generation Prudential Individual Life Insurance Research Report March 2010

Transcription

1 generation Prudential Individual Life Insurance Research Report March 2010 Reaching Gen Y with Life Insurance is easier than you think y The Prudential Insurance Company of America, Newark, NJ Ed. /201

2 Itonlytakesreadingsomeofthenation smostrespectednewspaperstogettheimpressionthat GenerationY,thegroupofchildrenbornbetween1979and1994,isdifferent.Since2004,articles havebeenpublishedaboutthisgroupofconsumerswithlessthanglowingcomments. ACBSNewsarticlestatedthatsomeGenYersare, Absolutelyincorrigible.It stheirwayor thehighway.therestofusareold,redundant,[and]shouldberetired. 1 EmmaJohnsonofMSNMoneydeclared, 20and30somethingsareinafinancialmess. 2 KellyMooneyoftheNationalRetailFederationwasquotedassayingGenYers thinkthey knowmorethanthepersonsellingthemsomething inanarticleforusatoday. 3 GenYhasbeenpampered,nurturedandprogrammedwithaslewofactivitiessincethey weretoddlers,meaningtheyarebothhighperformanceandhighmaintenance, says BruceTulganofRainmakerThinking. 4 ThesecharacterizationsseeminglycontradicttheassertionmadebysomethatGenerationYisthe futureofthelifeinsuranceindustry.nationalunderwriterinvitedreadersto ReachOuttoGenY andgrowwithit whiledeloitteisofferingcompaniesstrategiestohelpthembegin Insuringthe CatalystConsumer, andlimrawantscompaniesto CapturetheYoungerGenerations. 5,6,7 Overthepastyear,theIndividualLifeInsurance(ILI)businessofThePrudentialInsurance CompanyofAmerica(Prudential)completedamultiphasedresearchprojectthatsoughtto separatefactfromfictionandtodetermineifyounger,individuallylessaffluentgenyerswerea viablemarketinwhichtoselllifeinsurance.therewerethreeimportantquestionstowhichwe soughtanswers: 1. WillGenerationYbuylifeinsurance? 2. Ifso,howdoesGenerationYwishtopurchase? 3. HowandwheredowecommunicatewithGenerationYaboutourproducts,services,and brand? FourexternalGenerationYconsumerfocusgroups,threeinternalGenerationYfocusgroupsfrom ourindividuallifeinsuranceassociates,andover1,500internetbasedsurveyresponseslater, Prudentialhadtheanswer. InordertoreachGenerationY,theindustryandourcompanywillberequiredtostopsellinglife insurance.genyersdon twanttobesoldlifeinsuranceontheweb,inpersonoroverthephone. Rather,GenerationYwantstobeempoweredtobuy.Inotherwords,theywanteducationabout lifeinsurance,tobetterunderstandhowlifeinsurancefitsintotheirlives,andtobeprovidedwith aneasywaytopurchasetheproduct.

3 GenYWillBuyLifeInsurance Intention to Buy or Add Life Insurance Coverage by Gen Y Segment (%) Thesinglemostsignificantinsightthat emergedfromtheresearchwasthat GenerationYwillbuylifeinsurance.On theinternetbasedsurvey,48%ofgenyers statedthattheyhadintentionstobuy,oradd lifeinsurancecoveragewithinthenextthree years,andnearly20%plantobuylifeinsurance withinoneyear.that scomparedtoa2005limrastudywhichfoundthat27%of consumersfromallagesintendedtopurchaselifeinsurancewithinoneyear. 8 Add theirintenttopurchasetothefactthatoneinthreepeoplewhomoved,got married,orchangedjobsweremembersofgenerationy. 9 Together,GenerationY hascollectiveannualincomeof$1.89trillion,andsomeestimatesputthesizeof thisgroupatover70million. 10 Inaddition,GenY'searningsareexpectedto increaseby85%duringthenextdecadeto$3.5trillion,exceedingbabyboomers' earningsby$500billion. 11 Onethingiscertain:GenYisaveryviablemarketforlife insurance. Education GenerationYselfreportedgradeforlife insuranceknowledge? 17% 8% 6% 41% 28% A High honors B Above the curve C Need to work harder D Catch up in summer school F Dog ate my homework GenYersunderstandlifeinsuranceasaconcept:itpaysout moneyuponthedeathoftheinsured.however,the knowledgedoesn tgofarbeyondthat.thecomplexitiesof pricing,producttypes,andtheunderwritingprocessarelost onmostofthisgroupofconsumers.inaddition,many couldn tnameasingletypeoflifeinsuranceinsomeofthe focusgroups. Thosewhoknewofproductsliketermanduniversallifecouldn texplainhowtheproducts workedorwhatdistinguishedthemfromeachother.generationyhasnoideathatit snot commontocompletethepurchaseofalifeinsurancepolicyonline,as60%statedthatthe best dealsinlifeinsurancearefoundontheinternet. NotonlyarethemembersofGenerationYgenerallyunknowledgeableaboutlifeinsurance,but theyalsohavenoideahowmuchitcosts.somedescribeditasaluxuryitemonlyforthewealthy, whileothersrefusedtoevenstateanexampleoftheirperceivedcost.however,whengivenprices oftypicalsimplifiedissuetermpolicies,60%immediatelybecamemoreinterestedinlife insurance.theywereshockedtofindouthowinexpensivecoveragecanbefortheaverageperson Making Life Insurance Relevant to Gen Y

