KEY TAKEAWAY:
--the life insurance industry must innovate to appeal to the next generation of consumers' appetite for fast, personalized and digital-first experiences.
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The COVID-19 pandemic threat led to a surge in life insurance sales: In 2021, the life insurance industry saw its greatest nine-month sales growth in 25 years. However, a LIMRA study shows this trend is reversing, especially for younger markets. In 2023, only 40% of Gen Z adults and 48% of millennials say they own life insurance, and nearly half say they don't have sufficient life insurance coverage. That figure represents 53 million adults.
Still, the same report finds interest in life insurance products is at an all-time high for younger adults, as 44% of Gen Zs and 50% of millennials intend to purchase life insurance this year.
Therefore, life insurers have an opportunity to grow their life insurance sales in untapped younger markets by leveraging technology and digital sales techniques.
Here's how carriers can close the gap with these younger markets:
AI Digital Assistants and Education
Lack of knowledge about life insurance is the greatest obstacle preventing younger adults from purchasing coverage. 40% of Gen Z and 29% of millennial parents say they haven't purchased coverage because they don't know how much coverage they need or what type to buy.
How life insurers educate and engage with younger adults will be critical. While Gen Z and millennials value personalized advice and education from human financial advisers, it's impossible to provide human assistance to each policyholder with different needs and levels of knowledge.
As a result, insurers are using chatbots powered by artificial intelligence (AI) to drastically speed up and simplify the purchasing process and provide an always-on, contextual, educational experience.
For example, digital assistants and generative AI-powered chatbots can answer questions about coverage, simplify complex insurance jargon, coach users through the insurance purchasing process, articulate why each step is necessary or connect prospects and policyholders with human advisers.
Omnichannel Customer Experiences
Today's younger generations of customers aren't just expecting online experiences; they want Amazon-like levels of efficiency and convenience. Despite the demand, a McKinsey study finds that only 11% of life insurers facilitate multichannel online product sales.
An omnichannel customer experience occurs when multiple marketing and service channels work independently but provide an integrated and seamless customer experience across all online and offline channels. This means designing customer journeys that allow for seamless channel-switching and ensuring the customer receives the same experience whether they are interacting through email, text, telephone, website, social media or customer portal.
While the life insurance sector has yet to reach a standard for omnichannel outreach, insurers have an opportunity to differentiate their offering by providing a cross-channel experience that meets the next generation of consumers on their preferred platform.
See also: Balancing Innovation, Compassion in Life Insurance
Personalized Pricing, Products and Customer Experiences
LIMRA says high premium costs and inflation are critical reasons why younger people do not purchase life insurance. The problem is lowering premium prices is easier said than done. Instead, insurers can capitalize on personalizing pricing, products and customer experiences.
Personalization enables prospects and clients to get the exact information and policy they want, allowing them to understand their policies and pricing better. Of course, life insurers will have to obtain large sums of customer data to provide personalized experiences and products. The good news is that many Gen Zs and millennials are comfortable exchanging personal health data (i.e., step counts, sleep data, etc.) from their Fitbits or Apple watches for discounts and personalized policies.
This opens up a massive opportunity for insurers to maximize customer engagement and attract more millennial and Gen Z customers with personalized experiences, discounts and rewards for healthy behavior.
Relevant Marketing and Creative Policies
Life insurers must find unique ways to make their products relevant to younger generations. Life insurance marketing often focuses on financial protection for a traditional family structure. Because a childless 25-year-old would likely have different priorities than a 45-year-old with a family, younger individuals usually skip life insurance. However, if life insurers allowed customers to customize their policies to support a particular cause, customers may be more open to purchasing coverage.
For example, some innovative life carriers position life insurance as a way to buy a tattoo for a friend, activate a charitable donation, care for a beloved pet or send a friend or family member on a trip to Europe. Life insurance is positioned as an act of love. The customer feels in control.
Through relevant marketing and creative policies, personalized life insurance can appeal to younger demographics by making it easier to understand and helping them protect and pay for things they care about. Personalization is critical to filling generational gaps in coverage.
Social Media as a Channel for Education and Digital Distribution
Younger people are likelier to use social media platforms like YouTube, TikTok, Twitter and Instagram rather than financial company websites to get financial advice and information and buy coverage.
According to a LIMRA study, 81% of Gen Z and 75% of millennials turn to social media for discussion, advice and information regarding financial topics. Over three-fourths of millennials use their smartphones for financial transactions.
Almost every insurance organization uses social media primarily to promote its brand and market products. While this will remain important, leveraging social media channels to engage, educate and provide self-service policy options to younger customers will play a significant role in the distribution and marketing strategies of life insurers wanting to capture the next generation.
Accelerated Underwriting
The traditional process of getting insured, which includes paperwork, in-person medical testing (i.e., blood work and urine tests), and a reputation for complexity, are key reasons younger generations don't bother purchasing coverage.
Younger customers want to buy life insurance the same way they buy anything else online: quickly and easily. As a result, many leading life insurers are embracing accelerated underwriting. According to a LIMRA study, three out of four life insurance companies in the U.S. and Canada have automated or accelerated underwriting programs.
Accelerated underwriting enables life insurers to make quick decisions on an application. Accelerated underwriting processes use predictive analytics, machine learning algorithms and various data sources, such as medical records, claims history and credit history, to evaluate the applicant's risk.
This lets customers skip tedious underwriting processes. Accelerated underwriting programs can reduce policy wait times for life insurance from 27 days to just 24 hours.
It is essential to position the speed and ease of accelerated underwriting in campaigns targeted to Gen Z consumers.
See also: Life Insurance Digitalized
Attracting the Next Generation of Life Insurance Customers
Owning life insurance can be life-changing for younger generations and their families. While 71% of insured younger parents would feel financially secure if a primary wage earner were to pass away, only 48% of uninsured parents would feel the same.
With so many uninsured and underinsured young adults, the life insurance industry must continue to innovate to appeal to the next generation of consumers' appetite for fast, personalized and digital-first customer experiences.
Let's get creative and think of new ways to reach these younger markets and close generational coverage gaps.
