Insuring the Future

A Guide to Life Insurance For Millennials

By Dave Hanley October 4th, 2018

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— How do you convince the first generation to be more overweight than their parents that one day they might die?

According to a recent study, 29% of millennials would rather save their money for a vacation instead of taking out a life insurance policy. So far, companies have failed to engage the largest living generation in a service that, given current market instability, might be more crucial for them than it was for their parents. But something is changing.


It seems that when the word millennial is uttered, we immediately think of young kids just getting started in the world (and depending on who you are, a set of negative stereotypes.) But the truth is, half of millennials are in their thirties and are well on their way to raising families and becoming one of the most impactful generations in our history. Millennials are changing the workforce and doing things differently, but not all of that difference is positive. If you are born between the years 1980 and 2000 you probably don’t have life insurance — and more likely than not you have yet to even take into consideration the idea of purchasing one. However, today people are living longer than in the past, and the younger generations are starting their families later: such factors would reasonably make one think the exact opposite. Why is this happening, then?


Well, we know that millennials and Gen Z are not used to the bureaucracy and complexity of the past, let alone the process of taking out a life insurance policy – many in this demographic would rather just not think about it. But this is not the only reason behind this growing trend. This lack of interest is primarily caused by the insurance companies themselves.


As consumers have become more acquainted with online shopping and as e-commerce services blossomed into the de-facto means of purchasing, companies from industries ranging from retail to banking rebranded themselves and adapted to this new, digital world. This ultimately grew their businesses and helped them to reach new customers thanks to their more streamlined and sensible models. Insurance companies, on the other hand, believed that digitizing documents and uploading them online would be enough to engage younger audiences. It wasn’t.


These companies continued to rely on an outdated salesforce and focused on streamlining internal processes while their product and marketing remained stagnant. However, in this scenario of a seemingly irremediable, low engagement rate, it must be acknowledged that creating innovative products in the insurance industry is no easy task – one made all the more difficult thanks to the strict regulations that currently rule it.


In some sectors of insurance, we have seen murmurings of innovation: pay-as-you-go car insurance and pricing-comparison engines are good examples. However, in the realm of life insurance, most innovation has come on the underwriting side, where data has allowed some policies to be written without a physical examination. The sales process is still the same: To buy life insurance, you still have to go through the tedious, time-consuming process that pre-millennial generations did. There are still far too many middlemen, long applications and eternal waiting times. From the insurance carrier to the broker, the process is bogged down in data and information verifications which still take too long to complete.


At Tomorrow, a financial wellness company my partners and I created in order to engage younger generations, we identified several aspects that help guarantee success in today’s insurance market. These included a user-friendly service which cuts out the middlemen; shortens and automates the underwriting process, guides the customer in understanding regulations, as well as selecting the most relevant product. Enhanced user experience design is key in ensuring engagement and critical in any insurance business that wants to survive the digital revolution.


Tech solutions are finally finding their way into the insurance industry but, needless to say, there is still a long way to go. And we see this in the worlds of insurance as well as in the world of estate planning, where Tomorrow offers a free legal will, which you can create in an app. Despite advances in electronic contracts, a legal will must still, by law, be printed off and hand-signed, and then placed in a drawer for someone to find. In the US, digital wills are considered invalid.


On the other hand, the verification of a client’s medical record or credit report is still extremely time-consuming, and perhaps a shift from third-party source data to proxy (real-time) data could help change this thanks to improvements in AI. The blockchain’s tokenization principle and its full-proof, verification, guarantee is another avenue worth exploring.


Change will come, but it might take up to twenty years to be effective: eventually, as in many other industries, innovation will arise out of necessity. Being part such a complex industry, insurance companies will probably join forces with tech companies and startups, merging legal and digital knowledge in order to stay relevant to the consumers it aims to help – especially the younger consumers who need insurance most.

The end.