4 INSIGHT Research revealed that Generation Y sees life insurance as only necessary for those with families, who have high risk jobs or lifestyles, and who are sick, old, or both. According to Gen Yers, individuals who are older need life insurance because of the natural likelihood that they are more susceptible to sickness and poor health. The causes of this perception may stem from a variety of sources, but an exercise in the focus groups revealed a likely culprit. Some of the most recognizable ads among Gen Y consumers featured older people advertising guaranteed issue coverage. As it relates to families, Gen Y members who didn t have coverage suggested in focus groups that they would need life insurance when they were married or had children, and didn t see the need for coverage without a spouse or child who depended on their income. Those with spouses or children showed more openness to purchasing life insurance immediately and spoke of the need to provide for the remaining members of their family in the event of their passing. The findings changed when life insurance was explained to consumers and when the cost of life insurance was made clear. The distinctions between married consumers and single consumers became essentially non-existent. A majority of Gen Yers, regardless of marital status and the presence of children, were more open to life insurance after receiving more information. inhisorhertwenties.theyevensuggestedthatthepricebeaccentuated inadvertisingtobetterreachgenyers.however,oncetheyknewthe price,itspawnedamyriadofotherquestions.itseemedthattheirinitial objectiontolifeinsurancewasitsperceivedcost.afteritwasmadeclear thatlifeinsurancewasoftenveryaffordable,thenadooropenedtothe restoftheinformationgenyerswantedtounderstand. Theywanttounderstandthedifferencesinfeaturesfromtermto permanentinsurance,andhowthataffectstheprice. Theywanttoknowwhattheygotforthemoneytheyspentevery monthforthelifeofthetermperiod. Theywanttoknowthedifferencesinpricingbetweenproducts, andwhythatdifferenceexists. Theywanttobeabletocomparepricesonlineforthebestdeal andalsounderstandwhyittypicallycostsmoretopurchasecompletely online.(eventhoughpriceisn talwaysthedeterminingfactor.) Theywanttoknowwhathappenswhentheleveltermperiodis upiftheywerestillalive. GenYershavealotof questionsaboutlife insuranceandthe industryhasthe answers.however,44% saidthattheydon t knowtowhomtoturn forquestionsaboutlife insurance,andlife insurancecompany websitesandagents rankfarbelowother sourcesofinformation Where Gen Y Would First Turn for Information About MyTerm Life Insurance (%) Web/Internet(net) GeneralWebSearches Friends&Family Websitesofspecificcompanies CurrentFinancialAdvisor NewInsuranceAgent CurrentInsuranceAgent NewFinancialAdvisor forthisgroupofconsumers.educationhastobeattheforefrontofanyeffort toreachgenerationy,butthatisonlythebeginning

5 GettingTheirAttention How much thought have you given to your life insurance needs? A lot Some A little None Interestingly,81%ofGenYersstatedthattheyhadgiven atleast alittle thoughttotheirlifeinsuranceneeds. 19% 12% However,theirlackofindividualcoverageilluminatesthe gapbetweenthosewho vethoughtaboutlifeinsurance 32% 37% andthosewho vepurchasedit.thecausemaybethat 55%ofthosesurveyedagreedthat lifeinsurance companieshavenotstartedpayingattentionto[their]generation. GenYerskeptmentioning extremesportsenthusiastsandactivitiesduringtheconversationsaboutlifeinsurance.asaresult, Prudentialdevelopedaseriesofanimatedbanneradsandcorrespondinglandingpages(shown below),inspiredbyseveralfocusgroupscompletedduringtheproject,tomarkettheonline MyTerm isissuedbyprucolifeinsurancecompanyinallstatesexceptnewyorkandnewjersey,whereitisissued byprucolifeinsurancecompanyofnewjersey.botharelocatedat213washingtonstreet,newark,nj,andare PrudentialFinancialcompanies.PolicyForm#PFT2007.EachIssuerissolelyresponsibleforitsownfinancial conditionandcontractualobligations.

