Given the option between a lump sum payment or remuneration over an extended period, most young life insurance beneficiaries would prefer the latter, according to the results of a newly released survey.
Forty percent of life insurance customers under the age of 40 - also known as the millennial generation - would rather receive the funds on a monthly basis than all at once, or a lump sum payment, based on a recent poll conducted by worldwide research and development organization LIMRA. Just 30 percent preferred a lump sum.
Scott Kallenbach, director of LIMRA Strategic Research, noted that life insurance has operated under a single payment structure throughout the planning device's history.
"Our research suggests that products offering monthly income would have strong appeal among younger and middle class consumers and could be a way to more effectively reach them," Kallenbach explained.
1 in 4 Americans are millennials
Ranging in age from 18 to 35, millennials represent roughly 25 percent of the U.S. population, according to the most recent Census data released by the government. At one point, baby boomers - those between 54 and 70 year of age - had been the largest generation in America. Millennials now outnumber them at 83 million to 75.4 million among baby boomers. The only city where the largest share of the population is 65 and older is in Sumter, Florida. Nearly 53 percent of the city's residents are in their mid-60s or more.
From a life insurance standpoint, this means that millennials are increasingly a high target market. However, because millennials tend to be healthier and may not have the kind of family responsibilities as individuals who are older than them do, life insurance can be a tough sell. As a result, life insurance carriers are employing different strategies designed to resonate with young adults.
Activity trackers striking chord with millennials
Wearable technology is one such method that's proven effective in millennial circles. More than half of 18- to 35-year-olds, in a study done by nonprofit research foundation Life Happens, reported being "very" or "extremely" likely to wear activity trackers if the payoff was being rewarded for their active lifestyles. That compared to 30 percent of overall respondents.
Todd Silverhart, LIMRA Insurance Research corporate vice president, indicated that life insurers are effectively leveraging today's technological innovations in order to capture what had previously been a largely untapped market.
"For those insurance companies willing to modernize the way they engage with customers, there is a great deal of potential to build long-term relationships," Silverhart emphasized. "New technologies, such as wearable activity trackers and smart scales are not only able to help Americans live healthier lives, but can be the key to developing relationships between insurance companies and policy owners throughout their lives and into retirement."
Even though millennials seem to be more in touch with originality - both in terms of how benefits are paid out and how premiums are determined - there's still something to be said for tradition. Of the 51 percent respondents who preferred buying life insurance from an advisor in a one-on-one setting, 75 percent pointed to having their questions more effectively answered as the main reason, the Life Happens poll found.