The general trend with life insurance is that the older you are, the more likely you are to buy it. It’s common sense. Risk is everywhere, and the longer you’ve been alive, the closer you are to the grave… and the less blind you are to how that can affect those you love.
It’s a stereotype that the young feel invincible and on top of the world. Life insurance is the last thing on their mind. They’ll slowly become more and more risk averse as they get settled and gain more experience.
When you think of people who buy life insurance, you’re probably thinking middle aged men and women, not those under 40 who are still finding their footing in life.
Surprisingly, though, a majority of that younger generation does have life insurance. In fact, 70% of Millennials own some form of life insurance. They are breaking the trend, surpassing even the Baby Boomers on the amount of life insurance owned.
The question is: Why?
Background: The Millennials
Millennials are the generation born between the 1980s and the early 2000s. They are known by numerous names: Generation Y, Generation Rent, and Generation Me.
Currently, Millenials are the largest demographic age group in the United States, they make up 31% of the adult population and 34% of the workforce. They are a considerable influence in and out of the webspace, with loud voices and silent touchscreens where the typefaces scream their thoughts out for the world to hear.
These people are the generation of the internet. They grew up in a age smothered in information and they are using this to their advantage. With smartphones and tablets and computers and Google glasses, they are used to acquiring information in milliseconds, and they know more about the world than past generations knew at their age.
When the media talks about Millennials, it’s often in the context of new technology and the culture of the internet. The Millennials are thought of as the generation most up-to-date with technological and cultural trends, and so the image of them is typically that of young people on their smartphones, perhaps fresh out of college or looking for their first jobs.
With all this talk of the latest trends, it can get difficult to remember that the Millennial generation (as with any generation) covers a pretty broad timespace. While sources vary a bit, many put the beginning of generation Y at 1977. That means that some of the oldest millennials are hitting 40 now. Many of them already have established jobs and families. 40% of them are parents in 2016 and an estimated 80% will be by the year 2026. With this general shift from adolescence to adulthood, this generation is now coming of age.
Millenials and the Economic Environment
Millennials were the young people at the time of the Great Recession. They saw their parents and friends’ parents suddenly lose jobs, scramble for their savings, and struggle to get by from day to day. They learned the value of thriftiness at an early age and became cautious with money.
While the recession in the US technically only occurred from late 2007 to mid 2009. The effects of the recession on the job market, consumer sentiment, and overall economic optimism in America persisted for years to come.
Millennials spent many of their formative years in these trying economic times. Pennies were pinched, and job security was extremely low. Whether it was them or their parents directly affected, living with that sort of financial trauma certainly left its mark on the attitudes of the generation.
Then, there’s the issue of student loan debt. The number of college students in the US have been steadily increasing over the years, and that’s a trend that’s expected to continue as more of the lower-end jobs get replaced by automation and the internet.
Meanwhile, however, the amount of student loan debt in the country has increased immensely, completely dwarfing the relative student loan debts of their parents and grandparents.
As they grow older and move past college, Millenials face rent, income tax, and mortgage. On top of the country having only recently recovered from the biggest recession in nearly a century, the Millennial generation faces more financial pressure than the generations that came before them.
Studies indicate that they are “more concerned about protecting their financial well-being than prior generations at the same age.” Instead of being a generation of excess, they’re actually turning out to be something of a generation of prudence and thriftiness.
The Effects of Social Media on Millenial Spending
The full effects of social media on the number of people getting life insurance aren’t entirely clear, but almost certainly significant.
On the most basic level, social media allows people to more easily communicate with other people, which makes it easier to find out about life insurance and why it’s important.
Another possible effect of social media is that it makes these younger people more socially aware. There’s a heated debate going on about whether social media has made the youth more self-centered or less self-centered. Where insurance is concerned, the lean is toward being concerned about others.
If social media does indeed increase social awareness and make people less self-centered, it could be because seeing what other people have to go through makes these young people feel less like they’re the invincible, unstoppable center of the world.
One thing is certain: the internet makes the act of actually getting insurance much easier than before. Getting life insurance used to take an entire afternoon. Now, it can be done FAST, often in minutes instead of hours.
Wrapping It Up: A Perfect Storm of Factors
Millennials face challenges and environments far different from any of the generations that came before them.
They grew up in one of the worst recessions ever faced while also still having to face numerous other financial problems like student debt, wage stagnation, and a shifting job market that nobody quite knows how to deal with yet.
On the other hand, they also live in the Information age, and have access to more data than every single previous human generation combined. The internet has made nearly everything more convenient, and this young generation is more connected than ever. That potentially has the dual effect of both educating them and scaring them into wanting a greater degree of financial security for themselves and the people they care about.
If you take all these factors together, it’s little wonder that financial security options like life insurance have become such a hit with this smartphone-using, selfie-taking, oversharing generation.
That’s a good thing.
Author Abel Cane is horrible at money management. He’s thrilled to see the younger generation changing course and taking a responsible lead in finances. Catch up with Abel @boomalive.