While it seems computers and smartphones have been a part of millennials’ lives since they were in the cradle, when it comes to making key decisions about picking financial benefit packages offered by employers, they prefer to face-to-face conversations with an adviser.
That’s a consistent finding of a number of studies by organizations that survey consumer behavior when it comes to financial services.
“Millennials value that one-on-one benefit education as much as other generations. And they value employee benefits to the same extent as other generations do,” said Deborah Rasmussen, vice president of claims at Colonial Life. The Columbia-based company offers supplemental health benefits for life insurance, accident insurance, disability insurance and other products offered by employers.
Although millennials – those between 18 and 36 years old – have delayed life milestones such as marriage, babies and buying a home or car, studies show they’re interested in insurance that would protect them from a financial disaster, such as disability or critical illness insurance, said Jeanne Reynolds, director of corporate communications at Colonial Life.
A lot of people are in a “frighteningly fragile financial situation,” Reynolds said. She noted that a recent Federal Reserve Board survey found 46% of Americans don’t have $400 on hand to cover an emergency expense.
Colonial Life data shows millennials are buying voluntary insurance benefits, which provide cash to help cover a range of life events such as medical bills, at the same rate, if not higher, than other generations, Reynolds said. “More than 30% of our 2015 sales were to millennials. That compares to about 29% to baby boomers and 40% to Gen Xers,” she said.
“Millennials have this huge college debt – they’re financially fragile,” Reynolds said. “But they’re getting it. They need this financial protection because they don’t have a big cushion.”
According to the Wells Fargo Millennial study, 34% of millennials have student loan debt, with a median debt load of $19,978.
Aware of their precarious financial position, millennials also are more likely to buy life insurance through their employer than other generations and want to consult in person with an adviser, Reynolds said, citing a study by LIMRA, a worldwide research, learning and development organization that provides industry knowledge for more than 850 financial services firms.
“They need help understanding their needs and the solutions,” Reynolds said. “It’s not like buying a sweater online from Land’s End. You’ve worn sweaters all your life, so you know what a sweater is for and whether you’re likely to need one and what size you are. Not so much with disability, life, critical illness or other financial protection benefits.”
Even as health care expenses climb, Aflac’s “2016 WorkForces Report” found millennials are more likely than non-millennial generations to “underestimate the cost of an injury or illness, including medical, household and out-of-pocket costs (66% vs. 45%). And 65% say if they had an unexpected out-of-pocket expense, they could afford less than $1,000.”
Out-of-pocket health care costs can be steep. “For example, the out-of-pocket limits for 2017 are $7,150 for individual coverage and $14,300 for family coverage, making added insurance protection like voluntary insurance increasingly relevant to help pay out-of-pocket costs,” according to an Aflac press release.
"Employer-sponsored health care coverage is essential for employees," Matthew Owenby, Aflac senior vice president and chief human resources officer, said in a statement. "But as costs continue to rise, the younger generations appear more likely to tackle health care-related financial issues by means that older generations would not consider, including crowdfunding."
Millennials’ comfort with shopping in the digital marketplace also offers some organizations an opportunity to leverage technology and land a customer for life.
A recent study by Banksresearch found more than half of baby boomers and members of the silent generation – those born between 1925 and 1945 – and 47% of Gen X – those born between 1965 and 1980 – said convenient locations of a bank or credit union offices are important. By comparison, only 39% millennials said a bank office location was important.
“As more millennials establish relationships with their banks, we expect online and mobile services to grow in importance for them and for Generation Z, following right behind the millennials,” said Patrick Leary, corporate vice president at LIMRA.
The survey also found that millennials have a greater percentage of their savings and investments at their bank or credit union. While only 22% of older bank customers said they would consider a financial plan through their bank, about 40% of millennials would look a plan offered by their bank.
“Millennials have unfairly earned a reputation for being less financially responsible than previous generations,” Andrea Johnson, head of financial education at TD Bank, said in a statement. “While they may delay traditional milestones like marriage and children, they still aspire to achieve traditional hallmarks of the American dream, including owning a home, getting an education and being debt-free.”