Imagine waking up one fine spring day. You head to your office, only to find it empty. Your staff is gone. Your client files, mainly Baby Boomers, are missing. Your calendar is clear. Your CRM system is blank. It dawns on you that, after 35 years of selling life insurance, you have no one to see, nowhere to go, and nothing to do.
As you contemplate your plight, you realize you should have seen it coming. You focused your energies for decades on serving Baby Boomers, helping them save for retirement and then advising them on income strategies. But you may have done your job too well. Nearly all of them have retired and are living comfortably off the income streams you created. The few that haven’t are slated to retire soon.
With each passing year, you saw your Boomer client base shrink steadily, with no offsetting influx of millennials. It took many years, but today, finally, your business died. Congratulations . . . you have entered The Millennial Zone.
It’s not as if you failed to anticipate it. About eight years years ago, you saw the handwriting on your commission statements. You knew that if you did nothing differently, your business would lose traction and eventually slip into irrelevance. You tried your best to turn it around. You really did.
You started by cold calling lists of new homeowners and parents. You could tell from their voices they were mainly in their early 30s—millennials—until they hung up on you. You tried blitzing them with direct mail solicitations, but your conversions were anemic. Then you pitched them on attending dinner seminars. But that pulled even worse.
As you recalled your efforts to engage millennials, you realized you were always invisible to them. It was as if you screamed at them, but they never heard you. As if you flashed lights and shiny objects at them, but they never saw you. As if you . . . simply . . . didn’t . . . exist.
So today—lacking clients, staff, or even a job—you sit at your desk, envisioning a future without possibility. Lulled by your familiar Boomer target market and antiquated sales practices, you not only lost your livelihood, but also your hope of attaining the security your Boomer clients now enjoy.
It didn’t have to be.
Millennial Danger Ahead
Like many fables, the one we just told is fanciful. Yet it embodies much truth. Despite industry attempts to better serve them, America’s largest living generation remains under-served. As a result, too many young Americans—people with spouses, children, and parents—are destined to leave their loved ones financially unprotected in cases of premature death. Consider some of the data points flashing red in The Millennial Zone.
- Although having children is traditionally a major reason to buy life insurance, 75 percent of millennial parents are uninsured, according to a survey from Bestow, an online life insurance provider.
- Millennials on average say they need $452,000 in life coverage. But according to a New York Life report, those with policies only have $100,000 in face amount, covering only 22 percent of their needs. This compares with the general population, whose life insurance on average covers 49 percent of their estimated needs.
- According to research from Effective Coverage, only 24 percent of millennial consumers use a local insurance agency, with 67 percent preferring to buy insurance directly from an insurance company.
- Although LIMRA says about half of millennials have life insurance, only 16 percent have individual life insurance, reflecting the lower numbers that have bought their own coverage vs. that have access to group life at work.
- Based on LIMRA’s 2018 Insurance Barometer Study, 40 percent of millennials say they’d like their spouse or partner to buy more life insurance, a much higher number than for other generations. Surprisingly, according to LIMRA, 9 percent of millennials don’t even know if they have life insurance.
The Millennial Mind
These warning signs have been around for years. Yet the industry—insurers and agents alike—has been slow to react. Perhaps it has believed that millennials’ negative attitudes about life insurance ruled them out as prospects. There’s some truth to that. LIMRA suggests they don’t buy enough life insurance because the vast majority (80 percent) has other financial priorities on their minds. For example:
- 61 percent have their hands full paying for living expenses such as rent, mortgage, groceries, electricity, etc.
- 57 percent are focused more on paying for their internet service, cable, and cell phones.
- 38 percent place a greater priority on paying for restaurant meals, going to the movies, and shopping.
- 23 percent prefer to save for vacation trips.
Other observers point to trends such as their getting married later in life, postponing having children, and being burdened by student loan debt as reducing their interest in life insurance. Plus, since they haven’t amassed a lot of assets yet, they don’t have much to protect (which actually is an argument for buying permanent life insurance, a vehicle for creating assets).
Furthermore, their resistance to life insurance is more deep-seated than simply not being able to afford it. For example, millennials are well known for wanting to live life to the fullest—today. That means they’re more likely to invest in experiences of the moment than in buying future financial security. They also mistrust large financial institutions and traditional marketing, viewing both as obtrusive, inauthentic, and unnecessary.
Of course, millennials came of age in the internet era, which means they are true digital natives. This has immense implications for agents wanting to do business with them. For one thing, they do a lot of online research before making major purchases. They’re also comfortable buying nearly everything they need off the internet.
Since they are digital natives, they have grown accustomed to the speed and convenience of online shopping—and expect the same when they buy insurance. Because of this, they view filling out paper life applications and undergoing medical examinations and lab tests with much disdain.
