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Insuring the financial future of the sandwich generation

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Baby boomers? Generation X? Those experiencing a mid-life crisis? What exactly defines a member of the sandwich generation? All of the above. Members of the sandwich generation include anyone who supports parents older than 65 and children at the same time.

Those in the insurance industry should take note: According to a 2014 Pew Research Center study, 23 percent of all Americans find themselves sandwiched in this group, a large enough number to make waves in the insurance industry. This group is particularly interesting because they are dealing with several life transitions. Nearly half of them — 47 percent — are between the ages of 40 and 50 and have begun thinking about retirement. They need policies that fit their individual situations, while allowing them to continue supporting their dependents.  

Sandwich generation struggles and attitudes

Sandwich generation members are responsible for providing not only emotional support to their aging parents, but financial support as well. In fact, the aforementioned Pew study found that 15 percent of these folks support both their elders and children financially in some way. While it may be a burden for some, many of them find it to be rewarding. This tells us that they will do what they can to find room in their budget to support their loved ones — even if it means making sacrifices.   

Simply put, members of this generation experience cash flow drain when supporting both their children and parents. The resulting downfalls include the inability to save for their own retirement, reach their goals of charitable giving and save for a child’s college education. It even jeopardizes their personal lifestyle and future. Considering long-term care insurance for themselves becomes an afterthought, because they are too busy providing for their loved ones.

Experience has shown me that cash flow stress causes this demographic to be very “fee sensitive” and they will usually lean toward a low-cost term policy to ensure they can afford their immediate needs. Insurance is viewed strictly as an expense as opposed to an investment in their retirement. When they spend extra time and cash supporting loved ones, they don’t necessarily have the resources to shop around for an affordable and customized plan that ensures future financial security.

Marketing insurance to the sandwich generation

In my opinion, the sandwich generation appreciates having options. It is important to introduce a policy with a convertible option that can change as their needs change. This could be the passing of a parent or the financial independence of a child. A convertible option allows the policy holder to adjust to a better plan within the policy once their cash flow improves.

This generation tends to also be interested in bundling their life and long-term-care insurances with the option of a long-term-care benefit rider. This is appealing because the right policy can fit their particular situation and they like the idea of unspent money going to their beneficiary. Similarly, if members of this group are financially supporting an aging family member, they may be enticed by a “paid-up death benefit” option, which can help with their own finances while ensuring the unspent money will be returned once the elder passes.

It is my belief that the sandwich generation has the best intentions when making financial decisions. They want to be fiscally stable, but health is unpredictable and supporting loved ones at both ends of the spectrum opens up the possibility of unexpected costs. The right insurance policy can alleviate this pressure and help this generation achieve financially solid futures. 

See also:

Where the sandwich generation lives [Infographic]

The unique struggle of the sandwich generation

How to help the Sandwich Generation find a financial balance [infographic]

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