For Millennials the Life Insurance Industry May Be Stability They Need
For Millennials, the Life Insurance Industry May Be the Stability They Need
Senior Legislative Director, State Relations, ACLI
August 21, 2018
Minivan enthusiast, subscriber to a Netflix DVD-by-mail plan, and voracious eater of breakfast cereal. With a profile like this, I may seem the antithesis of the millennial generation I technically belong to. Millennials are stereotypically known for bucking tradition in favor of trend. That’s why a long-standing industry like the life insurance industry may not jump out as an obvious match for millennials. (70 percent of American Council of Life Insurer member companies have been serving customers for more than a century.) We have products and services focused on long-term and delayed gratification.
However, the core principles of the life insurance industry are advantageously aligned with millennials’ collective ethos. Our industry can help build secure financial futures, especially for a generation of unprecedented size and a pre-wired retirement savings mentality.
Millennials enter the work force conditioned to save. They are skeptical that Social Security will still provide meaningful income when they retire, so they expect to self-fund retirement through various retirement accounts (e.g., 401(k)s, 403(b)s, IRAs). According to a 2017 Transamerica Center study, 71% of millennials are already saving for retirement, and age 24 is the median age that they started saving. This is significantly earlier than the median age of Generation X (30) and Baby Boomers (35) when they started to save for retirement.
The millennial generation prefers to spend money on experiences instead of things. A secure retirement is the ultimate experience, and the life insurance industry is uniquely positioned to help ensure millennials save and build toward a secure retirement – one where they can continue to enjoy the experiential lifestyle they value long after they receive their final paycheck.
Millennial financial habits have been significantly influenced by the Great Recession. Millennials entered the workforce or grew up in an economy wracked by instability and uncertainty. They witnessed the stock market plummet and saw parents lose jobs and homes. Today, they yearn for safety, stability and peace of mind. Millennials are much more risk averse with their finances. Where better for them to look to than the life insurance industry that stood strong through the Great Recession as a pillar of stability and strength. The products that life insurers offer are specifically designed to provide consumers with safety, stability, peace of mind. Almost half of millennials would put most of their assets in an investment that provides a guaranteed income for life, even if it pays a low return.Only life insurers are able to offer annuities, which can provide an individual with a guaranteed income for life.
The need for these products will only increase as millennials become more established in their prime saving yearsand because of rising life expectancy, prepare to face a longer retirement. More than 75% of millennials say they are concerned about having adequate income during retirement.
That is why we need public policy solutions that expand access to retirement savings vehicles to enable them (and Americans of all ages) to protect their financial and retirement security. Legislators and regulators have a role in this. As new laws and regulations are considered, policymakers must not make it more difficult or expensive for individuals and families to build their own financial safety nets.
Just as it has with previous generations, the life insurance industry stands ready with products, financial professionals, education and advice to help millennials enjoy a life filled with experiences, financial security and peace of mind.
Michael Rowden is Senior Legislative Director, State Relations at ACLI where he advocates on behalf of the life insurance industry before state executive, legislative, and regulatory branches of government.