Five reasons Gen Z isn’t buying life insurance

Although nearly half of Generation Z and millennials say they need life insurance, many have not purchased a policy. During a recent LIMRA LinkedIn Live event, experts discussed 5 reasons the younger generation isn’t buying life insurance and how financial professionals can address these issues.

Alison Salka, senior vice president and head of research, LIMRA and LOMA, said the country’s 143 million Gen Zers are the most educated and ethnically and racially diverse demographic group. In addition, they are digital natives who are used to structure and convenience, expect support, and want authenticity from the brands they use.

Although they are the most educated group, they tend to join the workforce more slowly than other groups.

They also have accumulated less wealth than Gen Xers or baby boomers and are more likely to use buy now, pay later services. They also tend to be less optimistic than other groups about the possibility of owning a home.
They also went through the financial crisis and experienced Covid.

In addition, Gen Z and millennials feel more stressed about their finances than other groups, said John Carroll, senior vice president and head of insurance and annuities, U.S. and Canada, LIMRA and LOMA. In general, Carroll pointed out, baby boomers have done OK and Gen X is doing pretty well. But young adults tend to worry more about their finances and about “things” in general and are also concerned about job security. To make things worse, social media, which the older groups did not have, is amplifying the bad news that is out there.

Against this backdrop, life insurance sales broke records in 2021 and 2022. In fact, in 2021, life insurance experienced an 18% growth in premium sales. There was only a one percent growth rate last year. While this was a big drop, he said, it was still another good year, and the results for May 2023 were still strong.

Increase seen in the need gap in life insurance

Despite this growth in sales, the gap in the number of young adults who say they need life insurance and those who actually own life insurance has been growing, Salka pointed out. “We conduct the Insurance Barometer Study each year with Life Happens, and in general, the need gap has been growing, especially among younger groups, “ Salka said. Only 40% of Gen Z have life insurance, presenting a great opportunity to reach out to them.

So, how can advisors do this? They need to get past the noise, meet them where they are, and remember that since they are the most educated generation, they are very open to being educated.

5 reasons Gen Z isn’t buying life insurance

There are many reasons young adults are not buying life insurance or not buying more life insurance, Carroll said, but cited 5 common reasons:

1. They think it is too expensive. “We have a perception problem here,” he said.

2. No one has approached them about buying it.

3. They have other financial priorities.

4. They are not sure how much or what type to buy.

5. They have not gotten around to it yet.

To address these challenges, agents and advisors need to understand that:

• Many young adults are more diverse than other groups, and they are digitally savvy.
• They expect everything to be done online. So why not insurance?
• They have high expectations—with a need for personalization, speed, ease, and access.
• They have a crowded “financial mindshare,” which can keep the subject of insurance from standing out. The desire for them to act is strong, Carroll said, confusion is high, and most of them remain inactive.

Carroll then shared the social media usage of Gen Z and millennials. They are on all social media platforms, including LinkedIn, Twitter, YouTube, Facebook and TikTok. As a result, advisors can’t pick just one platform to communicate with them, he said. Instead, different platforms should be used.

Many advisors are already figuring this out – although 48 % of them are using social media to communicate with their clients and prospects, in just a couple of years, 63% expect to use social media for communication.

Alison said that she read somewhere that many young adults spend four hours a day online. “It is really where they are,” she said. Why such heavy usage? Sixty-six percent said that it is more convenient, and it is easier and faster than other types of media.

But reality is different, Salka pointed out. When they are making a purchase, many still prefer the security and knowledge they get when talking to a person. “People live their lives online, but want to talk to human beings when they are ready to buy,” she pointed out.

Important takeaways

The pandemic may be over, Carroll said, but its impact on young adults’ thinking about financial protection is still around and will last.

To enhance their level of engagement with young adults, advisors should:

• Personalize all online environments.
• Realize that embedded life products, wellness programs, immediate smaller purchases, and bundling may work well with younger adults.
• Look for new ways to educate and market products and services to them. “It is a new world out there,” he said, and advisors should think about different forms of messaging, visuals, and marketing. “This is our future,” he said,” and we are not going back to what it used to be.”

Ayo Mseka has more than 30 years of experience reporting on the financial services industry. She formerly served as editor-in-chief of NAIFA’s Advisor Today magazine. Contact her at [email protected]. 

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Ayo Mseka has more than 30 years of experience reporting on the financial services industry. She formerly served as editor-in-chief of NAIFA’s Advisor Today magazine. Contact her at [email protected].