Introduction
A life insurance policy is a contract with an insurance company. In exchange for premium payments, the insurance company provides a lump-sum payment, known as a death benefit, to beneficiaries upon the insured’s death. There are two main branches of life insurance: Term life insurance and Permanent life insurance. Typically, life insurance is chosen based on the needs and goals of the owner. According to Green & Trieschmann (1981), life insurance is a method with which a group of people can cooperate to alleviate the loss which results from the premature death of the members of that group. They also explain how life insurance can also be defined as a way of saving money for their current wealth, which later can be used as an income source in old age. It could be said that life insurance “is a combination of savings and insurance” which offers protection and creates the financial security of a person, its family or/and their business (Xhevat Bakraçi, 2004). Since the start of the 2010s decade, life insurance companies have been seeing a decline in its rates (Orszag, 2018). One of the main reasons for the decline in life insurance rates is the misunderstanding of price. According to the 2016 Insurance Barometer Study by Life Happens, many people are taking an unnecessary risk by not protecting their loved ones with life insurance and that “1 in 3 households would have immediate trouble paying living expenses if the primary wage earner died” (LIMRA, 2016). This study also found that 40% haven’t bought life insurance or more of it because they’re unsure of how much or what type to buy. Unaware of what to buy, many individuals, especially millennials, steer away from life insurance because they believe it is much more expensive than it truly is. Many consider it too expensive to add to more pressing needs in their current budget. “Paying for the basics (e.g., housing, food, utilities) takes priority over life insurance; some value internet or cable over end of life expenses.” This research shows that life insurance is not seen as a necessity, or priority, in evolving families. Life Insurance companies main target audience is the millennial generation. The millennial generation was born between 1980 and the end of 1994. Although millenials are the main target for life insurance companies, “Among the 57% of U.S. citizens who own life insurance, more than half of those policyholders are 45 or older.” This is seen as troublesome because of significant declines in life insurance rates. Evolving marketing tactics have made it difficult for the life insurance industry to promote their product to millennials. The lack of millennials buying life insurance could potentially link to the scarce marketing of life insurance. Life insurance companies need to improve their marketing to the millennial consumer market to possibly increase its sales. With the lack of improved marketing to millennials, this research targets to see if the marketing of life insurance will increase want and knowledge of life insurance, it’s price, and its different policies amongst millennials.
Target and Goals of Life Insurance
Over the recent years, life insurance rates have been declining amongst newer generations. Studies have shown that in comparison to Generation X, millenials have purchased less life insurance policies even though they are the targeted age group for life insurance. While the optimal age to purchase life insurance is under 35, millennials are the least likely to purchase a policy. According to data from Bestow, an online life insurance platform, 75% of millennial parents don’t have life insurance. “With marital rates decreasing 21% from 1960 to 2010, life policy purchases are being delayed despite the inherent advantages of buying at a younger age”(Bestow, 2018). With declines in marriage and an increase in average age of having children, many have pushed back the purchasing of life insurance, although it has proven to be
cheaper at a younger age. For many individuals, life insurance doesn’t get considered until they have had children. However, instead of increasing the want of life insurance, various families chose to postpone their purchase of life insurance due to the increased costs that come with having children. The goal of insurance companies in selling life insurance is meant to complete your financial plan. While you help to pay for all the things your family needs in life, life insurance allows you to continue paying for those same things after death.
Marketing of Life Insurance:
Marketing strategy is the basic approach that businesses use to achieve their objectives and target specific audiences. Modern media, such as the internet, has created new challenges in the insurance industry (Fuchs, 2001). New business concepts, a change in client sophistication and an increasing number of new competitors entering into the market, such as independent financial consultants, have changed business models and the competitive forces that established financial services organization. Today, with the life insurance industry at an all time low, many US consumers increasingly struggle to understand the full value of life insurance against competing financial priorities. The life insurance industry is undergoing dramatic changes, from the expectations of its consumer base to the players who compete in the industry. This disruption coincides with the 50-year low in the number of US households holding a life insurance policy (Sharps, 2018). Consumers generally have a limited awareness of life insurance and do not understand the need for a policy until a life event triggers action. Marketing needs to be more effective at identifying and reaching out to consumers at the right time with the right message. Many carriers continue to fall short at reaching consumers at the right time with the right message. Life events, which has been identified in previous studies as triggers to purchase, overwhelmingly continue to be the top drivers for life insurance purchase (Ma, 2018). Carriers should develop a more targeted approach to marketing and a compelling value proposition that better resonates with modern consumers. Since 2010, Deloitte has been studying life insurance consumers to determine what separates buyers from non buyers. Their research found that consumers increasingly prefer to self-manage across the purchasing life cycle, but most carriers have not yet developed digital capabilities to match these preferences. These consumers also observed competition for their attention and dollars between many enterprises. Instead of only focusing on millennials, Deloitte observed all ages and races and gathered data on the marketing of life insurance and its declining rates and concluded that there is a large effect on sales due to the marketing of a “taboo” product, as life insurance involves death. The lack of marketing of life insurance is a factor that contributes to the decline of life insurance sales amongst millennials, exemplifying the effect that marketing can have on the millennial consumer market.
