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4 ways to sell Millennials on benefits

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Just as the gaps between the generations are ever more apparent when it comes to embracing new technologies, work/life balance and social interaction, so too are the differences in levels of insurance coverage and expectations about benefits at work. When it comes to designing and communicating benefits, one size does not fit all. And yet, 67 percent of companies do not tailor their benefit communications to different levels or life stages, according to the 2014 Aflac WorkForces Report (AWR).

In designing benefits programs for the generations, it is imperative to take a holistic look at each age cohort, including varying education levels, experiences, life factors and even personality characteristics. Each of these aspects plays a role in what options are best suited to a generation, and more importantly, that appeal to those workers enough to drive participation and enrollment.

The younger generations, particularly those workers currently 34 years of age and under collectively known as the Millennial generation (or Gen Y), are not only an important market to consider — and the future of the workforce — but also a demographic that requires a deeper understanding among agents, brokers and HR professionals. Learning their needs, mindset and buying preferences is critical to converting Millennials from the naïve and free-spirited uninsured to the knowledgeable and protected insured.

The Millennial mindset

Gen Y workers are in a period of transition. They are reaching adulthood and facing the challenges and opportunities that come with personal and economic autonomy. They are typically finishing their education, entering the workforce and making choices about living arrangements, marriage and lifestyle. According to the Bureau of Labor Statistics’ 2011 Consumer Expenditure Survey, households headed by 18- to 24-year-olds spend five times more annually on entertainment and dining out than out-of-pocket spending on health care. The single members of Gen Y are also more likely to rent a home and spend more money on education and alcohol than other cohorts, while spending a smaller share on transportation, personal insurance and pensions than their married counterparts.

Gen Y workers are a bit more skeptical of corporate life compared to other age cohorts, having seen their parents lose jobs and experiencing difficulties in their own job search and entry into the workforce. Nonetheless, they are very capable of staying with their employer for the long haul if given access to the choices and flexibility they expect. For this group in particular, it is critical that HR decision-makers and employers provide immediate access to work/life balance opportunities and a range of benefit options. Absent of these, Gen Y workers will not hesitate to jump ship at the next best job opening. According to the AWR, more than half (60 percent) are at least somewhat likely to look for a new job in the next 12 months, the most likely of all generations.

A portrait of insurance coverage

Findings from the 2014 Aflac WorkForces Report shed further light on the youngest working generation in terms of their understanding of risk, mindset on benefits and buying behaviors.

Younger workers are relatively unfamiliar with the ins and outs of benefits administration, enrollment and the importance of enrollment. In fact, according to the AWR, Gen Y workers are the least engaged, informed and educated about most aspects of benefits among all age cohorts. And nearly two-in-ten Millennials (17 percent) work for an employer that does not offer insurance benefits.

According to the Aflac survey, Millennials are enrolled in the following insurance benefits:

  • Major Medical/Health Insurance: 79 percent
  • Dental insurance: 69 percent
  • Life insurance: 54 percent
  • Vision Insurance: 51 percent
  • Disability Insurance: 33 percent
  • Voluntary Benefits: 16 percent
  • 401(k): 61 percent  
  • Flexible Spending Plan: 20 percent
  • Employee Assistance Program (EAP): 11 percent

Millennials believe benefits influence aspects of job satisfaction and loyalty far more than their other generation counterparts. For example, 34 percent believe an overall benefits package is extremely important to their job satisfaction, compared to 30 percent overall. Nearly one-quarter (24 percent) of Gen Y workers believe an overall benefits package is extremely important to their loyalty. And 64 percent believe an overall benefits package is extremely/very important to their work productivity — more so than any other generation.

While this generation clearly sees the value in a robust benefits package, Millennials are one of the least likely generations to consider purchasing voluntary insurance, perhaps due to lack of knowledge or perceived need. Just over half (53 percent) say they are not at all/not very likely to purchase voluntary insurance benefit options if their employer offered them. Also influencing the lack of interest in benefits is a general sense of invincibility among younger workers. The Aflac survey finds that nearly all Gen Y employees feel they are not at all likely to experience serious medical events.

According to the Aflac report, the majority of Gen Y employees (71 percent) at least somewhat agree with the statement, “I would be unable to adjust to the financial costs associated with a serious illness or injury.” And more than one-third (35 percent) have less than $500 right now to pay for out-of-pocket expenses associated with an unexpected illness or accident.

Employers can help soften the financial burden of unexpected medical events to employees by making voluntary insurance available at no direct cost to them and with minimal administration. Often, these policies can help save individuals from unplanned debt, helping them focus on recuperating and getting back to work.

Agents and brokers can help workers understand and prepare for the costs associated with common illnesses and injuries such as cancer, heart attack, fractured limbs and others, by using online resources that show the average costs associated with a variety of common medical conditions and by emphasizing that the full range of expenses incurred can include anything from doctors’ visits, diagnostic tests and hospitalization to everyday living costs like transportation, groceries and childcare.

Voluntary benefit options are one way that allows employers to extend a host of offerings to these workers, allowing them to have more choices when it comes to health care coverage, to better meet their needs, and to give them more comprehensive health insurance.

Four ways to sell to Millennials

Here are four approaches HR managers and benefits advisors can take to increase enrollment in benefits and improve protection of their younger workforce.

1. Focus on brand name. Brand name or reputation was very important when selecting insurance benefit options for all workers, according to 81 percent of Gen Yers.

2. Offer financially-friendly products. Because Millennials are struggling to save, the perceived value of benefits needs to be clear. For younger generations, term life insurance is an excellent fit because it is affordable and they don’t yet have significant assets to protect.

3. Offer relevant products. As Millennial workers come of age, marry and begin to start families, policies such as hospital indemnity plans and hospital intensive care plans are particularly relevant.

4. Consider wellness initiatives. The 2014 Aflac WorkForces Report found that Gen Y employees are most likely to say they could be healthier if they exercised more (52 percent) and outranked older generations for “not eating as well as they should.” According to the AWR, one factor to their ill health may be their lack of engagement in workplace wellness programs. The survey found that less than half (46 percent) of Gen Y respondents work for a company that currently offers a wellness program, although the majority say they are at least somewhat likely to participate in individual health events including company fun runs (64 percent), health fairs (70 percent) and biometric screenings (71 percent).

With so many workers lacking a sufficient financial safety net, supplemental insurance policies can provide an option that can help protect workers in the event of the unexpected. Having these policies can help save individuals from unexpected debt, helping them focus on getting better and back to work. Considering the current enrollment of Gen Y workers in voluntary insurance, as well as their mindset around it, a clear opportunity exists for HR decision-makers and their advisors to better protect workers.