Gen Z clients may be the right fit for the new breed of IUL products

By Joshua Stanfield

Do you remember when you were 25 years old? For some of us, it’s a more recent memory than others, but we can all identify with the 25-year-olds who are finally finding their financial footing. Their student loan debt may be decreasing, their salary growing and they may be wondering what’s next. With that newfound financial independence comes great responsibility, and it doesn’t take long to realize the importance of both saving and planning for the future.

While the mid-20s isn’t a common target age for life insurance solutions, new products on the shelf today can change this thinking. Your young clients may not yet have children or substantial assets, but many are getting married, purchasing homes and planning to have children. It is during these periods of change that the need for financial growth and protection becomes especially important.

There are multiple approaches to achieve this, and one worth considering for this young generation of clients is an indexed universal life insurance policy. An IUL policy accumulates cash value based on the performance of the stock market, so buying an IUL policy presents an opportunity for significant growth for young adults who have a long investment horizon.

Consider Mary, a 25-year-old woman who wants to start building wealth. She can put $200 per month in an IUL product, but many popular IUL offerings today are so complicated that they’re difficult for clients to understand. Some IUL products are not easy to present to a Generation Z client with “immediate delivery” expectations and minimal life insurance knowledge.

Enter a new generation of IUL products with simple designs and straightforward illustrations that speak for themselves.

Flexibility distinguishes these newer IUL products

Flexibility is what makes the newer products particularly appealing for Gen Z and millennials. Flexible features provide the freedom to change future premium allocation choices. These features also provide the ability to periodically change how funds are allocated within index accounts over time to keep pace with market trends and economic cycles. Here are some ways IUL can help Mary achieve some of her financial goals.

In tight times: In periods of financial strain, Mary could pay the minimum premium to maintain coverage.

In flush times: After a particularly generous year-end bonus, Mary could pay extra to boost long-term accumulation.

At any time: Mary can access her plan’s cash value via partial withdrawals, traditional loans and participating loans (which allows her to keep earning interest through the interest rate tied to the index accounts).

All the time: Don’t forget, although the performance of an IUL policy is tied to an index, funds are not directly invested in individual stocks. Products offer downside protection through a minimum guaranteed interest rate, called “floor,” to help prevent losses during market downturns.

There’s no time like the present for young adults to start building wealth, and with only three in 10 Gen Z and millennial adults reporting that they feel very knowledgeable about life insurance (source: 2024 Insurance Barometer Study, LIMRA and Life Happens), there’s no better time for you to approach your young clients about easy-to-understand IUL products.

Additionally, building client relationships at this early stage will allow you to grow with them as their needs expand. Just as age 25 may not be in your recent memory, it will soon be in the rear-view mirror for today’s Gen Zers, and they will need help with the full spectrum of insurance planning needs for their growing families and businesses.

Joshua Stanfield, ALMI, ACS, is the manager, sales development at Mutual Trust Life Insurance Solutions. Contact him at [email protected].