Millennials Influence on Marketing
Among millennials, technology is a necessity in advertising. An “estimated 65 percent of millennials said losing their computer or phone would be more important than losing their car” (Jaksa, 2017). Almost the same number of millennials use social media to stay in touch with their favorite brands. When it comes to marketing, studies found that millennials rely on recommendations from their friends and technology to make informed decisions. With the gaining popularity of online streaming programs, such as Netflix and Hulu, many millennials do not watch nearly as many television commercials, as in previous years. They are also less likely to read newspapers or answer a telemarketing call. The best way to attract millennials is to use technology and social media platforms to reach out to them. In line with the online culture embraced by millennials in their very home, people are sharing more content on social media than ever before. This has increased the potency of social media marketing significantly, as it is logical to create brand awareness on platforms where individuals spend most of their time. Through the establishment of the target audience, marketers have learned which social media websites can most effectively market. Millennials make up 21% of consumer discretionary purchases, which is estimated to be over a trillion dollars in direct buying power and a huge influence on older generations.
Social media influencers partake a large role in marketing to millennials, having a significant impact on their audience. In today’s society, companies and branded content are consistently represented on personal social media accounts such as Instagram, Snapchat, Twitter, and YouTube, inevitably enabling opportunities for media influencers to flourish: “more than ever, consumers are looking to fellow consumers to inform their purchasing decisions” (Glucksman,2017). For example, social media influencer Kim Kardashian West received backlash while promoting appetite suppressants . She received said backlash for promoting appetite suppressants to her young audience, thus enraging people for her promoting unhealthy weight loss to her platform. The root of the backlash was that Kim Kardashian West knew the immense influence she had on her followers, and that promoting this unhealthy mechanism could massively influence her followers to purchase said product. This shows the true and significant impact that social media influencers have on their audience, to the point that sales of the Flat Tummy Appetite Suppressants almost doubled in sales after her promotion (Flat Tummy,2019). In the net world, social media influencers represent a new category of marketing and are “third-party endorsers” who influence an audience’s attitudes through post, tweets, and the use of other social media platforms. If marketed more efficiently and through social media and its influencers, life insurance rates could potentially go up with the use of advertisement on social media platforms, especially with social marketing media taking over the global economy.
Life Insurance Declining
Millenials have been seen to bypass life insurance. With other expenses at their worries, the “Net Generation” has prioritized student loan debt and saving up money for a house. Life insurance is losing its appeal in the U.S. In 1965, Americans purchased 27 million policies, individually or through employers. In 2016, a population that was more than 50 percent larger still bought only 27 million policies. The share of Americans with life insurance has fallen to less than 60 percent, from 77 percent in 1989 (Orszag, 2018). People buy life insurance for various reasons: to pass wealth along to future generations, to provide money for mortgage payments and expenses, or to cover funeral expenses. These motivations may become more or less important as the population shifts demographically. Theoretically, the lower a person’s chance of dying over a given period, the less should be his or her desire for life insurance during that time. And over the past few decades, overall life expectancy has risen. The number of employers offering insurance is declining. Lastly, only 22 percent of people have both individual and group insurance, leaving their families vulnerable in case of their demise. Many insurance companies have failed to improve their life insurance marketing thus leaving an immense gap in sales when looking at the millennial consumption market.
Conclusion
The decline of life insurance in the 2010’s, compared to its previous decades, can justifiably be compared due to lack of modern marketing (Orszag, 2018). Before the rise of social media and it’s influencers, advertising to brand consumers was one-sided and consumers could only see a product through print advertisements, billboards, radio ads, and television commercials. This affects life insurance companies as millenials are the ideal market for them to target. Today, consumers now can simply view and purchase a product through social media. Being raised with said platforms available, millennials have changed their way of buying and companies have adapted to these changes. Life insurance companies have tended to lack in their advertisement, especially to the younger generations. By modernizing their advertisement, and catering to younger generations, new business opportunities would open up and could potentially increase life insurance sales. With life insurance rates at an all time low, insurance companies must find a way to effectively sell their products to their target audience of millenials. Through social media apps and platforms, life insurance could see a potential increase in rate just by efficient marketing.
