SE2 Survey: 43% of Millennial Families Have Life Insurance
Millennial families are not buying life insurance at nearly the pace of previous generations. A new survey by SE2 , a technology and third party administration company focused on the North American life and annuity insurance industry, indicates that heavy financial burdens and deep confusion about financial planning choices are two of the primary causes. The result is that more families find themselves at risk of financial collapse.
The survey of 1,032 millennial families, commissioned by SE2 reveals:
- 65% of millennial families think about their financial futures daily;
- only 43% have purchased life insurance – even though 78% say their parents have it;
- 23% of respondents said they would be forced to file bankruptcy if their family’s primary breadwinner died; and
- an additional 37% said the death would cause their family financial hardship.
“Millennial families are under a lot of pressure. They face more student loan debt and other financial obligations than previous generations. They also face a more complex and confusing set of financial planning choices with the disposable income they do have. That can lead to a kind of paralysis – where millennials worry for their futures but don’t take the actions necessary to secure greater peace of mind” – CIO of SE2, Vinod Kachroo.
Student Loan Debt and Other Financial Burdens Weigh Heavily
When millennial families were asked the primary factors in their decision not to purchase life insurance, less than 10% said they were simply uninterested in insurance or did not see its value. In fact, 56% said they want to buy insurance in the future. For most, debt and other financial concerns were the biggest reasons for deferring the decision. Specific reasons cited for not purchasing insurance include:
- student loan debt, 30% of respondents;
- saving for a home, 29%;
- mortgage payments; 19%; and
- 30% said they simply couldn’t afford life insurance.
A Complex Set of Choices and Lack of Financial Education Create Paralysis
Beyond competing financial considerations, millennial families also face a complex set of financial planning choices, which can lead to confusion and paralysis in decision-making. A limited understanding of life insurance was evident throughout the survey results:
- 46% of respondents said they would be more likely to purchase life insurance if they were more knowledgeable about it;
- 23% said that life insurance was for older people;
- 18% complained that life insurance was too difficult to obtain; and
- 10% said they did not know how to acquire life insurance.
“Millennial families are less likely to have a trusted family insurance agent or financial planner than in previous generations . They are more likely to consult online resources – which can be a bit overwhelming, like drinking from a firehose. This survey indicates that millennial families may be lacking in necessary education about life insurance as a result” – COO of SE2, Kevin Paulson.
The Path Forward: Inexpensive, Customized Products and a Simplified Process
A bright spot in the survey results was millennials’ attraction to newer insurance options that appeal to their lifestyles, technological savvy, and price sensitivity. This suggests a path forward for insurance providers who wish to capture the millennial market. Specific features that respondents said would make them more likely to buy insurance include:
- customized plans for millennial households, 28% of respondents;
- an online application process that could be completed in a few minutes, 25%;
- incorporation of fitness wearables to track health and reduce premiums, 21%; and
- inexpensive plans that fit their budgets, 32%.
“Ultimately, this study is encouraging because it tells us that millennial families do value insurance. With all their other financial concerns, they just haven’t spent a lot of time thinking about it. Typically, once millennials learn how much lower insurance rates can be for younger people, they realize the cost doesn’t have to be a deal-breaker.” – Kachroo.
“It falls upon the insurance industry to meet millennials where they are by creating products, tools and processes that connect with how they live and buy financial products today.” – Paulson.
* The nationwide survey conducted in 2018 surveyed 1,032 millennial families. Millennial families were defined as multi-person households with either a spouse, live-in partner or children. Participants were ages 22 to 37.