In recent years, the obvious problem for the life insurance industry has been that people went away during the recession and never really came back en masse. While life insurers are now starting to make up that ground slowly but surely, there are still a number of issues that might cloud their capabilities to get back to pre-recession norms and, in particular, attract millennials. Perhaps chief among them, though, is a lack of understanding among the general public as far as how important such coverage can be in the event of a sudden loss.
The thing that many life insurers hear most often about why people don't have coverage or haven't even sought it out is that they're worried they can't afford it, according to a report from the consumer finance site Nerdwallet. A big issue here, though, is that when people are asked what they think about life insurance costs, the vast majority of people - regardless of their age, but this is actually most prevalent among the youngest group of adults - believe that such coverage carries a price tag a few times larger than the actual premiums.
Why is that a problem?
This disconnect can be disastrous, though, the report said. People who don't think they can afford life coverage have likely not looked into whether they can at all, and are just operating under the assumption that it's not something they can squeeze into their monthly budgets. However, experts say that if they can be made to look at the bigger picture, a better understanding can quickly emerge.
For example, if most people don't know about the true price of coverage, they might be very concerned with their families' ability to continue getting by in the event of their death, the report said. And most people seem to understand the economic realities here, as some 40 percent of people polled by LIMRA recently said that the loss of a primary wage earner would end up impacting their families within just six months. Of that group, nearly 3 in 10 said there'd be financial trouble within a single month. That's equal to about 12 percent of all respondents.
Bridging the gap
Because so many people believe they're living perilously close to hard financial times, getting people to understand that life insurance can be had for as little as 50 cents per day is probably vital to both policy issuers and those families, the report said. In fact, the better those companies are when it comes to connecting with consumers while they're young and healthy, the more likely those people will be to lock in the best possible deals on their coverage. Paying a little more than $10 per month for term coverage might appeal to many of them who feel that they're not operating with much of a financial safety net.
For these reasons, education outreach efforts are likely key to the long-term success of life insurers as a whole, especially because of how little millennials seem to understand such coverage. Soon, they will be the largest market for life insurance in the U.S.