HR Administration

They Bet Their Life

By Patty Kujawa

Mar. 30, 2016

Nenad Cuk doesn’t plan on dying or getting injured any time soon, so buying life and disability insurance is a waste of money, he said.

When he started his job nearly a year ago, the 27-year-old Internet marketing specialist turned down the chance to spend about $10 a month on policies offered at his company, DaVinci Virtual Office Solutions in Salt Lake City. Cuk said he had his reasons: He is single, doesn’t live a wild lifestyle and wants to put as much money as he can into his company 401(k) plan instead.

“I mean, what are the chances of me dying early?” Cuk said. Plus, “I’m a pretty safe person. I’ve never had anything broken in my life. I take calculated risks, and I’m not into any crazy outdoor activities.”

Cuk said he plans to get married and have kids at some point. Maybe it would make sense to look at life and disability insurance then. “Maybe when I get into my 40s, I may look at it more seriously,” Cuk said. “By then I hope to be a little more settled in my life.”

Millennials and Insurance Careers

Insurance companies are not only having trouble getting millennials to buy their products, but also having difficulty recruiting for the industry. While 40 percent of millennials want to work in the arts and entertainment industry, only 4 percent aspire to be in the insurance business, numbers from The Hartford’s “2015 Millennial Leadership Survey” showed.

It’s hard to blame someone in their 20s or 30s for thinking of things other than an insurance career, but many of the characteristics the industry boasts are in line with what millennials want in a job, said Jessica Gaudio, director of MyPath, an online clearinghouse of industry information for prospective job seekers.

“We hope to change millennials’ perspectives,” Gaudio said. “Much of what millennials look for in a job, including flexible work schedules and jobs that help them make a difference, can be found in the insurance industry. They just aren’t aware of it.”

About half of professionals in the insurance business will retire in the next 10 years, numbers from the U.S. Bureau of Labor Statistics Current Population Survey show. By 2022, nearly 500,000 jobs will open, but only 14,000 students are pursuing undergraduate degrees in risk management and insurance.

“Even if we hired all those students majoring in the field, we wouldn’t come close to filling those jobs,” she said.

—Patty Kujawa

Insurance companies are courting millennials like Cuk to buy life and disability insurance policies at work. According to a Gallup poll published last year, 69 percent of millennials (those born in 1980 to 1996) are either actively disengaged or indifferent when it comes to buying insurance. Generation X, ages 37 to 51, is close behind at 65 percent.

MetLife’s “2015 Employee Benefits Trends Study” showed only 38 percent of millennials carry short-term disability insurance through their employers compared with 52 percent of Gen X, and half of baby boomers, now ages 52 to 70.

It’s a problem for insurance companies because millennials — the largest segment of the workforce surpassing boomers — simply aren’t interested in these products.

“When you are single and in your mid-20s, you don’t think of life insurance as something you need right now,” said Dan Gangemi, head of research and insight for the retirement plans and group benefits at Lincoln Financial Group.

Hot List Life Insurers
Group Life Insurers
Source: Companies

Lincoln Financial took a look at millennials’ opinions on general finance issues in December 2015, and found 80 percent think things like smartphones are important, but only 54 percent value life insurance and only 32 percent identify disability insurance as a top priority.

Just like Cuk, millennials in Lincoln’s study said they don’t spend money on insurance products because they don’t think they need them today. Only half find it to be a good value for their money.

That can turn into a big mistake for likeminded millennials because the Council for Disability Awareness reports 1 out of 4 young workers will have a health issue that keeps them from working in their lifetime. And it’s not always a fall or a cut; back injuries, cancer or heart conditions can have people out of work for a few months or longer.

“They don’t understand the risk they face every day and that they are left exposed,” said Jessica Vanscavish, vice president for voluntary products at Prudential Group Insurance.

Who Are These People Anyway?

Like Lincoln Financial, many insurance organizations have invested a lot of money to find out about millennials’ saving, spending and living habits to figure out how to get them to buy life and disability products at work.

First, many insurance carriers are realizing millennials are postponing a lot of what they call “life events,” like getting married or having a baby. Often, when a person is going through one of those stages, life and disability insurance becomes more important.

April Hot List
Hot List
Source: Companies

Last year, Pew Research Center compiled data comparing millennials to other generations when they were young and found that only 28 percent of them were married in 2014 compared with 38 percent of Gen Xers in 1998 and 49 percent of boomers when they were younger in 1980.

