India’s youth population (15-29 years) is going to cross 45 crore by 2020. Besides understanding the importance of millennials in our economy, it is equally important to understand their behavioural aspects which are significantly different from earlier generations. For millennials, immediate needs take precedence over saving for a secure future. These behavioural attributes expose them to greater financial risks in case of any unforeseen eventuality. The widespread use of credit or easy access to loans to acquire bigger assets like house, car, etc accentuates risks.
In most cases, the realisation that one needs life insurance does not come unless one experiences the shock of unexpected loss of life or health problems. Unlike the previous generation, the marriage age for millennials has got pushed by three to five years due to a stronger career focus. Naturally, late marriage results in having children in the late 30s, which is the time when millennials seriously start considering financial planning options. It is important for financial advisors to approach millennials with these life stage changes in mind.
Time is money for this generation which believes in doing things ‘on the go’. They are also more willing to share information about themselves in order to get a near custom made product. The importance of analysing data thus becomes critical which can discover more about millennial customers and offer them the best solutions. Insurers need to digitally enable millennials with extremely smart user interfaces to let them compare and zero in on the best possible plan. Agents have to be digitally equipped to respond to the queries raised. In case life insurance products are being bought through banks, insurers should enhance customer experience by providing pre-filled proposal forms. It is also important to provide flexibility of multiple online payment options.
Adapting to evolving customers
The speed of service is equally important. They don’t mind paying slightly extra, but strongly believe in getting value for their money spent. In an ecosystem in which one can get literally anything at their doorstep within a day’s time, millennials might not want to wait for 10-15 days to receive a policy pack through post.
Waiting for their turn in offices or on IVRs or writing letters to their insurers is passé; instead they might tag their insurer on social media and look forward to an instant response from the insurer.
While the industry needs to adapt to evolving customers, it is important to educate millennials about some basic financial planning and life insurance that remain unchanged. Starting early is not replaceable, and hence they must go for a life insurance cover and retirement planning the day they start earning. A regular life stage analysis is something that is critical to ensure that financial planning meets all future requirements along with a sufficient cover.
It is important to understand that digital is the new normal, data is the currency and millennials are the future that are collectively going to drive the industry growth. While the Indian life insurance industry is on a growth path with macro-economic conditions favouring it, adapting to these factors will be essential to win in the new world.
The author is director & appointed actuary, Max Life Insurance