The life insurance industry has been worried for some time now about adoption rates for coverage among the youngest group of adults. Millennials have generally proven to be quite reticent when it comes to buying such policies, but there may be more reasons why this is the case than many in the industry suspect.
Put simply, many in the industry would likely attribute the lack of life insurance policies among those in Generation Y to the fact that those people often just don't feel as though they need such coverage, according to a report from the financial news site Main Street. There's a reason that many in the insurance field refer to this age group as the "Young Invincibles," because they often may not feel as though they need to carry life or health insurance because they feel so good physically in their day-to-day lives.
More reasons for the lack of coverage
Moreover, they may also feel as though life insurance isn't something they actually need because of their personal financial situations, the report said. The fact is many remain unmarried and without children, meaning that they may feel they don't have anyone they need to protect financially should anything happen to them. While this isn't always necessarily the case - such coverage could help with funeral arrangements in the event of an untimely death - there may at least be a reasonable defense of that kind of decision for those younger people.
But perhaps the biggest of all the reasons that people young and old don't buy health insurance is that people generally tend to believe it's far more expensive than it actually is, the report said. While the average person overestimates the cost of coverage significantly, this trend is actually most pronounced among millennials. Experts say they may not think coverage costs what it actually does because they can conflate permanent life insurance - which can be quite costly in some situations - with term.
What can life insurers do?
One of the most important issues for life insurers, then, is that they might also want to think about modernizing, the report said. Data shows that as few as about 1 in 5 people who bought their life insurance coverage did so online, and about one-quarter submitted applications via the same method. Millennials tend to use the internet far more in their daily lives than any other generation, and efforts to reach them on those platforms could end up going a long way.
Another major challenge in this regard, though, is almost certainly education. It seems that people across the country may not buy coverage simply because they don't understand it, and so it's not just crucial to pitch coverage to people, but also to show why it's valuable, what it actually costs, and so on. The better people understand any financial product, the more likely they will be to see the value in it and utilize it going forward.