Millennials, Generation Y, Generation Next, Generation Net or whatever the term de jour is to describe the demographic cohort born somewhere between 1980 and 1999 are a group that perplex, frustrate and intrigue anyone trying to keep a pulse on their habits and culture. Assailed for being lazy while lauded for their entrepreneurial acumen; derided as self-centered egoists while being praised as fierce individualists; scorned for their spendthrift ways while remaining a target of mass sympathy for coming of age during the greatest economic disaster since The Great Depression, Millennials seem adept at confusing and contradicting any and all that seek to examine, exploit or explain their people.
However, Millennials — with varying estimates placing them anywhere from 79 million to 92 million strong — are an economic force to be harnessed. Banks, home builders and real estate developers, technology companies, advertisers of all stripes and of course, the financial services industry are all looking to this group as older generations enter quieter times of their lives. Many realize they cannot employ the same tactics to market and sell to this demographic as they did to Boomers or Gen X. Many are also left grasping at straws as Millennials break entrenched social mores and turn their noses up at traditional sales tactics and marketing channels. The group, who by 2030 will exceed all other consumer groups combined, are a profitable powerhouse that must be courted and catered to in order for their purchasing power to be fully realized.
With the oldest Millennials at age 33, on the cusp of their prime earning years and at the stage of their lives where they begin to enter into the “life moments” (i.e., getting married and having children) that initiate the purchase of various protection products such as life insurance, what are their attitudes about life insurance? What are insurers doing to reach them? And what needs to happen for this demographic to become the new lifeblood of the industry?
Taking it to the streets
A 29-year-old, recently-engaged Manhattan resident who works in human resources and wished not to be identified feels that he has not been marketed to by the industry and is not at all convinced that life insurance is a necessary purchase at this juncture in his life. When queried about what would happen to his fiancé if some tragedy were to befall him, he simply said, “She has a well-paying job and would manage fine.” The individual did express some interest in purchasing life insurance in some capacity when the couple eventually has children but was not aware of what product type would be the best fit or how much protection would be needed.
See also: Millennial: Setting Benchmarks
There is obviously a void of awareness here, with the young man admitting that he has never been approached by a financial services professional nor had he sought one out on his own volition and his lack of protection did not seem to trouble him whatsoever, remarking as he walked away that “life insurance isn’t really that big of a deal.”
Therein lies a monumental problem for the industry: Conveying the importance of these products to a group that is too busy, too broke or simply too bored to actually care.
John Chandler, chief marketing officer of MassMutual Financial Group, knows the problem all too well and, in order to save their breath and their resources, the company markets to a psychographic rather than a demographic. Psychographics, or groups with certain personalities, values, attitudes, interests and lifestyles, may make it easier for companies to winnow down who is interested in what they have to offer, saving valuable resources and energy.
“If someone is just categorically not interested in thinking about managing their finances — this could be a baby boomer who does not care about planning for retirement or it could be a Millennial who just says, ‘I want to live the Michelob Light commercial for a little while longer’ — we are not going to reach them no matter what we do…We are trying to build our marketing around individuals who are in what we refer to as the ‘grown-up mind set,’” Chandler said.
The recently-engaged young Manhattan resident was not yet there and neither was the 28-year-old married graphic designer from Brooklyn who laughed at the idea of purchasing life insurance when death, as she put it “was more than a long way away.”
There are Millennials out there who, by dint of certain life experiences coupled with a front row seat to the damage caused to families during the recession, have an enormous respect for protection products of any kind that can insulate them and their families from financial hardship.
Chandler recalled how MassMutual sold more whole life policies than term life insurance policies to Millennials last year, which, as he said, was very unusual. “A certain segment of the Millennial cohort jumped on guarantees.”
Randy, who lives in Manhattan and works for a large investment bank, is married with a four-year-old. He is 31-years-old and owns a whole life policy. “The policy was purchased when I had my child. A financial advisor, who had worked with my father before me and was a trusted counsel, recommended that I purchase one. There was not a lot of convincing on his part; simply the hypothetical scenario in which something happened to me and my wife, who does not work, would have to rely on only my savings.”
Obviously entrenched in the grown-up mindset Chandler referred to, Randy also freely mentioned that he was aware of many colleagues who are married with young children who feel their savings and investment portfolios are more than enough for their loved ones to depend upon were something to happen to them. “Many of them do not think about life insurance as most manage their own finances and have an air of invincibility common among the young and successful.”
Millennials like Randy’s colleagues, who appear to be averse to life insurance planning, present a new challenge for an industry that, for many years, offered products that people believed they needed and would purchase at certain life stages without blinking an eye.
There is no debating that Millennials are entering into life moments later than previous generations: Either as a result of the recession and the stagnant wages it brought with it or because of devotion to their careers or, simply because they want to remain unencumbered by the responsibilities of a family for a little while longer. This presents a unique problem to the industry — but, perhaps more concerning, are married Millennials with children who have no life insurance and do not plan on purchasing any.
