Despite being a prime demographic target, millennials have eluded life insurers. To win over this generation, insurers must design products and payment structures that account for their financial realities and tech preferences and communicate a commitment to health and wellness.
Millennials are the first digitally native generation, having spent their formative years online. At about 73 million people, they account for 25% of the U.S. population, making them the largest living adult generation in the labor force, according to Pew Research Center. For life insurers, they’re a force that cannot be underestimated.
It’s hard to believe, but the oldest millennials are now approaching 40. The majority have settled down with careers, families, and homes. With financial responsibilities and debt, they have an increasing obligation to act with fiscal responsibility.
According to a separate Pew Research Center study, “Millennial Life: How Young Adulthood Today Compares with Prior Generations,” 39% of millennials have at least a bachelor’s degree, making them the highest educated generation ever. As they pay off student loans and secure better-paying jobs, their spending will continue to grow. In other words, they’re reaching the point in their lives where life insurance is becoming a necessity.
The life insurers who come out on top tomorrow will be those that are reorganizing and reprioritizing innovation efforts around millennials today. Here are five revelatory statistics on what the next generation of life insurance customers is looking for.
81% of millennial consumers say being a member of a rewards program encourages them to spend more money with a brand
Millennials are eager participants in awards programs, according to KMPG’s “The Truth About Customer Loyalty.” To earn the trust and loyalty of this generation, life insurance companies need to shift from being protectors of risk to being ardent supporters of health and wellness.
By rewarding policyholders with discounts and better rates as they commit to healthy lifestyle choices, life insurers can build loyalty while increasing their knowledge about their customers. This will require insurance carriers to consider partnerships with third-party wellness programs and insurtechs. From a technology perspective, a platform with a deep library of APIs to enable the ingestion of data from a multitude of sources, including telematics and wellness apps, is a must.
46% of millennials said the biggest impediment to purchasing life insurance is confusion (including confusion around policy specifics, and why they need life insurance)
Life insurance is a highly regulated industry filled with jargon and legalese, which are an instant turnoff for all generations. However, millennials in particular have zero patience for complexity, having grown up in an environment where they can order a latte with the tap of a single button. According to IBM, almost 50% say buying life insurance is too confusing.
Insurers that do the best job at shielding shoppers from complexity throughout every engagement will be the winners of tomorrow.
Whether an interaction takes place through an app, web browser, or face-to-face with an agent, millennial customers will expect simplified explanations and options, usually with price tiers and bulleted lists of specifics. Policy applications should include only the most relevant questions and where possible avoid medical exams. Claims, billing, and renewals should be quick and easy — even as policyholders experience life changes, such as a new home or health condition.
The road to simplifying the life insurance experience isn’t easy. However, insurers that remove roadblocks to coverage stand to benefit because, according to a Siegel+Gale study, 64% of all consumers are willing to pay more for simpler experiences.
36% of millennials prefer to shop online, with only 9% choosing to shop in-store only
Millennials are never far from their mobile devices. In fact, they make up 58% of mobile shoppers, according to JungleScout.
To stay relevant, incumbent life insurers must offer mobile apps that are both technologically sophisticated and intuitive. The most successful apps will use technologies like Face ID for quick login, offer integrations with the other financial products, such as banking, payments, and investing, and be built as true consumer-focused mobile-first experiences — as opposed to portals into a web interface from the 1990s.
Brand loyalty among millennials increases by 28% on average if they receive personalized communications
Ultimately, this statistic from SmarterHQ speaks to consumers’ hunger for a hyper-personalized approach to building a relationship with brands. Life insurers must recognize the power of personalized experiences across the entire policyholder value chain, including marketing, account customization, content personalization, pricing, and payment preferences.
Success or failure hinges on insurers providing a level of “fair value exchange” with consumers to ensure the data you’re collecting translates into more meaningful products and experiences. Millennials resent being pestered by brands that haven’t invested the time to understand their aspirations. They expect to be recognized as individuals, not anonymous points on a sales chart. Insurers that move beyond generic, one-size-fits-all policies and experiences will build loyalty because authenticity isn’t just a defining characteristic of the millennial mentality — it’s at the core of their every purchase decision.
92% of millennials have active subscription services
From meal kits and music services to razors and clothes, millennials live their lives via monthly subscriptions. According to recent studies, subscription usage is approaching 100% among millennials.
As a demographic that never experienced life without the internet, consuming services and products on-demand is a natural way of living. The allure of the subscription economy is that it’s simple, recurring, tailored, and automatic.
Since insurance is already sold through monthly premiums (the most common structure to any subscription program), life insurers don’t have to radically reinvent their entire mode of operation. Instead, this transformation is more about packing more value into a personalized monthly subscription and making consumer interactions easier at every touchpoint.
One of the first entrants into “insurance as a service” was Lemonade. The company’s first venture was in P&C (it recently added life insurance to its product offerings). With a smartphone app powering the frontend user experience and AI and machine learning doing the heavy lifting on the backend, Lemonade can onboard new customers in less than a minute and pay claims in seconds. And it’s easy for policyholders to turn coverage on and off. One customer testimonial on the company’s website suggests buying Lemonade insurance is as easy as ordering pizza.
There’s still time to win over millennials
To date, millennials have been underserved by large incumbent insurance companies. Although insurtechs and startups are unencumbered by the legacy infrastructure that restricts traditional insurers and have gained some traction, their success has been on a relatively small scale. Larger life insurers still have the lion’s share of the customers, recognizable brands, and the regulatory track record necessary to scale quickly.
Life insurance companies with the vision to recognize the profound shift required to win the hearts and minds of millennials and the gumption to act now to transform their organizations will be best positioned to win. However, insurers can’t afford to make patchwork upgrades to legacy systems. To achieve a sustainable competitive advantage over the long term, a broader re-think of insurance core technologies is required.