Life insurance is designed to protect a client’s future — a spouse, dependents, a home or business. But how do you approach a client who has none of these things? Generation Y (born between 1980 and 1992) is showing an increased interest in insurance and investing, but the emotional calls to action that work on their parents and grandparents have no pull with a client who hasn’t yet put down roots.
How do you change the conversation to reflect what matters to this generation?
Position it wisely
Gen Yers are in tune with their money — about 83 percent contribute to a 401(k) plan, and nearly 50 percent are auto-enrolled in a savings plan sponsored by their workplace. However, according to LIMRA, more than half of Gen Y households (about 30 million people) need more life insurance. To help Gen Y clients make the connection between financial planning and life insurance, focus on life insurance as a portfolio asset that helps secure retirement.
For example, indexed universal life (IUL), in which the accompanying cash value account is invested in the S&P 500, is a simple way to combine investing with life insurance coverage. Unlike an IRA or 401(k), there is no pre-set limit to the amount a client can contribute to the cash value account. The premium is paid on an after-tax basis, but your client can get tax-free distributions from the cash value account during retirement. I explain the value of IUL using a proprietary Monte Carlo comparison, showing historical data that doesn’t over-illustrate a product with high-interest projections.
Your Gen Y client may still ask, “What’s in it for me?” Answer this question by explaining the value of living benefits, such as long-term care, disability riders and return of premium. Long-term care and disability riders can help ease a Gen Y client’s worries about future changes in Social Security and Medicare. Return of premium functions as a sort of money-back guarantee that a financially cautious client will appreciate. Each of these policy additions offers your Gen Y client a tangible benefit accessible in his or her lifetime — and that’s what sells when a client doesn’t have much to protect.
Follow these selling steps
Armed with these positioning tools, let’s look at the nuts and bolts of making the sale.
Step 1: Ask, “Are You a HENRY?”
HENRY stands for “high earner, not rich yet.” This client has no dependents, makes $75,000-plus per year, and has disposable income. Although they aren’t rich yet, they have the potential to be. Make your client aware that others in this situation are already planning their financial futures … and in today’s tough economic climate, every day matters when it comes to retirement planning.