“Holding off on marriage and having kids has an effect” on buying life insurance, said Neal Shah, an analyst with LIMRA, an association of insurance and financial services companies that used to be known as the Life Insurance Marketing and Research Association. “They are more concerned with what they have to pay now, like rent. That is more top of mind than life insurance.”

Millennials are the nation’s most educated generation. Nearly half, or 46 percent of people ages 18 to 33, told The Hartford Insurance Co. that they are too busy paying off student loans to even think about hitting other milestones in their lives. About 1,000 millennials taking The Hartford’s survey said loans are delaying them from doing things like saving for retirement (50 percent), renting or buying a home (40 percent) and having children (20 percent).

“Student debt makes all of these other decisions harder,” said Laura Marzi, vice president of group benefits marketing for The Hartford.

But millennials are savers. Pew found that millennials had $61,003 in median household income in 2014 compared with $63,365 for Gen Xers when they were young in 1998, and $60,068 for baby boomers in their prime in 1980.

Lincoln Financial’s study showed most millennials identified themselves as savers, and 35 percent said they should spend more on life insurance and 25 percent said they should spend more on disability insurance.

“People understand that they have a need to fill,” when it comes to insurance, Prudential’s Vanscavish said. “They are struggling with how to put together the pieces.”

Guide Me

Armed with this new data, insurance companies are revamping how they are delivering messages about insurance to millennials, experts agreed. Because this is the “me” generation where everything is centered around their needs, insurance companies are getting that the message must be personal, meaningful and should provide value to a millennial’s life.

First item on the list is to get rid of old language. For Prudential, even the phrase disability insurance is too stuffy.

“When we market it, we call it an income protection plan,” Vanscavish said. “We believe ‘plan’ invokes control, so now people might read past the first line.”

People can even confuse the word “premium,” said Kristen Phillips, who heads Lincoln Financial’s insurance and retirement solutions marketing and strategy group. While premium refers to the payments a participant would make, Phillips said some think they are getting a type of bonus.

“We talk this language every day,” Lincoln Financial’s Gangemi said. “We need to communicate in a way that they don’t need a decoder ring to understand what we are talking about.”

April Data Bank
Data Bank
Source: MetLife's U.S. Employee Benefits Trend Study, 2015

The Hartford is marketing products to millennials in the way they like to purchase other items, Marzi said. Digital and mobile applications are their first resource for information.

“If you haven’t designed your communication to be mobile, you’re being knocked out of the competition,” she said.

Millennials want the information broken down to a personal level so they can understand that it really isn’t a big sacrifice of their budget and time to get covered, Marzi said. Peer reviews and star ratings are useful and familiar tools that help them understand and affirm what might work for them.

Last June, MassMutual Financial Group launched Web-based software called MapMyBenefits because its research showed that millennials were most distracted by their finances (58 percent) compared with other groups; most millennials (82 percent) said they would be interested in using an online financial tool. 

Some benefits, like life and disability insurance, can get lost in the myriad choices and decisions employees need to make during open enrollment. MapMyBenefits helps workers prioritize health care, retirement, insurance and other financial needs. Users input information like income and expenses as well as existing benefits and other savings. The tool analyzes the data and makes recommendations on coverage and savings goals.

“It meets millennials in a way that isn’t too threatening,” said Kristine Rice, vice president of worksite insurance marketing for MassMutual.

MetLife uses Snoopy and the Peanuts gang in interactive videos to help users learn and make life insurance choices. One video starts out asking users to rate their stress level. After a few slides that teach and gather more information, the video checks back asking the user to rate their stress level once again.

And while all the online information is helpful,LIMRA data show that millennials still want guidance from a real person. Nearly half of millennials toldLIMRA they would prefer to buy life insurance through a one-on-one meeting. Only 11 percent said online with no professional involved.

Overall, 74 percent of MetLife’s respondents in its Employee Benefits Trends Study said one-on-one in-person meetings were the most effective way to make benefit elections. Broken down, millennials said it was the top method they would most likely use.

“It’s not simply a social media exercise, they still want that personal interaction,” said Phil Bruen, vice president for life and disability products for MetLife. 

Patty Kujawa is a freelance writer based in Milwaukee.

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