In terms of the sales process, millennials, as mentioned in our fable, abhor traditional sales and marketing approaches. They prefer to be approached digitally and they like ongoing communications with their company and agent to be via text or e-mail.
As a result of all of the above issues, the average life insurance agent, financial planner, or registered investment advisor is likely to have a Boomer-dominated practice, while under-serving millennials. In fact, according to Cerulli Research, less than 10 percent of advisor clients today are 40 years old or younger.
This is alarming, since having a dearth of younger clients means your business will have trouble sustaining future growth. You’ll have fewer opportunities to upsell multiple insurance and investment products as millennials cycle through life events. And because millennials are well known for sharing their opinions online—posting online reviews and referring their friends to financial providers they trust— agents with few millennial clients will lose out on future referrals and the sales they produce.
Become Millennial Friendly
Do you want to avoid getting trapped in “The Millennial Zone,” a place where traditional insurance businesses will go to die? Then it’s time to engage millennials on their terms, not yours. Here are seven strategies for doing just that.
- Make sure your sales and marketing methods are authentic and trustworthy. As mentioned earlier, millennials hate being the object of marketing ploys. All of the promotional practices you used for decades—the mailings touting features and benefits, the canned cold calls, the fear-arousing sales presentations, the tricky closing verbiage, the primitive objection counters—will repel millennials faster than you can say, “Hello.”
Instead, they want you to engage with them because you sincerely care about them and have helpful ideas for making their lives better. What’s more, you need to come across as sitting on their side of the table, as being completely trustworthy. Being as transparent as you can about your background and business practices and sharing online reviews of your business will help them see you as an ally to be trusted. Also, avoid manipulating them or distorting the truth; it’s an automatic millennial relationship-killer.
- Lead with education. Similarly, millennials love to research their purchases online. They know how seek out information by themselves, so they don’t need spoon-feeding. What they do need is credible guidance from you on where to go online to learn about life insurance. They also are eager to read your blog articles and white papers about life insurance, as well as your short posts on Facebook or Twitter. They’d much rather engage with your expertise online than to be the object of old-style push marketing, which they view as being intrusive.
This is where you can have a tremendous impact with millennials. For instance, LIMRA has found them to have some remarkable knowledge gaps about life insurance:
- About six in 10 of them don’t know how much protection they need and of what type.
- About four in 10 think it likely they would never qualify for a policy, even though that is clearly untrue.
- Almost half of them believe life insurance costs more than five times what it actually does.
- Meet them where they are today in their financial lives. Millennials are highly educated. That’s the good news. The bad news is they carry high levels of student debt. Between that and their high living expenses, they are cash strapped. This makes buying life insurance a stretch for many. How to leverage? When you approach them, talk about the virtues of starting small with affordable term insurance and then trading up to a permanent plan later for cash value growth. The classic “rent your coverage now/buy it later” analogy can be a powerful one in the millennial marketplace.
- Avoid high pressure and fear-based appeals. Given their age, millennials react poorly to high-pressure tactics and attempts to frighten them into buying life insurance. As a result, avoid heavy-handed discussions of death and fear-driven arguments. Instead, since they define themselves by their experiences, show how life insurance can make them feel good about protecting their loved ones, while providing living benefits such tax-free policy loans and cash-value withdrawals that will enhance their lifestyles. It’s an ideal scenario—provide for your family, while also giving yourself the means to buy cool experiences. What’s not to like?
- Create a fully stocked internet storefront to entice digital natives. The key is to make your sales and marketing process fully digital. Replace print lead mailers with digital prospecting, including a content-rich mobile-friendly website. Publish articles and blog posts optimized for keyword Google searches. Consider supplementing your website marketing with pay-per-click advertisements, social media posts, and e-mail marketing. The goal: to have a 24-7 digital storefront that engages millennials where they live: on their smart phones.
- Stress convenience and simplicity. Millennials want to live their lives and have fun, not waste time puzzling over policy provisions or having to deal with medical exams and lab tests when applying for life insurance. To this end, keep your explanations clear, concise, and high level. And take full advantage of simplified underwriting that spares your millennial clients intrusive and time-consuming medical exams and lab tests, replacing them with artificial intelligence and analytics.
- Finally, engage with millennials as a person with feelings, a unique personal history, and a passion for helping others. Why? Because millennials want to feel good about the people and companies with whom they do business. They want to know you stand for something other than money and that your core values are exemplary. If you can paint an appealing picture of yourself online, you’ll entice millennials to connect with you. Eventually, you’ll create a strong bond with them that will result in a growing book of business.
In short, if you want to make sure your business doesn’t perish in The Millennial Zone, adapt to the attitudes and preferences of today’s twenty and thirty year olds. They will soon account for the majority of U.S. purchasing power. So embracing their needs and concerns today will ensure that your business will continue to have clients—and continue making money—in the dynamic marketplace of tomorrow!