The survey also revealed which financial products were most popular among millennials and Gen Zs, with insurance topping the list at 79 percent for millennials and 68 percent for Gen Z. Government savings programs or bonds came in second and third, respectively, with 78 percent and 50 percent, and cryptocurrencies came in third with 60 percent and 40 percent.
How millennials are changing the life insurance game?
COVID-19 has made 45 percent of millennials more inclined to acquire life insurance, compared to 15 percent of baby boomers and 31 percent of Gen Xers. Millennials are altering the life insurance industry, just as they have changed everything from suitable job clothing to car-buying alternatives.
Why insurance is important for millennials?
We millennials have a tendency to feel that because we’re young and healthy, we don’t need life insurance. Most of us are career-driven, and it’s true that we can be so preoccupied with saving for our future and rising obligations that thinking about mortality may seem premature.
However, when it comes to future planning, we often need insurance more than we believe we do, especially when we are faced with responsibilities. If you’re considering obtaining one, Frances Chua, one of the longest platinum qualifiers in 2021, offers ten compelling reasons to do so:
1. Everyone, young or old, requires protection.
We may believe we are youthful and healthy right now, yet accidents and illnesses happen to people of all ages. Prevention is better than cure, as the adage goes. We, too, require protection, just like the elderly.
2. It is less expensive.
Because we are young, we are considered low-risk consumers, which means cheaper costs, and it is even better if we live a healthy lifestyle. Because the application is finalized without a rating, this is a better fit for insurance prices.
3. It’s like hitting two birds with one stone when it comes to protection and investing.
We tend to favor investment over protection when planning for our future, but we can do both. Insurance not only protects us and our assets, but it may also be used to make a profit.
“Plans like Sun Life’s VUL funds are an excellent place to start because they provide both,” Chua recommends. “Alternatively, you can go with the Fit and Well plan, which is more cheap.” Even if you’re young and healthy, it covers catastrophic disease.”
4. Insurance serves as a backup plan.
Assume you’re driving somewhere and you don’t have a spare tire. When you have a flat tire, you’ll face additional challenges on your way to your objective, such as higher service expenses and the like. This is what insurance stands for: it aids us in achieving our objectives despite unforeseeable setbacks.
5. Be ten steps ahead of the game when it comes to planning for the future.
We tend to become competitive and eager to achieve our goals as career-driven people. We’re already ten steps ahead with an insurance coverage. Our future is safe, and we are accumulating extra savings at the same time.
6. Life insurance is also available to low-income individuals.
It can be difficult to consider spending money when we are juggling family duties and little income. However, insurance does not have to be a financial burden. Sun Life, for example, offers whole life policies with fixed premiums or term insurance that is best suited for low-income individuals. So don’t be concerned we all have the right to be safe.
7. Your company’s insurance as a backup.
You may be an employee with health insurance, yet it may be insufficient at times. And you won’t be able to take the benefit with you if you leave your work. As a result, it’s wise to have a backup.
8. Avoid paying a lot of money for a funeral.
We understand that burials and funerals are an inextricable aspect of Filipino culture, but they’re also becoming increasingly costly. This is covered by insurance. Whether you have dependents or not, it’s best to save your family from funeral fees if the worst happens.
9. Keep your family out of debt.
Debts are inescapable as we strive for a stable future, but so can accidents. Insurance coverage can keep our debts from stacking up on our family’s doorstep if something happens to us. We can allow our families time to grieve without burdening them with our financial debts if we pass away.
10. Protect your family’s way of life.
Some of us are breadwinners, while others start families when we are young. We take our earnings with us when we die. It’s more important to be present, but when they’re financially reliant on us, it’s equally important to think about their future. If we are no longer able to provide, the correct insurance coverage can pay our bills and sustain our family’s lifestyle.
Whether we are young and healthy, or whether or not we have children, planning for our future should be a top priority. “You know he’s a candidate for insurance if he’s responsible, loves his family, and has ambitions for his loved ones,” Frances Chua explains.
Are Millenials buying insurance?
Naturally, the epidemic has sparked a surge in interest in life insurance, forcing the industry to adapt to the current shift in customer attitudes. According to the LIMRA 2021 barometer report, COVID-19 has made 31 percent of customers more willing to purchase life insurance.
One out of every eight North Americans wanted to buy life insurance for the first time, and one out of every four millennials wanted to buy life insurance for the first time, making the millennial generation the most likely to do so.
What percentage of millennials have life insurance?
Millennials are more likely to have life insurance than previous generations. Overall, 70% of Millennials have some form of life insurance (individual, group, or both), which is 10% higher than in 2010. In addition, since 2010, the number of Millennials who purchase individual life insurance has climbed by 48 percent.
What do mean by insurance?
Insurance is a way of safeguarding against financial loss. It’s a type of risk management that’s generally utilized to protect against the danger of a speculative or unpredictable loss.
An insurer, an insurance company, an insurance carrier, or an underwriter is a company that sells insurance.
A policyholder is a person or entity who purchases insurance, while an insured is a person or entity who is covered by the policy.