6 INSIGHT Overall, more than 7 in 10 members of Gen Y would consider purchasing life insurance online, with a quarter preferring to do so. However, 50% of them still want to talk to an agent at some point during the purchase process. It seems that Gen Y wants a professional who can validate the information they have gathered from other sources. Agents will continue to have an important role in life insurance, but Gen Yers want to drive the sales process using agents as a resource. purchaseoflifeinsurancetogenerationy.theadsweretestedwithover 1,500membersofGenerationY,andclearlytherewasagreatdeallearned thatcouldbeusedtoreachgenyers. Generalreactionstothecampaignwerepoor.WhileGenYersrecognized theattempttoreachyoungerconsumersthroughthebanneradcampaign, theywerenotimpressedwiththewayinwhichitwasdone.yes,theywant messagingtowhichtheycanrelate,butalsoacknowledgestheseriousness ofthepurchaseoflifeinsurance.genyersdon twanttheirlifeinsurance companytouse gimmicks tosellinsurance.itseemedthatwehadgone toofar.themessagingandoveralladsshouldmostimportantlybe relatable.genyerswanttoseepeoplelikethemwhohaveinsuranceand arebetterforit. AnEasierWaytoBuyLifeInsurance Wecurrentlyhaveasimplifiedissuetermproductavailableoverthe internet.therefore,aportionofthetestfocusedongauginggenerationyreactionstothe product.inthesurvey,48%founditappealingorveryappealingandanother31%somewhat appealing.whenaskedtocomparetraditionaltermpolicyunderwritingtosimplifiedissue,60% wereintriguedbecausetheproductgenerallydoesn trequireamedicalexam.58%likedthatthe processwasinrealtimeand43%likedthattheydidnotneedtotalktoanagent.simplystated, GenYersdon twanttobeapartofthetypicallifeinsurancepurchaseprocess.theydon tlike medicalexams,almosthalfdon twanttoseeanagent,andmanythinkthattheyshouldbeableto acquirecoverageimmediately,notinweeks. Anotherperspectivethatwasraisedinthefocusgroupswastheabilitytocombinelifeinsurance paymentswithcarinsuranceandmortgagepayments,aswellastohavethepremiumscome directlyoutoftheiraccounts.infact,manyofthosewhoownedindividuallifeinsurancedidn t knowthespecificcostbecausetheyhadoneoftheseaforementionedarrangements.forthis groupofconsumers,convenienceiskey,sotheworkmustbegintomakeacquiringand maintaininglifeinsurancecoveragemucheasier.

7 Conclusion GenerationYpresentsagreatopportunityforthelifeinsuranceindustry.GenerationYcan becomethefirstgenerationofconsumerswhowalkintoofficesandvisitwebsitesalreadydecided onthenecessityoflifeinsurance.theycanunderstandtheproductsoffered,andpurchasethem inrealtime.theymayeventelltheirfriendsonfacebookandtwitterabouttheirexcitementwith lifeinsurance.genyerswanttounderstandlifeinsurance,theydon trequireextrememarketing messagingandgimmicks,theywouldliketodrivethepurchaseprocess,andtheyintendtobuy lifeinsurancewithinthenextfewyears.essentially,generationywantstobeempoweredtobuy lifeinsurance. ThisresearchprojectdidnotdispelallofthestereotypesthatexistaboutmembersofGeneration Y.Theseconsumersliketobeincontrol,andareusedtodrivingthesearchforinformationaswell asthepurchaseprocess.thechallengeisfortheindustrytoaugmenttraditionaldistribution channelsandbegintothinkofallchannelsasconsumeraccesspoints.lifeinsuranceshouldbe availableforpurchasebyconsumershowevertheywishtopurchaseit.companiesshouldalso considerchanginglifeproductstobecomemoreconsumerfacing,sothattheconsumers,not distributors,canhavewhattheywant.finally,generationymustbeengagedinaconversationof whichsocialnetworkingisjustonepart.marketingmessaginghastomeetgenyerswherethey are,andallowthemtoseethemselveswithlifeinsurance.generationywantstobeincontroland inorderforthattohappenlifeinsurancecompanieshavetorelinquishsomecontroltothem. Willweempowerthem?

8 Notes Why Generation Y is Broke. Gen Y sits on top of consumer food chain. Generation Y: They've arrived at work with a new attitude. National Underwriter Life & Health Catalysts for Change: The Implications of Gen Y Consumers for Banks. Building Connections: Reaching Out to Gen X and Y Online. National Underwriter Life & Health. Forrester References Making Life Insurance Relevant to Gen Y. Marketing Life Insurance to Generation Y. The Boomers Had Their Day. Make Way for the Millennials..