The Educated Sale – Getting in Touch with Gen Y

Time. Technology. Budget. Accessibility: These are the attributes that are important to Generation Y, a group of young adults born between 1978 and 1994 whose annual spending is estimated to be greater than $200 billion and who are predicted to surpass baby boomers in purchasing power by 2017.

Gen Y has been a notoriously tricky group for the insurance industry to capture. In more ways than one, they fly in the face of tradition, and they are no strangers to unfavorable press. Positioned as high-knowledge yet high-maintenance, pampered, and financially irresponsible with a distinct know-it-all streak, the demographic leaves many producers cold when searching for new markets to penetrate and serve.

But as the numbers suggest, it would be a mistake to ignore Gen Y. Not only do these prospects possess a vast amount of collective resources, they actually have a real interest in obtaining insurance coverage. Granted, they may not be as interested in the needs-based coverage favored by their predecessors, yet study after study has revealed that Gen Y clients do think insurance is important, that they want to protect their income stream and assets — and that they have barely scratched the surface when it comes to finding the educational tools to do so.

Products: What to know

Gen Y clients are overwhelmingly in the dark when it comes to the products that are available to them. A March 2010 Prudential Individual Life Insurance study found that most Gen Yers understood the basic concept of life insurance — that it pays out money upon the death of the policy owner — but that very few knew anything beyond this. That there are different types of insurance to fit different needs, that paid premiums can be recouped at a certain agreed-upon point, and that term of coverage varies are all foreign concepts to this younger generation.

From a sales perspective, clarifying these points could be the missing link between a generation of prospects and a generation of clients. More than anything else, Gen Yers must understand that life insurance is relevant for them now, and that it is a beneficial and lasting investment. One thing that may help them is an assortment of life insurance products that addresses the needs closest to Gen Y’s heart. Joan H. Cleveland, vice president of business development at Prudential Financial, said most of the products that appeal to Gen Y are term.

“Return-of-premium term, for example, based on 10, 20, 30 years, is a level term period, and if you’re still alive, you get your premium back,” she said. “It appeals to the ‘what’s in it for me’ mentality. Gen Y clients can say, ‘I’m buying coverage for the amount of time I need it, and then I can recoup my gross premiums [when the term finishes]’. ”

Pricing: When to buy

Pricing is another big question mark, and Cleveland said that she is continually surprised by the misconceptions in this area. After a year of market research, she has found that price is No. 1 among Gen Y concerns.

“What’s really interesting is that [Gen Y clients] know [life insurance] is a good thing and they’re somewhat predisposed to understanding that it’s worthwhile to have,” she said. “But really … they still think it’s complicated in general. And they believe it’s expensive. That continues to come up as a theme, that they just aren’t aware when it comes to price.”

In many ways, this is good news for agents: A whole slew of potential clients awaits, and one of the biggest obstacles to the sale is simply a lack of knowledge about price, which can actually be quite affordable if purchased at a young age.

This is something agents need to stress. Nic West, senior insurance advisor at Wholesale Insurance and himself a member of Generation Y, said that his success in selling to his own generation is due in part to his emphasis on financial intelligence. Although he prefers to connect with clients through his own life story, when speaking with those who lack such financial responsibilities as a home or family, he tries to appeal to their goal of fiscal responsibility.

“It becomes a nuts and bolts financial purchase. [Purchasing life insurance at a young age] just makes sense financially,” he said. “Would you rather pay $20 per month now or $50 per month if you wait 10 years?”

This technique of breaking things into monthly
portions is particularly successful with Gen Y. What they’ve come to expect from automatic and electronic bill
payments and direct deposits, they have also begun seeking in insurance payments. The old approach of religiously writing a check each quarter simply does not appeal to this generation: As in most other areas, they want to pay for life insurance on their own terms.

Purchasing: Where to conduct the sale

As indicated by the preference for automatic payment schedules, Gen Y often prefers to rely upon technology for many of the tasks that have traditionally been conducted in person. More than any other generation, members of Gen Y will start the purchase process online, but this doesn’t mean that the human element is entirely removed from the sale: More and more, it seems, Gen Y craves both online and face-to-face interaction.

For West, who runs the entire sales process online, this need to sit down with an agent has turned into a challenge.

“Over the years, I’ve found that [Gen Yers] may start online and then take the information and want to meet on a face-to-face basis. So they start [online], but don’t want to end there,” he said. “They still want to talk to somebody, because there are still questions that are essentially unanswered.”

Timing: Why purchase now?

In part, this conversation can persuade Gen Y that they are not, in fact, invincible. Joel Ohman, president of Real Time Health Quotes, said that Gen Y’s biggest misconception is that they don’t need coverage until much later in life.

“Even many Gen Yers with families and children that depend on them for financial support still cling to the notion of being young and invincible and not needing to bother with preemptively buying life insurance … before they maybe experience a major illness and get a taste of their own mortality,” Ohman said.

This points to a crucial fact: Even for those without dependents, insurance is a smart purchase — which brings us back to pricing.

Jeff Root, owner of Root Financial, believes that the security Gen Y finds in purchasing at a young age is priceless — something he understands firsthand.

“I’m a Gen Yer, single, no children, and I have a significant amount of life insurance,” he said. “Owning life insurance at this point in my life isn’t essential, but I know the economy will impact us Gen Yers for the rest of our working days, and knowing my future family is protected for the measly price I’m paying is something I’ll be glad I did.”

Connecting: How to pitch to Gen Y

Now for the biggest question: How do you earn Gen Y’s trust and business?

“Agents that are transparent about the way the sales process works [and] what the client can expect — Will other agents call them? Will they receive multiple emails? — and that are honest throughout will make a great impression on Gen Yers,” said Ohman.

If you can move beyond the first impression and get to know the client as an individual, this will also help your sale. Connecting on a more personal level can strengthen the bond often lost in the initial online experience. It’s all about getting to know their needs and helping them picture themselves with life insurance — and social media platforms are a great interactive forum that allows you to relate to prospects without the sale. This is important because a key attribute of Gen Y clients is that they don’t want a sales pitch. They want to drive the sale themselves.

 “[Gen Y is] very smart, they’re decisive, and sometimes they’re a little stubborn,” said Adam Sherman, CEO of Firstrust Financial Resources. “I think this whole generation has grown up not necessarily believing people, but believing what they read if it’s supported by a lot of sources that they recognize.”

It is, then, the 21st century agent’s job to provide sources, let Gen Y do their own research, and meet them in the middle with an accurate needs analysis. It’s using an open, direct, technology-drivenprocess — mirroring this generation’s very collective personality. «

Nichole Morford is the managing editor of the Agent’s Sales Journal. 



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