Although policyholder and insured are frequently used interchangeably, coverage can sometimes extend to other insureds who did not purchase the insurance. In exchange for the insurer’s pledge to repay the insured in the case of a covered loss, the policyholder assumes a guaranteed, known, and generally minor loss in the form of payment to the insurer. The loss might be financial or non-financial, but it must be reducible to monetary terms and usually involves something in which the insured has an insurable interest based on ownership, possession, or a prior relationship.
The insured is given a document, known as an insurance policy, that spells out the terms and conditions under which the insurer would compensate the insured, or their designated beneficiary or assignee. The premium is the amount of money charged by the insurer to the policyholder for the coverage specified in the insurance policy. If the insured suffers a loss that may be covered by the insurance policy, the insured files a claim with the insurer, which is then processed by a claims adjuster. A deductible is a mandated out-of-pocket fee required by an insurance policy before an insurer will pay a claim (or if required by a health insurance policy, a copayment). The insurer can reduce its risk by purchasing reinsurance, in which another insurance company agrees to take on some of the risk, especially if the primary insurer considers the risk too great to bear.
What are the biggest challenges facing the insurance industry?
As the year draws to a close, the 15 major publicly traded property and casualty insurers and reinsurers are all confronting comparable issues. The top three challenges, according to R Street’s assessment of Q3 2021 earnings calls, are societal inflation, climate change, and supply chain disruptions.
The impact of those challenges on present and probable future financial results was mentioned by nearly all 15 (re)insurers. Credit-based insurance scores, infrastructure, and prospective changes to global tax rates were all mentioned as important problems by a few. While losses from COVID-19 and natural disasters were highlighted, the overriding message was that these losses were controllable and did not have an irreversible impact on balance sheets.
Each of these concerns has a public policy component, so legislators, staff, and regulators must be aware of them before they become full-fledged crises affecting policyholders.
The R Street Institute has provided a brief synopsis of each subject area mentioned during the earnings calls.
Almost every commercial insurer, whether in prepared remarks or in a Q&A with analysts, addressed social inflation. Commercial general liability, excess casualty, commercial car, medical professional, directors’ & officers’ liability, employment practices liability, products liability, and professional liability are all subject to the negative effects of rising civil lawsuit awards.
If social inflation is not controlled, insurers’ reserves may be found to be insufficient. Because under-reserved liability insurance business has been the leading source of insurance company impairment in the past, insurers are understandably apprehensive of any external trend that could jeopardize reserve sufficiency.
The majority of respondents said they were able to secure significant rate increases in their liability books, which corresponded to insurance rate surveys that showed double-digit rate increases in some liability lines.
- “It’s obvious that there’s inflation out there.” We talked about social inflation for years. “It’s still there…” says the narrator. Berkley, R.
- “Claim numbers are rising to prior highs, and more jury trials are on the horizon.” We will continue to monitor social inflation and seek to reduce it…” RLI
- “In classes hit by social inflation, we boosted our loss cost trends by around two points over the last couple of years.” CNA
- “Social inflation and outright fraud are driving up loss costs in difficult-to-quantify ways.” RenaissanceRe
- “Most insurers realize that the drivers of social inflation, such as legislative and regulatory involvement, social inequity, and lawsuit funding, are still present, as well as new causes for action, such as examination of ESG practices.” Axis Capital is a venture capital firm based in New York
- “All insurance firms are affected by societal inflation in some way.” We’ve undoubtedly witnessed some of it.” The James River is a tributary of
- “I think of societal inflation as being driven more by things like plaintiffs’ bar aggressive tactics, advertising, lawsuit money, and other similar things.” The Pilgrims
Insurers are asking if many of the major natural disasters in 2021 were caused by climate change (February Texas freeze; German floods; hurricanes Ida and Nicholas; tropical storms Fred and Elsa; western U.S. heatwaves; drought; and wildfires). As seen by the comments below, several (re)insurers feel climate change is to blame. RenaissanceRe, in particular, highlighted its investment in RenaissanceRe Risk Sciences as a means of better understanding the influence and consequences of climate change.
- “…is shaping up to be another year of significant weather-related loss events, as is becoming the new normal as a result of climate change and other societal shifts.” Chubb
- “We are seeing changes in the frequency and severity of threats such as tropical storms, wildfires, and floods around the world today.” Chubb
- “…there is now evidence that the amount of precipitation contained within storms appears to be larger, which is increasing the amount of loss caused by events.” Chubb
- “If extreme hurricanes, storms, and events continue to occur as a result of climate change. Obviously, that has to be taken into account when determining the cost of insuring certain areas.” RLI
- “These recent incidents, combined with the industry’s dismal performance over the last five years and fears about the immediate impact of climate change, have most reinsurance carriers signaling a steady reduction in capacity.” Axis Capital is a venture capital firm based in New York
In recent months, shortages of construction materials, microchips, and skilled labor have contributed to higher-than-average inflation. It’s unclear whether the rise in the consumer price index (CPI) is due to a boost in demand following the economy’s reopening, implying that the inflation spike would be short, or is due to rising wages, implying that higher inflation will persist. Insurers are concerned about the immediate effects of increasing pricing since higher prices result in bigger loss payments, which raise premiums. Insurers are acknowledging the impact of rising costs in their future loss forecasts, as evidenced by the remarks below.
