As we kick off 2016, the common demographics and groups interested in life insurance options will change. Indeed, the transition has already begun.
A new audience, millennials, are reaching a point in their lives where they value financial security. And they are only too aware of the financial penalties and long-term damage that can arise from not taking the right steps to provide for loved ones.
Baby boomers are America’s wealthiest generational class, but increasingly, millennials are taking action to secure their financial futures. Life insurance products offer one way to protect their families.
Defined by Pew Research Center as between ages 18 to 34 in 2015 and born into the generation most directly affected by the financial downturn, millennials began to enter the workforce when news coverage turned to the real estate market meltdown and financial fraud committed by the likes of Bernie Madoff. Thus, the stage was set for millennials to prioritize financial responsibility, even if many haven’t yet had an opportunity to develop a plan for real, long-term savings.
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For years, life insurers prioritized baby boomers as their target audience — and for good reason. Baby boomers were the largest and most financially successful generational class in U.S. history.
However, as more baby boomers enter retirement and millennials continue to move into the workforce, 2016 presents an opportunity for the industry to consider and probe the future-facing mindset of a new group of potential customers. For example, according to a 2015 Pew report, millennials surpassed Gen Xers in the first quarter of 2015 to take over the largest share of the American workforce at 75.3 million and will soon have the financial clout to match.
According to 2014 research by Experian Marketing Services, 59 percent of millennials with a college degree have a savings account. And 49 percent have an investment. However, as important as their financial wherewithal is, it’s just as important that as an industry, we understand what makes millennials tick.
It will come as no surprise that millennials face unprecedented challenges. According to findings from the U.S. Census Bureau and U.S. Department of Commerce, they will be the first generation financially worse off than their parents.
Years after the official end of the financial crisis, unemployment remains a pressing concern among millennials. A group with significant long-term career plans driven by aspirations of success and job security, nearly one-third more young people were out of work in 2013 than in 2007, according to the Organisation for Economic Co-Operation and Development (OECD).
Given this current state of the American economy, millennials are not surprisingly cognizant of risks respecting their long-term financial outlook. The Financial Times found in 2015 that 39 percent of millennial respondents believe they will not have enough money to retire; and they therefore expect to continue working indefinitely past a standard retirement age.
While the economic outlook might be more challenging for the millennials, this generation is more in tune with their financial condition than several before it. Their financial self-awareness also makes them more receptive than prior generations to the benefits of life insurance.
Indeed, millennials remain committed to overcoming financial obstacles and achieving fiscal independence. Bank of America’s “2015 Year-End Millennial Snapshot” found that half of millennials said the Great Recession changed the way they plan to save. They’re opting for more conservative savings options and have become wary of large, irresponsible purchases.
What’s more, over 80 percent of millennials remain optimistic that they’ll be able to save and invest more in the future. Given this cautious, yet hopeful, approach to personal finances, the life insurance industry would do well to look past millennials’ temporary financial setbacks to their long-term prospects and aspirations.