Millennials (people aged 18-35) are the largest segment of the U.S. population. Over 75 million Americans, or nearly a quarter of the population, fall into this age group.1 While they share many of the same experiences, like growing up with technology and living through the Great Recession of 2008, they are also different. In fact, millennials are the most diverse adult generation in American history. Forty-four percent are minorities, due in large part to waves of immigration to the States. Some skilled immigrants can receive a h1-b visa from an employer who might see their skillset as beneficial for the company. This happens in quite a few companies in America, immigrants can bring different skills to the table, no matter their age. Just like American Millenials, they are usually hard-working and looking to improve their financial situation by benefiting the company.
Stereotypes about millennials abound. Whether any of these assumptions are true is debatable. What’s not deniable, however, is that the majority of millennials are postponing career commitment, marriage and parenthood to the latest ages ever seen in the U.S.2 In many cases, this may be for good reason: 42 percent shoulder student loan debt.3 In fact, the average monthly student loan payment for a borrower in his or her twenties is $351 per month.5 Many of these young people have had difficulty finding jobs, or have part-time or entry-level positions, so paying back these loans and saving money for the future is often difficult.
Whole life insurance, with its living benefits, could help millennials pay off their student debts and build a financial foundation for the future—but are millennials good prospects for us? You bet. Here’s why:
- They have an estimated $220 billion in collective annual spending power,6
- They’re set to inherit more than $30 trillion from their baby boomer parents,6
- They’re hungry for financial information and, the services we provide,6 and
- They’re a direct link to multiple generations of potential clients.
Different Values/Different Approaches
Millennials came of age at a difficult time and have different core values than previous generations. They may be savvy with technology, but many lack basic financial skills such as budgeting and saving. They also tend to be wary of traditional financial institutions because they lived through the Great Recession and may have experienced first-hand the losses their parents suffered in the job, housing and equities markets. As a result, they are risk averse.6
Given the financial instability they’ve witnessed, millennials want reassurance that they’ll be protected no matter how volatile markets become in the future.6 Whole life insurance, with its guaranteed premium, death benefit and growth of cash value, can be a good fit.
A whole life policy can enable them to automatically accumulate money and grow it at a guaranteed rate of return tax-deferred. It also can provide them access to these funds through loans throughout their lives, for whatever reasons they choose, including paying off their student loans and eventually supplementing their retirement income. This can be especially useful because a recent study by the National Institute on Retirement Security finds that 66.2 percent of working millennials have nothing saved for retirement.8 With whole life insurance, even if they take a loan from their policy, the cash value will continue to grow uninterrupted while they enjoy the benefits of the loan distribution. Add a flexible paid-up additional insurance rider, a waiver of premium, or other riders or options, and you can create policies that can satisfy very specific client needs.
Although millennials are financially cautious, they are receptive to and want financial information. In a recent survey 44 percent said they were extremely interested in improving their understanding of financial products but they want space to make their own decisions.6 As a result of their social and digital experience conducting online research comes naturally to them, so they are less likely than other generations to take the advice of a financial advisor without first consulting other sources.
Experts suggest that when working with millennials, the best approach is to be a collaborator and a partner; educate as well as coach. Taking the time to consult with them and clarify their objectives can pay off for them and you. Studies show financial firms are achieving success by positioning themselves as support services and enabling millennials to fulfill their financial goals when they’re ready.6
Divide and Concur
The millennial generation spans 17 years and multiple cultures, so one marketing approach won’t fit all. Troy West, a financial advisor and president of Lifestyle Financial Planning, finds it helpful to divide millennials into two age groups—18 to 25, and 26 through 35—because each group is experiencing different life events.
According to West, the 18- to 25-year-olds are usually dependent or semi-dependent on family for living expenses and may not have many assets. Although these young people may only be able to afford a basic term or whole life policy, they can be good prospects for multigenerational marketing. Working with them, as well as with their parents, could enable you to help them protect themselves against life’s “what-ifs,” maximize their retirement income, and also leave a legacy to their loved ones. The parents may take out policies on themselves and their millennial children as well as become a source of marketing to their parents and siblings.
Millennials age 26 to 35 are often establishing careers, buying homes and cars, and getting married and having children—all top triggers to shop for life insurance. Here, marketing to millennials as well as their family and friends works well, too, advises West. In these situations you may be marketing to households with high incomes who have two sets of parents, multiple grandparents and several children. All are prospects for sales.
Culture can affect how you market as well. Hispanics make up almost 20 percent of the U.S. population and 25 percent of all Hispanics living in the U.S. are millennials. One characteristic that sets them apart from their peers is that they aren’t likely to have a “delayed adulthood.” They often get married and have children earlier than non-Hispanic millennials. In addition, they tend to be more traditional when it comes to long-term savings methods. They seek out advice from financial professionals more often, have a stronger faith in the American dream, and place more value on higher education.7
Ready, Set, Go
Working with millennials and their families and friends now can dramatically boost your revenue and the future looks even brighter! Why?
- Millennials are well educated. More than 30 percent of those aged 25-34 had achieved a college education by 2015, up from less than 30 percent for comparably aged young adults in 2000, and up from 25 percent in 1980. This should result in higher earnings for them in the coming years.
- They’re set to inherit record wealth from their parents. Helping with this transfer of wealth could mean tremendous opportunities for you. Although millennials were raised in the tech age and may use robo-advisors, they’ll still need human advisors to provide a sounding board and objective advice about how to manage changing life events.3
- Fewer employers are offering life insurance to their employees (so the market for individual coverage could increase for all workers). According to a recent LIMRA study, in 2017 only 48 percent of employers offered life insurance to their workers—a decline of 23 percent from 2006.
So, if you’re not working with millennials, now may be the perfect time to start. Ready, set, go!
- Frey, William H. “The Millennial Generation: A Demographic Bridge to America’s Diverse Future.” Brooking.edu, Jan. 2018.
- Krauss, Michael. “Generations Are More than Labels.” Marketing News, Nov. 2015.
- Carlozo, Lou. “Millennials Are Set to Inherit Record Wealth—And the Way they Manage it will be Unprecedented.” U.S. News.com, 10 Aug. 2017.
- Moulton-Abbott, Peggy. “Why the Wealth Gap Matters to Marketing Researchers.” AMA Access, 2015.
- Hess, Abigail. “Here’s How Much the Average American in their 20s Has in Student Debt.” cnbc.com, 14 June 2017.
- Birkner, Christine. “From Entitlement to Enlightenment.” Marketing News, March 2014.
- Soat, Molly. “A One-Two Punch.” Marketing News, Dec. 2014.
- Barney, Lee. “Two Thirds of Millennials Have No Retirement Savings.” Planadviser.com, 27 Feb. 2018.