The Gen Y population, also known as the Millennials, are between the ages of 16 and 34. Believe or not, according to statistics, they outnumber Baby Boomers. According to Visa, their buying power still trails that of their elders, but that will most certainly change.
One study suggests that more than half of recent college grads rely on their parents for financial help, and another reveals that over a third carry more college debt than their parents did. This contributes to a hesitation to make purchases such as life insurance unless they’re convinced it’s necessary.
One thing marketers know with certainty is that a pair of life milestones are key triggers to making a life-insurance purchase: marriage and welcoming children. The typical scenario goes like this; when a couple marries, they often consider buying life insurance coverage for whichever spouse has the higher income. And the motivation becomes stronger with the arrival of children to better secure the entire family’s financial future.
The typical scenario goes like this; when a couple marries, they often consider buying life insurance coverage for whichever spouse has the higher income. And the motivation becomes stronger with the arrival of a child.
But one key consideration is that members of Gen Y have tended to delay marriage, home purchases and starting their families until later in life than previous generations.
As a result, companies and agents are focusing on a more conservative “whole life” and investment-focused policy strategy. Certified financial planner Sophia Bera of Gen Y Planning suggests that members of her generation buy fixed-term policies and that they price shop for their insurance aggressively on sites like lifequotes.com.
“There’s definitely fear tactics used to coerce millennials to buy insurance that they don’t need. For 99 percent of people, a basic-term life policy is going to be the best fit for them, ” Bera says.
A report from Prudential Individual Life Insurance finds that insurance companies have not yet done an effective job of selling their products to Generation Y, but adds that the task may be easier than many think.
According to the report, consumers in their late teens and 20s are unlikely to perceive the life insurance industry as catering to their needs, but most say that they’re looking to purchase life insurance coverage at some point in the near future.
“While it’s clear that more research needs to be done, we know that our marketing messaging needs to meet Gen Y’ers where they are, and allow them to see themselves with life insurance,” said Joan Cleveland, Prudential’s senior vice president for business development.
What isn’t in dispute is that younger consumers can realize significant benefits from purchasing life insurance early in their lives. Rates are frequently a fraction of what they will be later on, and the health problems that are common to older people aren’t often an issue early on.