Although millennials may not exactly fit what we think of as a traditional customer for life insurance coverage, they’re known for being financially savvy and having an interest in protecting their financial future — two attributes that lend themselves to receiving sound financial guidance.
Whether they are risk adverse or simply see the value in planning for the future, there is great potential to connect with this demographic and have productive conversations about the many benefits life insurance can add to their long term financial goals.
While term life insurance doesn’t immediately come to mind as a fresh or “innovative” solution, some new options within the category may make this financial vehicle more attractive to younger consumers who are looking for protection, but also have an eye toward needing flexibility as their circumstances change.
Many Millennials Have a Long-Term Financial Focus
According to the 2017 Generations Ahead Study from my company, Allianz Life Insurance Company of North America, younger Americans are displaying a keen interest in their long term financial security and retirement readiness. Nearly three-quarters (74%) of millennials say they are currently feeling prepared for retirement and a similar amount (76%) say they have confidence their income will last a lifetime.
This is good news for financial professionals as these responses tell us that millennials are thinking about more than just the short-term financial concerns they get pegged with obsessing over (eating out every night, getting the latest phone, etc.) — they are also focused on the future and therefore may be open to learning about different strategies that can help them protect and grow their finances.
Recent advances within term life insurance products offer more ways for millennials to address future uncertainty with their money. Among the newest options are exchangeable term policies, which allow policyholders to exchange their term policy for another type of permanent policy that has more flexibility – such as a fixed index universal life (FIUL) insurance policy — but may be too expensive for a younger client on a limited budget.
Although FIUL may not be affordable for millennials right now, it can help them address future concerns such as protecting their loved ones (especially if starting a family is a priority) with the death benefit that is generally income-tax-free to beneficiaries. The death benefit can also be useful for future considerations like income replacement, a college funding strategy, paying down a mortgage or other debts, estate tax coverage, final expenses, and business succession.
Millennials have significant concerns about their ability to deal with the effects of rising costs as they get older. According to another study from Allianz Life on Americans’ perceptions of the effects of inflation, nearly four in 10 millennials (39%) report being either “very concerned” (34%) or “terrified” (5%) that the rising cost of living will affect their retirement plans.