The Next Generation of Life Insurance Buyers: New Economic Realities.

An inside look at Gen X and Gen Y–and the next-generation life insurance products and sales strategies that resonate with them.

(Conversation: Issues and Opinions on Life Insurance Planning) Article from: Agent’s Sales Journal | June 1, 2011 | COPYRIGHT 2011 Summit Business Media

In the shadow of the massive Baby Boomer generation looms a huge–and largely untapped–potential market for life insurance. With so much attention dedicated to serving the needs of seniors (a generation also known as traditionalists) and retirement-bound Boomers, it’s easy to overlook the life insurance needs of their children, members of Generation Y (born between 1977-1994) and Generation X (born between 1965-76). But the sheer size of these generations surely warrants the life insurance industry’s attention. Generation Y numbers more than 76 million, and Generation X close to 50 million. By way of comparison, the U.S. Baby Boomer generation numbers about 75 million.

Five life insurance professionals gathered at The Prudential Insurance Company of America’s headquarters in Newark, N.J., this spring to discuss how Generation X and Y consumers are changing the dynamics of the life insurance market, along with the tools and tactics advisors and financial professionals need to tap into a younger generation of buyers who want easy-to-understand, value-added life insurance products that meet multiple needs…

…Life insurance ownership has hit a 50-year low, with 30% of households not carrying any coverage, according to figures from LIMRA. Meanwhile, the career-agent force has dwindled from some 250,000 in 1975 to about 170,000 as of 2007, according to LLMRA’s U.S. census of sales professionals, meaning fewer professionals are educating the public about the need for life coverage.

“What’s more, says Bob Baranoff, LLMRA’s senior vice president for member benefits, there’s a negative stigma attached to the life insurance industry and its sales force. It’s hard for people to conceive of image-wise, a stodgier industry. “That doesn’t mean it’s a legitimate image, but that is the image. The stereotype of the car salesman type persists.”

What Younger Buyers Want

The challenges to selling life insurance to Gen X and Gen Y aren’t limited to supply-side issues. “We’ve gone through a terrible economic time,” observes Baranoff. ” There are more people out of work, more people worried about getting out of debt than ever before. The younger generation is forming families later in life. They have other priorities.”

But that’s only part of the story he says. “The biggest hurdle [to selling life insurance to Gen X and Gen Y] is probably procrastination, quite honestly In our survey work, 50 percent of all households recognize they need more life insurance. Yet only 25 percent say they plan to buy life insurance in the next 12 months, which is lower than it’s been before.”

Today’s consumers do not want to be “sold” insurance, asserts Mark Hug, vice president and chief marketing officer for Prudential Individual Life Insurance. “They want to be empowered to buy it. This attitudinal difference surfaced in a 2010 Prudential Generation Y survey.  Carriers need to figure out what this psychological difference means. The process by which they buy needs to be different. Today we’re dealing with four distinct generations: X, Y Baby Boomers and traditionalists. Each relates differently to insurance.”

The onus is largely on advisors; financial professionals and carriers to figure out how to sell life insurance to a younger consumer whose priorities and circumstances are different than those of the clients to whom they’re accustomed. “Taking the pulse of the consumer has never been more valuable than it is today,” says Nate Williams, marketing and communication director for Brokerage Resources of America. “We’ve never had to study our clients more. We don’t have to work harder. We have to work smarter.”
Working smarter means using sales strategies and products tailored to younger consumers, he says. “The kitchen table is not relevant to many Generation X and Y members. It’s obsolete.”

There’s no such thing as a pressure sale anymore,” echoes Phil Rosenau, a financial professional with Prudential’s Southern Pennsylvania Agency “That is completely off the table. There’s no car salesman routine or anything like that, because they’ll throw you out the door.”

Creative prospecting approaches are what will allow life insurance producers to deliver an impactful life insurance message to Gen X and Gen Y, says Hug, “Because our distribution is shrinking, we have to find other ways. Social media may offer up one of those opportunities to target them.”

Social media fits well within an “empowered buyer” approach to marketing and selling life insurance, says Rosenau. “The majority of consumers today whether they’re buying toys for their kids or buying life insurance to protect their families, are using social media sources.”

While social media might provide the means to make initial contact with prospects, the face-to-face relationship between advisor and client is where the rubber meets the road. Citing LIMRA data, Baranoff says 52 percent of Gen Y members still would prefer to buy life insurance face-to-face. Thus, to make inroads with younger life insurance buyers. And the message they’re conveying to younger life insurance prospects has to change as well, according to financial planner Financial Planner Stephanie Sherman. “Their parents are living longer. Their grandparents are living longer. So they’re not seeing the sort of traditional bread-and-butter reasons why someone may have purchased life insurance as relevant to where they are today. It takes a planner or financial professional to sit with them and explain why it is.”

Value, Versatility are Paramount

When it comes to buying life insurance, Hug emphasizes, value is more important to members of Gen X and Gen Y than price. “The idea of having life insurance protection and important features built-in so they don’t have to think about it, is a very important research point with consumers.”

 …Nowadays, according to Sherman, versatility means having a product that addresses risks such as job loss that are top of mind with many younger consumers. “Lots of people are getting laid off, so it’s important to have a life insurance policy that can stay put if they’re unemployed, that grabs people and really speaks to them. And when you include the added value of a premium waiver in the event of a qualifying disability and the added value of the ability to convert the policy when their budget is perhaps a little looser, it’s a very easy decision for [younger buyers] to make. It isn’t a sale, it’s a decision.”

Ultimately, she says, advisors who can deliver a resonant solutions-based message that addresses those kinds of hot-button issues will be best positioned to close younger life insurance buyers. “Living in the information age is great, but our job as planners is to help put it all in perspective. We need more people who are willing to take it one family at a time to get out the message. We have the solutions. We have to help them hone in on them.”