Methodology
This research study is a qualitative case study. To answer the research question and to test the hypothesis that the advertisement of life insurance does affect a millennials want and knowledge of it, life insurance was tested through a specifically crafted survey and a life insurance commercial. The questions of the survey were created to get a thorough understanding of life insurance, its necessity, and the perspective of its worth and want through millennials. The analysis of the data collected through the chosen method was meant to highlight trends present in the data. A survey was chosen as the main method of this study because of its efficiency and its precision for analyzing qualitative sets of data.. Surveying was the best way to gather up unbiased opinions and it’s flexibility made it efficient to test multiple subjects. The participants of the research were specifically chosen to be between the ages of 25-38, making them fall into the millennial generation.
Design
The survey used in this study was created specifically for this research, but includes questions from previous studies relevant to the topic. Those questions served to gather data that would answer the pertaining research question. The survey was kept neutral to avoid bias and to keep honesty in the study, as well as to make sure the data is accurate. The survey asked questions like “Do you believe that the advertisement of life insurance improves/influences one’s knowledge of it ?” and “Do you believe that you fully understand how your life insurance policy works?” to receive input from the consumer’s perspective and to test results found from said created survey. This survey aimed to find the consumers thought on advertisement, their knowledge of life insurance and its advertisement, and lastly, the questions aimed to see what the millennials already knew about life insurance. The design of the survey was made very simple and easy to access. There were only 12 simple questions given to all participants, and there was no time limit given to take the survey.
Procedure
For the gathering of data and the testing portion of the research, an survey was created to test the participants of the study. The life insurance survey created was tested amongst all participants involved in the research. Before surveying, the participants were split into two test groups, 30 participants in each group, to study two different medians of data for comparison. The first group of participants, study group A, had taken the survey and answered all questions without viewing any type of video or reading on life insurance. The second group of participants, study group B, were set up to watch a strategically chosen life insurance commercial, provided to the research by Luis Peters State Farm Insurance Agent, who has had a profession in the insurance industry for 28 years. They were then given the chosen survey to take. The survey consisted of 12 simple questions concerning over the topic of life insurance and/or its advertisement. The participants had no given time limit for the survey and could take however much time was needed to complete. The survey was either completed online through the website Google Forms, a survey creating program, or through a cellular device on the Google Forms Mobile App. All participants had the option to either consent, or not give consent on using their results anonymously for the research and data analysis portion. After responding to the survey, data was then collected and shifted into a Microsoft Excel program, a software program created by the company Microsoft that uses spreadsheets to organize numbers and data with functions, formulas, charts, and graphs. Microsoft Excel analysis is widely used around the globe by business and corporations of all sizes to perform financial analysis and by academic scholars and students in universities worldwide. The Excel created was used in order to draw trends and observe the differences and similarities found in the data gathered. Overall, these trends were used to support or disprove the hypothesis that the visual marketing of life insurance, such as commercials, affects a millenials knowledge of its usage, thus increasing their want of it.
Results
After the study was conducted and the data was collected, 60 responses were recorded through Google Forms. The data was then later converted into a Microsoft Excel document and studied further. There were more male respondents, making up 58% of all respondents, in comparison to women who made up only 42% . The respondents of the survey were between the ages of 25-38 classifying them into the millennial generation. An even 50% of the participants selected that they had some form of a life insurance policy, whereas the other 50% selected that they had none as shown in the diagram below. 77.6% of all participants stated they planned on getting life insurance in the future, 20.7% said they were unsure, and 1.7% said they did not plan on getting it in the future.
Diagram A
There was an even amount of participants with a life insurance policy as there was without a life insurance policy.
The overall results showed that a majority of the respondents, 96.7%, used social media as their main form of entertainment, and their main source for information and 70% stated that they sometimes shared interesting advertisement to their family members and close friends. 90% of all respondents put that they advertisement affected their influence of a product and 10% chose that it didn’t. 60% 55% stated that the platform they saw life insurance advertisement mostly on television.As the results were split into two different groups, subject group A and subject group B with 30 participants in each each group, it was found that only 46% of the respondents in subject group A selected “Yes, I fully understand the process of life insurance,” and 54% selected “No, I don’t fully understand the process of life insurance,” whereas after watching the video, 90% of the participants of subject group B selected it and only 10% chose no. When asked “Which of the following best describes why you would buy/ have bought a life insurance policy?” 36.7% of participants responded “To replace lost income for my family/dependents if something ever happened,” 23.3% responded “Another reason not listed,” 10% chose “I was recommended to get a life insurance policy by a trusted source,” 8.3% “To cover burial expenses,” 6.7% “To pay off family’s debt,” 5% put “To pay for family’s college expenses,” another 5% put “To build cash value,” 3.3% “To cover burial expenses,” and lastly only 1% chose “Business planning” (see diagram B for further analysis.)
