One of the biggest issues in the life insurance industry over the past few years, even as it recovered significantly from the recession, is that younger adults still aren't buying it en masse. This may be due to a number of reasons, not the least of which is the issue of perception among millennials about what life insurance costs and what benefits it provides.
Nationwide, about 83 million people were born between 1982 and 2000 - what is generally considered the millennial generation - and that made up about 1 in every 4 Americans last year, according to a report from Benefits Pro. Consequently, they also made up about 1 in every 3 adults of working age. However, they also largely do not yet have life insurance policies in their own names.
Meeting their needs
When it comes to marketing life insurance to young adults these days, the tried-and-true methods insurers have long relied upon may not necessarily work, the report said. To that end, more policy providers are now working to meet changing consumer expectations, including speeding up the approval process, offering policies with shorter terms (five to 10 years instead of 20-plus), and how benefits will be distributed.
As a consequence, it is important for insurers and brokers to make sure millennials know about the options available to them, the report said.
"The challenge is that brokers always need to educate the next generation about the benefits of having a life insurance policy," said Michael Barry, vice president, media relations, for the Insurance Information Institute in New York City. "Opportunities will arise, however, as younger Americans advance in their careers, start families and realize that their beneficiaries need the financial protection life insurance provides."
Getting them involved
One of the biggest hurdles young people face when it comes to buying this kind of coverage is that they often don't know the difference between whole life and term life, associating higher monthly costs with both types of coverage, according to Wealth Management. However, some financial experts say that those who want to use life insurance as a savings vehicle might be wise to buy universal life or other permanent life insurance coverage as soon as possible. Consumers will get lower premiums when they're young and healthy, so the sooner they obtain this kind of coverage, the better off they're going to be in the long run. Waiting for a future purchase is effectively a gamble that the consumer will remain healthy and insurable. Buying term insurance rather than permanent insurance is another form of that gamble, if the consumer's insurance need extends beyond the end of the level-premium period of the term life insurance coverage purchased.
In addition, insurers are becoming more flexible when it comes to the various types of life insurance products available. More than ever before, policies can be customized to address the specific needs of the consumer and adapt to their changing needs over time.
With all this in mind, it is important for insurers and brokers to reach out to prospective younger clients to explain all the benefits buying among several different types of life insurance can have for them. That effort should include doing whatever they can to dispel some of the misconceptions young people, in particular, seem to have about life insurance coverage.