Millennials and Gen Z Are Buying Insurance

More than half of Americans are now millennials or younger, according to U.S. Census Bureau data, with millennials turning 42 this year. Furthermore, millennials and the oldest members of Gen Z have become full-fledged grownups with adult responsibilities.

According to Pew Research Center, in 2019, 55% of millennials lived with a family (i.e., with their child, spouse, or spouse and child). And a recent Rent Café report found that 52 percent of millennials are now homeowners, while 4.5 million Gen Z members became renters within the last five years.

Hard work and buying power naturally follow these responsibilities. YPulse, a market research firm that focuses on younger generations, has found that U.S. millennials and Gen Zers possess nearly $3 trillion in spending power annually.

Responsibilities also have a way of making consumers take a closer look at insurance.

To explore how members of younger generations understand, investigate and purchase private insurance across product lines, the Society of Actuaries Research Institute recently sponsored a survey of younger consumers in the United States. A thousand participants from age 21 through 42 years responded.

Evolving Perceptions

Younger generations seem to have a fairly favorable opinion of the insurance industry, and rate insurance companies a 6 out of 10 in terms of trust. According to the SOA survey, they also think of the role of insurance in a positive light: On average, they feel it plays a large role in their lives, provides protection in emergencies and brings peace of mind.

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Moreover, the upheaval caused by the COVID-19 pandemic has increased the appreciation younger consumers have for home, health and auto insurance in particular, and three out of five respondents are now more aware of life insurance.

Unfortunately, inflation and other recent events have tempered respondents’ perception of insurance. A third have canceled insurance policies to help make ends meet, and 78% fear inflation has made some insurance products unaffordable for them.

On the other hand, the need for insurance seems to be outweighing price pressures: 6 out of 10 plan to purchase insurance within the next 12 months. Below are the percentage of respondents that intend to buy different types of insurance within the next year:

• Auto: 29%
• Health: 28%
• Dental: 27%
• Life: 23%

Additionally, younger generations are more likely to already have auto and health insurance and less likely to own critical illness, disability and accident insurance.

Purchasing Behavior and Priorities

As the younger generations shop for insurance, cost and coverage tend to be more important to them than carrier financial strength or convenience.

By far, the attribute most important to respondents is affordability.

Fifty-one percent said affordable coverage was the most important feature to consider when shopping for insurance. Thirty percent said the amount of coverage was most important, while 11 percent said the financial strength or reputation of the company was crucial and eight percent cited convenience as the most important feature.

Speaking of convenience, it’s probably not surprising that younger generations of consumers prefer online shopping. Even when it comes to insurance, roughly half of the respondents said they would prefer to purchase any type of insurance online rather than in person or over the phone.

What might be surprising, however, is that 21- to 23-year-olds, the oldest members of Gen Z, are more likely to prefer a face-to-face transaction than 24-42-year-olds. Additionally, 26 percent of respondents said they would do online research before purchasing.