Several trends in American families and workforces are reshaping the consumer market for life insurance and related products, and new opportunities abound for wise brokers and agents. Before we can seize these opportunities, though, we need to address a common hurdle in our industry: Historically, some of us have been slow to change and meet new realities.
We all know the refrain, to borrow from an automobile commercial, “This is not your father’s ________.” Fill in that blank with “employment market,” “traditional family,” “interest rates,” “company pension,” or any of a number of descriptions for the way things used to be. We know the world our clients inhabit has changed, and yet, all too often, we fail to demonstrate we understand their lives and have solutions to their needs.
Of course, consumers don’t necessarily know all the needs they may face, or what can help address them. As Henry Ford reportedly remarked, “If I had asked people what they wanted, they would have said faster horses.” More recently, how many of us knew we wanted an iPad — and how many now can’t imagine life without one?
Insurance carriers today offer creative solutions for current as well as age-old needs, but our industry still has miles to go to fully educate consumers. Yet despite Americans’ lag in awareness of needs and potential solutions, the market for life insurance and innovative riders may be more abundant than ever. Following are some demographic shifts we need to understand, and some ideas on how to leverage our wisdom into compelling client conversations and fruitful relationships.
In 2050, the number of Americans age 65 and older is projected to be 88.5 million, more than double its projected population of 40.2 million in 2010, according to the U.S. Census Bureau. For a married couple age 65, there is a 50 percent chance that at least one spouse will live to age 94, and a 10 percent chance that one will live to age 104. Clients, therefore, need solutions that address the longevity challenge: their fear of outliving retirement income.
According to updated U.S. Census reports, more than half of all American households are unmarried, with single people who live alone comprising 27.5 percent of households. Married couples with children comprise 19.6 percent, a figure down more than half since the 1970s, when the percentage was 40.3. The percentage of married couples in households with no children is statistically stable at 29.1 percent, down slightly from 30.3 percent in 1970.
To rephrase this, in 1970, more than seven out of 10 Americans lived in married households (70.6 percent). In the latest census figures, fewer than half of Americans live in married households, and the change is overwhelmingly in the “married with children” demographic. As married households with children have been decreasing, households that are single men living alone, single women living alone, and unmarried mixed households have grown from 29.4 percent in 1970 to 51.4 percent in 2012.
Truly, this is not the marketplace many of us initially were trained to serve. Likely, this new American reality is not “our father’s Oldsmobile,” to finish that earlier quote. These new households still need life insurance and other financial planning products, but they need them as innovative solutions that meet unique and emerging needs. Before we start sharing solutions, though, let’s look at one more game-changing factor of American life and work.
If you and I stood around an office water cooler, assuming we could find one, we would no doubt agree corporate life has changed over the years. Among other transformations, including water coolers themselves, we have fewer examples of the man or woman who invests his or her entire career with one organization. Not only are employees more likely to make multiple career moves, with one in five workers anticipated to change careers in 2014 alone (according to CareerBuilder.com), the golden age of company-sponsored benefits and pensions for lifelong employees seems behind us.
While we might believe that, generally, people have fewer employer-related benefits, and therefore they might need more help than ever finding the right benefits and insurance solutions, another demographic shift could shake up our assumptions.
This summer, the independent research firm Edelman Berland found that more than 53 million Americans — 34 percent of the entire U.S. workforce — are freelancing. These numbers are up from eight years ago, when a 2006 study by the General Accountability Office found there were 42.6 million “contingent workers.”
Who are these 53 million freelancers, described as individuals who have engaged in supplemental, temporary, or project- or contract-based work in the past 12 months? According to Edelman Berland, independent contractors lead this job growth powerhouse at 21.1 million (40 percent of the independent workforce); moonlighters, another 14.3 million (27 percent); diversified workers are at 9.3 million (18 percent); temporary workers represent 5.5 million (10 percent); and freelance business owners make up the remaining 5 percent, at 2.8 million Americans.
The reasons Americans give for working outside the traditional, full-time employee model are diverse; the Edelman Berland study mentioned everything from “pursuing work I’m passionate about” and the hope of earning extra money, to a described trend of corporations reducing full-time employment opportunities. Whatever the motivating factors, the result for insurance professionals is clear: more opportunities to help more people protect their lives, families, earnings and future.
The growth of the independent workforce should not be dismissed as a blip on our radar screens; the global business and financial management firm Intuit projects that by 2020, more than 40 percent of Americans (upward of 60 million people) will be freelance workers.
Solutions for the emerging American reality
Combine the growing trend of independent workers with the rising number of households headed by single adults, and it becomes easy to see layers of opportunities. Yes, some Americans still have “traditional” workforce and family needs; yet, more and more consumers have new and different problems to solve.
Last year, the LIMRA Secure Retirement Institute surveyed 2,000 Americans ages 50 to 75, with $100,000 or more in household investable assets, and involved in household financial decisions. Of those surveyed in November 2013, women were more likely to be concerned about outliving income. With the ranks of independent contractors growing at the same time single households are growing, we can begin to bring even more insight and empathy into our conversations with our clients.
As trusted professionals, let’s aspire to bring more value to our clients, to invest strategic time in our clients, listening to their real needs and researching the factors that impact them. Let’s break away from old habits of assuming we know what they need and instead learn what our clients really need. Once we truly see our clients’ varied needs, we will see our opportunity to offer nuanced and dynamic solutions, not one-note products. Solutions that address more than what has been termed “the death problem” — insurance solutions that actually offer flexible choices for life, career and old age.
Our clients today certainly want to take care of loved ones and business matters imperiled through an untimely death. Yet, they also want to solve the potential challenges of longevity, becoming sick along the way or unexpected early retirement. An August 2014 Wells Fargo/Gallup survey of Americans who invest showed nearly half (46 percent) are concerned they will outlive their savings.
That new research from Wells Fargo and Gallup reflects the findings in the 2014 Fact Book on Retirement Income, in which the LIMRA Secure Retirement Institute estimates that half of pre-retirees put a high value on minimizing the risk of running out of money in retirement.
With all of our clients, in every stage of life and work, we can ask about their concerns for the future: What do they want to protect, which threats do they want to mitigate? And with both freelancers and single heads of households, as well as with clients in other demographics, we can help them create a plan for asset replacement and protection, addressing concerns potentially arising from access to fewer defined income plans and related income streams such as corporate pensions.
As we listen to our clients’ concerns, I wonder if we will hear them ask for flexible options, protection or guarantees. I can imagine them asking for solutions that can adapt to changing circumstances, and provide optionality as well as security. Faced with an ever-changing landscape of workforce and personal transitions, clients deserve consumer-friendly features and benefits they can use when they need them, sooner or later.
Yesterday’s solutions cannot be depended upon to solve today’s problems. If we are listening to an independent contractor or fledgling entrepreneur concerned about business continuity, or a single breadwinner hoping to retire stronger, we should be in tune with their real challenges. If we are counseling a younger, two-income family concerned about children’s college expenses, or a pre-retiree faced with multiple life scenarios, including longevity and chronic illness, we should be ready to discuss innovative solutions with accelerated benefit riders.
In all situations, let us strive to truly understand today’s customers with today’s needs — and tomorrow’s concerns — and show our value to the myriad of Americans who rely on trusted advisors to guide them forward.