Diagram B
This diagram explicitly shows the reasons why participants chose to buy/ would buy a life insurance policy.
After said data was collected, a t-test was conducted and calculate to find the value of P. When the value of p was found, the value of p came out to .29%, thus making it significant. (The value of t is 6.49623. The value of p is .0029. The result is significant at p < .05.) The value of p coming out significant showed that my research analysis had significance and further research would be useful and impactful towards the topic.
Comparison of Subject Group A responses to Subject Group B responses
Difference Scores Calculations
Mean: 1.25
μ = 0
S2 = SS⁄df = 0.74/(5-1) = 0.19
S2M = S2/N = 0.19/5 = 0.04
SM = √S2M = √0.04 = 0.19
T-value Calculation
t = (M – μ)/SM = (1.25 – 0)/0.19 = 6.5
Conclusion
Based on the surveys given and the participants tested in this case, the research seeked to identify if the visual marketing of life insurance, such as commercials, affected a millenials knowledge of its usage. The decline of life insurance in the 2010’s, compared to its previous decades, can justifiably be compared due to lack of modern marketing (Orszag, 2018). Although previous studies have tested on marketing to millennials or the lack of millennial sales in life insurance, no study has tested the correlation between both. The research studied specifically targets the marketing of life insurance to millennials and their knowledge of it, making it the only study that does so, thus increasing insight on the millennial consumer market and the marketing of life insurance.
The results displayed that more participants felt knowledged about life insurance after watching the commercial shown in the research case in comparison to those who didn’t. They also demonstrated that the market most exposed to them was through social media and streaming platforms. Insurance companies tend to rely on selling life insurance through word of mouth or other business, but they tend to lack on the advertisement of it in the media. The lack of marketing of life insurance is a factor that contributes to the decline of life insurance sales amongst millennials exemplifying the effect that marketing has on the millennials consumer market. Life insurance companies can highly benefit from the advertisement of their products on platforms such as YouTube or streaming platforms such as Netflix and HBO Now, as they have a large millennial viewing and can increase brand awareness. Another way they can potentially increase millennial usage is through social media applications like Instagram and Twitter. Another result found was that 86.5% of the participants stated that advertisement influenced their want of a product, and 70% shared interesting advertisement to their families. This shows that through efficient marketing to the millennial market, life insurance not only could receive sales and awareness through visual marketing, but by the word of mouth of their viewers. This conclusion can potentially boost up life insurance sales amongst millennials.
Although multiple conclusions were brought up from the case study, the research may be limited due to many factors that could call for further investigation of the topic. The findings found were statistically significant, (average p value of .29%), proving that the advertisement of life insurance does have a positive effect on a millennials want and knowledge of it. However, due to my research having a small demographic, the power of my results is weakened, and the margin of error is increased, rendering it implausible to generalize these results to a whole generation. To acquire more accurate information, a larger study should be conducted to find more trends involving the evolving millennial consumer market and its correlation to life insurance sales. Furthermore, there is need for further research on the marketing to millennials and the effect social media and its influencers have on their users.
36.7% of participants claimed that the reason that they bought/would buy life insurance was to pay lost income for their family, or those dependant on them, in case something were to happen to them. This analysis shows that those with families are more likely to receive life insurance in comparison to a millennial with no family/dependants. This is significant because life insurance could potentially create advertisement that could attract families and those with a higher need of life insurance, and insurance sales could increase by specifically targeting their market crowd and by the words of mouth by families/clients to their friends and other families. Millennials are known as content creators and users. 46% of millennials post original photos or video on social media platforms that they themselves have created.(Who Are Millennials, 2019) Social media influencers thrive off of promotions and sponsorships through apps such as Instagram or Twitter. Through sponsorships and promotion through people’s social media feed, these applications would allow insurance companies to spread out information amongst potential clients and those unaware of the brand. 80% of millennials want brands to entertain them 40% want to participate in co-creation of products and brands 70% feel a responsibility to share feedback with companies after a good or bad experience.(Who Are Millennials, 2019) Marketing has rapidly evolved and conformed to the new and advancing forms of technology. Millennials have been found to be drawn towards visual advertisement and advertisement that brings them laughter, they are also more likely to spread information my word of mouth which, therefore, with the right and modern advertisement of life insurance, these applications and commercials could spread life insurance want and increase overall brand awareness.
References
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Xhevat Bakraçi”Menaxhmenti i rrezikut dhe Sigurimet,Universiteti i Prishtinës, Fakulteti
Ekonomik,
Prishtine, 2007.
Works of Kimberly Peters 