- “We elevated our loss cost trends in property lines by roughly two points this quarter due to supply chain limitations, which have raised material and labor costs and don’t appear to be going down anytime soon.” Our overall P&C loss cost trends have risen slightly as a result of this move, and are now above 5%.” CNA
- “…underlying Personal Insurance results were influenced by car frequency reverting to pre-pandemic levels and increased severity in both auto and property due to greater labor and materials expenses.” The Pilgrims
- “Auto severity is on the rise, owing to growing costs of old cars, components, and labor. We estimate these inflationary drivers to continue to be a negative for the industry into 2022.” Hartford is a city in Connecticut.
- “However, we expect costs to climb as a result of rising labor costs, commodity prices, supply chain issues, and material scarcity, and we’re factoring that into future claim payments and pricing, which is only prudent.” Chubb
- “Rising commodity prices, in part due to labor shortages, supply chain disruptions, and rising commodity prices affecting building costs, have a role in the elevated cost of catastrophes.” So, while we actively update our views of natural disaster frequency and severity to account for the impact of climate change, we also recognize that these other elements are a significant cost accelerator.” RenaissanceRe
In response to an inquiry on the use of credit-based insurance ratings and telematics in underwriting, the Travelers said. Credit-based score data are powerful variables in pricing auto insurance, according to both Michael Klein, President of Personal Insurance, and Alan Schnitzer, Chairman and CEO, because they are “very predictive of claim experience, and if you remove it, then you have subsidization in your rate plan between higher risk drivers and lower risk drivers.” R Street’s research into the usage of credit-based insurance ratings supports the view that such scores are useful ratemaking inputsand that their use is not discriminatory.
The pending infrastructure, according to Chubb, would be a windfall to the insurance business since it would generate projects that would require construction insurance and surety bonding.
President Joe Biden’s proposed tax revisions include efforts to create a global minimum tax, which RenaissanceRe and Arch Capital have remarked on. The Biden tax plan will stay on the watch list, especially for global (re)insurers with a foreign footprint, because the specific elements have not been finalized and specifics on implementation have not to be established.
Social inflation, climate change, and economic inflationthe three topics that received the most attention on the insurance sector’s Q3 earnings callsall have one thing in common: they are exogenous factors, or externals over which the business has little influence. The industry is not experiencing inadequate management of problems over which it has control, such as capital allocation, reserving, or pricing. R Street will continue to track these calls in the future to identify trends and overlaps between public policy initiatives and the insurance industry.
How many Americans are underinsured with life insurance?
This is the second installment of a two-part article on how insurers can promote financial inclusion by increasing knowledge of and access to life insurance. The first piece, which was released in April 2021, detailed two of the most evident effects of the epidemic on the life insurance industry in the United States:
- Because Americans are more concerned about their mortality, insurance applications are at an all-time high. 4
Longer term, our survey findings revealed several factors that could affect life insurance growth in the future (figure 1):
- A growing number of persons in the United States have a life insurance coverage gap. About 102 million adults in the United States, or 40% of the adult population, report they are uninsured or underinsured (do not have enough insurance to cover household expenses if they were to die tomorrow). 5 This amounts to a total coverage shortfall of around US$12 trillion. 6
- Consumers in the United States have amassed over US$1.5 trillion in savings as a result of government-sponsored stimulus cheques and spending lockdown obstacles during the pandemic.
- 7
- Consumers across all industries were forced to turn to internet and mobile platforms to obtain products and services, boosting an already growing interest in digital interaction.
- Carriers that offered a diversified collection of life, health, and wealth products in addition to their core mortality services may have faced less unfavorable portfolio impact in this high-mortality environment. This could be a way to reach out to people who are more likely to think of life insurance as part of a larger picture of their health, wealth, and well-being.
- Because of the current low interest rate environment, carriers are under pressure to discover viable organic expansion opportunities. In addition, financial institutions are increasingly required to take proactive steps to increase diversity, inclusion, and economic fairness. Insurers can expand beyond their usual sweet spot in the life insurance market by matching these aims and casting a wider net to include underserved areas.
The pandemic paved the way for the expansion of life insurance. To stay afloat, insurers will have to subdivide the underserved market and tailor their offerings to the specific needs of these different demographic groups.
In order to make the best selections on the various segments, insurers will need to first determine which demographics are most in need of coverage, their proclivity to purchase, the most common roadblocks, and the levels of coverage they seek. Insurers should look at how each group chooses to connect with one another throughout the life insurance life cycle, as well as their preferences for product features and holistic financial portfolios.
Identifying and activating underserved segments
The life insurance coverage gap affects people of all races and ethnicities, as well as all ages and economic levels, however some groups are less well served than others.