes recommendations from peers seriously. Some carrier websites offer tools that use certain archetypes as a basis for demonstrating the value of life insurance, which can be quite helpful for younger clients. You can take this a step further by sharing examples of what real Generation Y clients have bought for life insurance, ensuring their privacy is protected, of course.
Meet them on their turf. For many in Generation Y, the world of kitchen table conversations and snail mail communications is quaint but outdated. Mobile devices are the go-to communications platforms for this generation, so life producers must have a presence on these platforms to engage prospects. Try this: Pick up a smartphone with Internet capability and type in the Web address of your insurance agency. What shows up? Is it an elegant, crisp rendition of your website, or a cluster of unreadable type and broken-link question marks? Not every agency can afford a native mobile application, nor does it need one. But at the very least, you should ensure that when a Generation Y prospect tries to engage with your agency through a mobile device, you don’t appear to be stuck in a time warp.
Our industry continually laments how inadequately we serve the middle market consumer with essential, affordable life insurance protection. In many ways, Generation Y represents the basic characteristics of this middle market consumer — living outside of the sweet spot of most life insurance marketing, unsure of how life insurance fits in with other financial products vying for their attention, and unaware of the significant risks they are taking by living without life protection.
The need for education, engagement and coverage is undeniable. According to LIMRA, those in Generation Y are much less likely than other generations to have life insurance. Only 4 in 10 have any life coverage, and only 2 in 10 are covered by an individual policy. By contrast, roughly 6 in 10 among those in other generations have life insurance coverage. This makes Generation Y the preeminent underserved market in America.
In addition, Generation Y represents the future of every agency and every life producer. Building trust early on can yield a strong, long-term loyalty from Generation Y clients. As they gain traction in their careers and amass assets, they will need a broad range of financial products and will look to trusted advisors for help and guidance. Producers who engage these clients today to provide basic life coverage will be well positioned to become those trusted advisors in the decades to come.
For more on Gen Y, see: