Millennials and life insurance: A different approach?
Millennials (also known as Generation Y) are mostly defined as young adults aged 18 to 34. With a population of 19 million, Millennials are the largest age cohort in SA, accounting for 50% of the working-age population.
Interestingly, several studies in the U.S. show that Millennials are not purchasing life insurance. This is also true for South African Millennials.
According to the 2015 All Media and Products Survey (AMPS), only 4% of Millennials in SA have life insurance. So, why are Millennials not purchasing life insurance? How are Millennials different from previous generations? What do brokers and insurers have to do differently to be able to serve them?
Different outlook
Millennials have grown up in a time of rapid demographic and technological change. They also have a set of priorities and expectations that are significantly different from those of previous generations.
One of the more important differences relative to life insurance concerns how many of them are getting married. Marriage rates among Millennials in SA have fallen steadily from 22% (2004) to approximately 15% (2015). Hence, the traditional milestones of marriage and starting a family often relied upon by brokers and insurers to prompt the demand for life insurance may resonate less with Millennials.
Millennials are also the most avid users of the internet and mobile devices, and they are the most active on social media networks. A recent study by VISA shows high internet and smartphone usage among SA Millennials, with activities such as banking and shopping done through online channels and smartphone apps. These digital tendencies mean that insurers and brokers have to think differently when trying to reach Millennials.
Purchasing behaviour
The fundamental question is now whether Millennials are more inclined to purchase life insurance via online channels instead of the traditional broker and agent channels.
In order to understand the preferences of Millennials when they are deciding to purchase life insurance, RGA Reinsurance South Africa conducted a short online survey of 2 500 employed individuals from ages 18 to 35. Some key insights are detailed below.
A huge gap
As shown in figure 1, only 57% of survey participants reported having life insurance. The remaining 43% of participants indicated that they did not have or were not sure if they had taken out life insurance. Therefore, this huge gap in protection needs among Millennials presents a huge opportunity for those brokers and insurers who understand that the characteristics and expectations of this technologically savvy generation are very different than those of other customers.
Millennials are not so different
Although Millennials are quite comfortable with internet banking and online shopping, when it comes to life insurance, the purchasing preference is different. Surprisingly, almost half (45%) of survey participants indicated that they preferred to “Go and speak to someone in person” when they wanted to buy life insurance (figure 2). This shows that Millennials value the personal relationship and advice offered by brokers when they are deciding whether to buy life insurance. Furthermore, 21% of participants responded that they would “Go online,” while 25% were not sure of their preferred channel.
The internet is a powerful enabler
Technological developments have strongly influenced the preferences and buying behaviour of Millennials, with many looking to the internet and social media for information and company reviews (usually from friends) before making a purchase. Their demand for real-time information creates an opportunity for brokers (and insurers) to effectively engage with, inform and anticipate the needs of Millennials.
In summary, market trends and research continue to show a huge protection gap among Millennials in SA. Despite growing up as digital natives, nearly half of the participants in our survey prefer and value personal advice and support when deciding to purchase life insurance. However, continuous engagement through online channels is crucial in building trust and meeting the expectations of this large demographic.