Individuals like Randy’s colleagues who are married with children and feel that their investment portfolios will do the heavy lifting were something to happen to them are not an insignificant portion of the demographic. Where once all it took to sell a policy was a hypothetic doom-and-gloom scenario regarding protecting one's family, insurers now have to innovate their sales and marketing techniques to reach this group who view life insurance not as an immediate need but as something nice to have in a jam.
“For generations in the past, life insurance seemed more like a necessity: It was just something that you did because you made certain decisions and reached a certain point in your life,” Chandler said. “What we have now is people saying ‘life insurance seems more like a luxury or one way to try and address a problem I am trying to solve.’ The problem is that other solutions, unlike insurance, do not transfer risk. Individuals who use the equity market or their savings to replace their lost income still hold all of the risk. The education is now harder than in the past to get across but it comes down to financial literacy. Every generation needs financial literacy; Millennials need a different kind.”
A solution in place
Alex, a 26-year-old single account executive from Hoboken, N.J., owns no life insurance at this point in his life because he feels no need to. “There is no one that depends on me financially and it is just something that is not a priority at the moment.” Alex said he had never been approached by anyone in the industry to purchase life insurance and getting a phone call or having someone knock on his door would turn him off. However, if life insurance were marketed to him through his workplace, he would seriously consider it.
Millennials as a whole feel more comfortable purchasing financial products through the workplace. Although many change jobs rather frequently, the workplace remains a sanctuary of stability in their lives. It is an environment where they let their natural cynicism retreat, employing the philosophy that their employer would not let a snake oil salesman come into the workplace and peddle their wares.
“Were I to get a phone call one night at home asking me about my life insurance needs I would be instinctively dubious about their motives,” said Michael, a 29-year-old single social worker who lives in Summit, N.J. “An email would feel more comfortable but I would still have the taste in my mouth that I am being hard sold to. I would undoubtedly feel more comfortable if I was approached at work after a brief education on the insurance products.”
Debbie Cecil, director of product and marketing development for Unum Group Corp. in Tennessee, realizes this. Cecil said Unum is combining Millennials’ inclination toward technology and their tendency to look at voluntary benefits sold through the workplace as more trustworthy by combining the two.
“We are developing a new whole life product and one of the things we are looking at is not only the development of the product, but the way we approach people about buying the product,” Cecil said. “In the voluntary benefits worksite realm, we are not just handing out paper applications, we are looking at ways such as using iPads to do enrollment. We are not only pushing the need for life insurance but we are also looking at better ways to attract them to the enrollment system.”
Colonial Life & Accident Insurance Company, a subsidiary of Unum group, reported in a recent paper that there will be 63 million Millennials in the workforce by next year. Harnessing the workforce and acquainting the group with basic financial literacy regarding the importance of life insurance will be an imperative step on the way to making them lifetime customers.
The report found that 60 percent of Millennials named benefits as their primary reason for being satisfied with their current job. It would appear that parlaying their interest in benefits into voluntary benefits such as life insurance, would be a natural strategy for the industry.
Matt, a 30-year-old armed services veteran from Newark, N.J. who works in retail, is a father of one. He has a small term policy to protect his six-year-old daughter were something to happen to him but said he would be interested in finding more comprehensive coverage. “I work long hours and when I am home there is just so much else to do. Were I able to find out about protection products while on the job, it would make things a lot easier,” he said.
The Colonial Life report found that selling life insurance through the workplace was indeed the best fit for Millennials. Many are under intense debt, whether derived from reckless credit card use or student loans, and need benefits that allow them to meet their financial obligations but also give them the protection they desire. Voluntary benefits through the workplace, it would seem, are optimal for them.
Steven Johnson, assistant vice president for product development at Colonial Life sees life insurance through the workplace as the wave of the future when it comes to Millennials. “They are accumulating a lot more debt than previous generations through credit cards and college loans,” he said. “This creates a unique opportunity for us to work through employers to provide stronger benefits packages that are going to attract Millennials. Strong benefits communication is very important to the Millennial contingency.”
The bottom line
Millennials, unlike their baby boomer parents, for the most part do not self-identify as so and many regard the classification as capricious. (“Oh, is that what I am?” Michael the social worker asked.) The lack of a cohesive shared identity among the cohort may be a symptom of their time: A fragmented age where clear cut answers rarely exist, where information and data are willfully shared by the second only to be erased or augmented later. Where the world is a smaller, interconnected place containing common interwoven themes rather than hard delineations.
This mindset is indicative of their purchasing patterns and their philosophy of protection. There is no set age that jerks them into adulthood and triggers that “grown-up mindset” Chandler referred to. No, Millennials make their own rules and are content with beating their own path through life not as a rebellious plan to alter society, but rather as a result of a “live and let live” mantra that facilitates a meandering into adulthood that allows ample time for self-weaning.
They need financial literacy education as every generation before them has needed, but they do not need it tailored to them as a generation, but rather to them as individuals. The workplace is the ideal forum for this to be done, a trusted place where the information can be offered and they can trot to the watering hole leisurely and at their own pace. That is, after all, the speed with which they have been moving their whole lives.