Life insurance plays a key role in achieving one’s estate planning goals. We recommend a three-pronged approach in convincing Millennials that life insurance has relevance to their lives.
Lattes vs. Life Insurance: Do Millennials Really Have to Choose?
Posted on: September 22nd, 2015
By Mary Merrell Bailey, Esq.
This month marks the 12th anniversary of Life Insurance Awareness Month. For more than 200 years, life insurance has created a financial safety net for families when the unexpected happens.
With September well underway, many professional advisors have taken the opportunity during client meetings to underscore the important role that life insurance can play in achieving one’s financial and estate planning goals.
While the life insurance message generally resonates with those from the Baby Boomer and Silent Generations, recent surveys indicate that Millennials (those ages 18-34) simply don’t consider life insurance a financial priority.
Having served as a member of the Board of Trustees for the National Endowment for Financial Education (NEFE) for the past three years, I have my radar up when it comes to filling a “financial knowledge gap.”
I recommend that advisors and parents use a “three-pronged approach” to reach younger adults with the message that life insurance may have relevance to their lives and be a financial priority.
1. Understand the Mindset
Who are the Millennials? They are 77 million strong and make up 24 percent of the U. S. population. According to Neilsen, 21% are married, and 36% of Millennial women have children. They are the most educated and most racially-diverse generation in America. While they may not be capable of writing large checks to charities, social causes and volunteerism are important to this generation.
Millennials are described as tech-savvy, entrepreneurial, out-of-the-box thinkers. They are often swayed by celebrity endorsements and peers, and their digital communities are important to them. A recent Deloitte study found that Millennials also are focused on “leaving their mark on the world by working and volunteering for organizations that benefit society.”
In terms of their financial priorities, a 2015 LIMRA Insurance Barometer Study found that 54% of Millennials and 45% of Generation Xers think it’s more important to pay for their “screens” (cell phones, internet, cable), than to purchase life insurance. Next in line of priorities was shopping and eating out, followed by new cars and vacations. They don’t mind clipping coupons and like getting a good deal on price.
2. Keep It Simple, Introduce Professional Advisors, and Don’t Oversell It
The same LIMRA study cited above also found that most younger adults do not have an accurate understanding of the true cost of life insurance. The majority of those polled by the LIMRA study had the impression that life insurance is far more expensive than it actually is. But the reality for healthy Millennials is that a reputable financial advisor can source life insurance that can be purchased for pennies on the dollar.
Case in point. A senior client shared with me a conversation that she had with her 27 year-old grandson. Married for several years, her grandson and his spouse recently took out a mortgage to purchase a home. When the topic of life insurance came up, the grandson (a healthy non-smoker) explained that, although he had given thought to purchasing individual life insurance coverage, he decided against it because the $250 monthly premium was not in their budget. My client was stunned that her grandson was under the impression that insurance to pay off the mortgage would cost that much.
As it turns out, a financial advisor seated next to her grandson on an airplane tried to sell him a complex insurance-related investment product. My client explained to her grandson that she could introduce him to a trustworthy financial advisor who would estimate the cash replacement needed to support his family if something were to happen to him, then offer multiple solutions at different prices, including purchasing “term” life insurance for about the same cost as three lattes per month. The grandson agreed and the problem was solved.
3. Make It Lifestyle-Relevant
When advising younger adults about the benefits of life insurance, it’s best to keep it simple and use scenarios that they can readily relate to. Ask questions such as:
· How will your significant other afford the full mortgage payment along with your car
loans and joint credit card debt if something were to happen to you?
· Your social activism is admirable. If something were to happen to you, would you
want your life to have even greater meaning through a charitable bequest to your
favorite cause, such as the University of Central Florida or Great Dane Rescue?
· Considering the fact that you are a single parent, do you realize that for a few
pennies a day, you can plan for the unexpected in order to ensure that your children
will have the financial resources to afford food, shelter, health care, and pay for
In the spirit of NEFE’s mission, those of us who work in a professional advisory role have a responsibility to empower Americans of all ages to achieve their life goals through the prudent and informed management of their financial resources. Part of that effort means inspiring educated financial decision making among young adults and spreading the message that insurance coverage truly does have relevance to them.