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Life Health > Life Insurance

Coming of Age in the World of Life Insurance

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What You Need to Know

  • Millennials should be big life buyers right now.
  • Their awareness of the need for life insurance hasn't translated into all that much action.
  • The author says that, if financial professionals want to stay in the game for the long term, the time to be working with millennials is now.

Will the millennial generation buy life insurance today? There are many who doubt that they will. After all, they’re young, many don’t own homes, and they say they aren’t getting married and definitely aren’t having kids. I should know, I have a millennial son — he’s 27 and all of the above.

Still, I have to be careful not to map my frame of reference onto a large group. I need to remind myself that my millennial is on the younger end of the generation, a generation born as early as 1980. A generation that is the future of life insurance in the United States, like it or not.

The older half of the millennial generation — those born between 1980 and 1990 — are now in their 30s to early 40s. Historically, this age group has been an excellent market for life insurance. The reason is simple: life insurance is well suited to any adult with financial dependents. According to Pew Research, the older millennial cohort is full of married couples with young children. They typically own homes and live on two incomes. While millennials have been slower to get married, purchase homes and have children, they’re still following in our footsteps. They’re just doing it three to six years later.

These older millennials are moving into higher-paying jobs and thinking about their future. For many of them, that means thinking about life insurance. According to the 2021 LIMRA Barometer Study, 45% of millennials are more likely to buy life insurance due to COVID-19, a higher percentage than boomers or Generation X. Awareness is up, but that hasn’t translated into as much action as we might expect.

The Barometer Study found that the complexity of the product itself is a common cause of indecision for all adult Americans. Would-be purchasers don’t know what type of coverage to purchase or how much coverage they need. For prospects too busy for the deep dive, a 10-times-income rule of thumb can be used. Is that the right amount? Almost certainly not, but it’s much better to have purchased some life insurance than none at all.

Another important study finding was that 42% of families would face financial hardship within six months of the death of the primary earner. And hardship doesn’t mean the kids don’t get swim lessons. It means trouble paying for groceries, mortgages and cars. It means changing lifestyles to meet the new reality of a reduced income. Getting prospects and clients started down the road to protecting their families and businesses is as important as being certain they have the right product and the right amount.

More than half of Americans overestimate the cost of life insurance coverage on average by a factor of three. And yet term life insurance has never been more affordable for young and healthy individuals. Term’s low cost can provide the bulk of coverage when your millennial clients are growing their incomes and their financial burdens are heaviest. As your clients continue in their lives, having strong conversion options on the initial term policy can be an important tool for transitioning some or all of the coverage to permanent life insurance.

The application process has long been seen as an obstacle to getting more Americans insured. The good news is the number of companies with some level of fluidless underwriting continues to increase. The Barometer Study found that more than half of consumers (55%) like the idea of no medical exam and no blood draw. When speaking with busy millennial clients, determine whether they will qualify for a fluidless program and then use it. It saves your clients time and gives them privacy. They’ll appreciate it.

Millennials are the future of the life insurance business. Over the next 20 years, they will move into the C-Suite. They will send kids to college, start businesses and drive the economy. Their protection needs and the value of life insurance to them will increase. Any financial professional who plans on remaining in our industry for the next few decades will be well served by working with this important group of prospects. And remember, the oldest millennials are now in their 40s. It would be wise to think of the future not as five years away, but as right now.

Karl Kreunen (Photo: Ohio National)Karl Kreunen is vice president of product marketing at Ohio National Financial Services.


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