Advisors and life insurance agents must walk a fine line with the solutions they offer younger clients who lack a thorough grasp of life insurance and its value proposition, cautions Baranoff “Consumers are looking for insurance products that meet multiple needs, that can serve multiple purposes–that is key A lot of companies are developing those kinds of products today However, if you come at consumers with too many options, you overwhelm them and confuse them even more.

With the recent financial crisis, younger consumers also want assurance that the company underwriting a life insurance product will be behind them over the long haul.  “Do they trust us 100 percent? Probably not,” Hug acknowledges. “But the one thing we have always found is that consumers generally think we will be here to pay the claim, and ultimately that is the important part. The most powerful statement about the life industry is not what the rating agencies say, but the fact that we have never failed to pay a legitimate claim. In 2010, we paid more than $55 billion in death benefits.”
That message resonates with consumers, whatever their generation, he says. “We’re trying to make life insurance more relevant today, while still maintaining the key behind it, which is death benefit protection. And I think you will see more innovations down the road with life insurance products to make them more appealing to younger buyers, whether it’s taking care of the consumer if something happens during their working lifetime, whether it’s a transformation policy that changes in midstream.

Part of a Plan

Life insurance begins to make more sense to younger consumers when an advisor puts it in a broader insurance planning/financial-planning context, contends Sherman. “More than one policy is often needed to fit the bill. Is your client worried about putting their children through college or paying the mortgage if they become disabled or unemployed? Their plan at work may not be sufficient for them to retire. We look at where clients might be at risk. It isn’t necessarily once and done. It needs to be periodically re-examined.”

“That is a big thing we have to do as an industry” adds Williams. “People think they can buy something once and not think about it again. There is the idea of a ‘life insurance plan’ because the chances of a 25-year-old’s needs changing in five to seven years are almost 100 percent.”

A policy’s convertibility from term to permanent is an important sales point when discussing life insurance in a broader planning context with clients, says Rosenau. “With that conversion option, it becomes something where you can lock in your health rating, today when you’re young and healthy There’s peace of mind there.”

While tools such as social media and tactics that focus more on education than salesmanship may be what allow agents and advisors to get a foot in the door with Generations X and Y life insurance prospects, it’s the ability to proactively provide solutions and build trust with those prospects that will yield results, says Sherman. “It’s our job to help point out the risk and help bubble it to the top so they’re thinking about it. If they’re not going to act on it today it’s our job to come back and say ‘You know what, we talked about this a few months ago in the context of your plan, and you weren’t ready to talk about it then, but how about now?’ You have to bring it back to the surface, as their advisor. We can’t just wait for the phone to ring. We have to be making the phone calls and talking to people. And when those calls lead to appointments, “we can’t just go in and say here you go,” Sherman adds. “We have to hear what prospects and clients are telling us, digest it and then come back with the appropriate solution.”

Sometimes the initial life insurance solution offered to a Gen X or Gen Y prospect or client might not yield a huge payday But for the advisor or agent who has the acumen and foresight to put the client’s needs, education and relationship-building first, the seeds have been planted for bigger things down the road, Williams points out. “The people who aren’t making much money for you right now, they are the people who in 20 years…”

In other words , the advisors who stand the best chance of prospering in the Gen X and Gen Y market are those who think Big Picture. The time and energy invested to cultivate younger life insurance clients today can pay huge dividends–if not immediately then down the road.

Why They Buy

What Gen X & Gen Y prospects look for in a life insurance product:

* Easy-to-understand policies
* Affordability
* Convenience
* Accessibility
* Value-added coverage
* Ability to meet multiple needs
* Convertibility
* No coverage gaps
* Level premiums
* Adequate death benefit
* A highly rated carrier
* A trusted advisor

Why Convertibility Appeals to Gen X, Y

While many of today’s consumers understand the need for protection, life coverage is at all-time lows, with 30% of families carrying no coverage. While term policies often offer the “most for the least,” many younger consumers now want more for their insurance dollar. The ability to convert a term policy into a permanent policy, thereby locking in favorable younger clients who want more value from a life insurance policy.

New Twist on Term: Disability, Unemployment Protection

To satisfy younger generations of buyers, life insurance products need to provide multiple solutions, such as protection from unemployment and disability. Gen X and Gen Y prospects have seen friends and neighbors lose their job, home or ability to earn a living.

Survey Says … WorkLife 65 Will Sell

PruTerm WorkLife 65 is a convertible term product whose features clearly resonates with Gen X and Gen Y consumers. In a recent survey (Term X Concept Research, May 2010), Prudential found that 90 percent of respondents thought WorkLife 65 offered better value than a basic term product. Younger consumers (aged 25-34) thought the product’s guaranteed coverage to age 65 had the strongest appeal, while for respondents aged 35-44 the disability and unemployment benefit appealed most.

Robert Baranoff, Senior Vice President, Member Benefits, LIMRA, LOMA lo´ma

Mark Hug Vice President, Chief Marketing Officer, Prudential Individual Life Insurance

Nate Williams, Marketing and Communication Director, BRAMCO (Brokerage Resources of America)

(Moderator) Joseph Finora Financial writer, Senior Market Advisor contributor and author of Recession Marketing

Stephanie Sherman, Certified Financial Planner (CFP)

A person who has passed examinations accredited by the Certified Financial Planner Board of Standards, showing that the person is able to manage a client’s banking, estate, insurance, investment, and tax affairs. [TM], Stephanie Sherman & Associates, located in Whippany, NJ

Phil Rosenau, Financial Professional, Prudential’s Southern Pennsylvania Agency


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