As consumers continue to demand greater and more diversified services from their insurance agents, a growing number of independents are exploring the financial planning sector. When it comes to identifying the most promising potential clients, however, the answer may not be self-evident.
A new study from the non-profits LIMRA and Life Happens has found that “millennials”—Americans age 25 to 34—have the highest level of concern for common financial planning issues like saving for retirement, paying for their children’s education and leaving others responsible for final expenses.
Marvin Feldman, president and CEO of Life Happens, said millennials’ unique coming-of-age experience has made them great candidates for life insurance sales.
“Having come of age through the recession and facing uncertainty about the future of employer and government protections, millennials are having to take personal financial responsibility to ensure their future plans are secure,” Feldman said. “Life insurance can provide stability and financial peace of mind and yet, while younger Americans recognize its importance, they lack a basic understanding about it, which may be hindering them from getting the coverage they need.”
That lack of basic understanding manifests itself in sever ways, the LIMRA study found. First and foremost, millennials mistakenly believe that life insurance is out of their reach financially. Roughly 63% of young people who have not yet purchased a life insurance policy said the main reason was because the policies were “too expensive,” despite the fact that young and healthy individuals actually get much better rates.
In fact, the average individual under age 25 reported that a $250,000 level-term life insurance policy for a 30-year-old would cost $1,000 a year—nearly 10 times its actual cost of $150 a year. Another one in five consumers in that age group believe the policy would cost them a whopping $3,000 annually.
"Our findings showed an astounding lack of awareness about the true cost of life insurance. Yet, younger consumers are not alone in this misconception. Overall, more than 80 percent of Americans we surveyed overestimate the cost of life insurance and this misconception hasn't changed much in recent years," said Todd A. Silverhart, Ph.D., corporate vice president, LIMRA Insurance Research. "It is important to continue to educate potential buyers, particularly younger consumers who can often pay less, about the policy options that exist."
The issues of most importance to millennials include retirement, a child’s chooling and burdening others with final expenses. Consumers under age 25 showed the most worry of all groups, with 43% reporting they were “very or extremely concerned” about paying for medical expenses, leaving dependents in a difficult financial situations if they were to die prematurely (38%) and paying for their children’s schooling (36%).
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