By Joan H. Cleveland, The Prudential Insurance Co.
Few people would buy cars if they thought the only ones available were expensive, luxury automobiles, and yet this principle is evident in the young generations’ misimpressions about life insurance.
Young adults who fall into the demographic categories of Millennials (those in their late teens into mid 20s) and Gen Y (late 20s into early 30s) understand the concept of life insurance—paying today for a benefit paid out at their death—but they know little else about it. A 2010 research study conducted by The Prudential Insurance Co. of America, “Reaching Gen Y—Easier than You Think,” suggests that Millenials don’t understand the complexities of the various product types and, most importantly, the costs as a result of age, amount and contract type.
While many if not most Millennials plan to buy life insurance eventually, many do not think that they need coverage right away; they tend to pass up the opportunity to select coverage when it's provided through an employer as a voluntary benefit, with premiums paid through salary deferral. Alternatively, even employers who don't make life insurance available to their employees directly as an employer-paid or voluntary benefit still can educate their workforce about the role of insurance as part of their employees' financial planning.
For Gen Ys, the need for life insurance mirrors traditional lifestage reasons—getting married, buying a home and/or becoming a parent. Research shows further that Millenials want to learn about life insurance but just not in the traditional way. In other words, they don’t want their education to come only through the sales process. Rather, they want to learn on their terms.
For employers, the best time to begin educating young employees about life insurance is during the onboarding process. Employee benefits brochures and microsites should be fully accessible and should provide information about insurance options in consumer-friendly language. Fact sheets and other documentation should go beyond the typical pricing and coverage amounts. And if people images are used, they should reflect individuals in the Gen Y age range.
Gen Ys find that many financial services company web sites aren’t as friendly or intuitive as they are used to and expect. To remedy this, work toward doing a better job of explaining complex financial products and educating Gen Y employees to increase their participation in the process.
For example, the life insurance section of an employer's benefits web site could include:
• Information about the types of life insurance products available to them, and why they differ.
• A breakdown of how prices vary by age, gender and health.
• How life insurance can be purchased, and what that process entails.
• A phone number or web chats for real-time conversations to respond to specific questions.
With some 70 million members, Generation Y is too big a group to be ignored. Employers and HR managers are encouraged to do a better job of demystifying the life insurance process and making sure that their young employees are equipped with the knowledge to enable them to make informed financial decisions.
Joan H. Cleveland is senior vice president of business development for Prudential Individual Life Insurance, a division of The Prudential Insurance Company of America, Newark, NJ.
Single Employees Less Likely to Have Life, Disability Coverage, SHRM Online Benefits Discipline, December 2010
Life Insurance Coverage Falls to 50-Year Low; Gender Gap Seen, SHRM Online Benefits Discipline, September 2010
Closing the Life Insurance Coverage Gap, SHRM Online Benefits Discipline, April 2010
Confronting the Gender Gap in Life Insurance Coverage, SHRM Online Benefits Discipline, September 2008
SHRM Online Benefits Discipline