The average millennial may not think twice to spend money on designer shoes and wearables, but that does not mean they are not saving for a rainy day either. And several studies show their proclivity to insurance products.
The Indian millennial consumer base is a force to be reckoned with, comprising nearly 440 million individuals – approximately 34 percent of the country’s population and 46 percent of its workforce. Brands and marketers are constantly attempting to figure out what makes these young consumers tick, scrutinising their online behaviour and purchase habits at each stage. This cohort is a particularly lucrative segment for financial service providers, given their longer consumption horizon and relatively higher appetite for risk as compared to preceding generations.
One of the biggest drivers for millennials to take a decision regarding any product or services is the level of digital accessibility offered by brands. However, when it comes to financial products and services, these consumers are far-sighted and are getting started on their long-term financial wellness at a young age.
According to research by Morgan Stanley, millennials are among the highest users of smartphones and mobile internet, spending nearly 17 hours online, predominantly on mobile devices. Both banks and fintech companies are leveraging their proclivity to the digital by providing easy and quick access to bespoke products and services, along with a plethora of information to help them make the right decisions. While their preference for digitally accessible investment and wealth-creation products continues to see consistent growth, another segment of financial services that are starting to higher growth is insurance.
Millennials and insurance
More and more millennials are looking at life insurance as an investment instrument, with a high level of customisation offered by providers to help consumers meet their wealth-creation goals. A study was conducted recently by Assocham and IndiaFirst Life Insurance to analyse the savings and investment patterns of around 1,000 individuals between ages 18 and 35 across Maharashtra. The survey found that life insurance was the most preferred investment tool among 70 percent millennials, followed by 69 percent respondents preferring mutual funds, while 64 percent preferred to invest in fixed/recurring deposits.
Insurance products offering higher coverage at lower premiums, with benefits such as quick documentation and purchase, and swift customer support and response to queries is driving the growing use of life insurance among this demographic. The study also found that the respondents were considerably well-informed about the benefits of insurance as an investment, as well as the various types of products, with a clear preference for investing in term plans.
At the same time, with an increasing number of millennials entering the workforce, they are planning early for not only their own future but also that of their families. A highly aspirational segment, millennials want the best for themselves and their families. Thus, given the rising costs of healthcare, which more often than not leaves a significant dent in the personal savings, health insurance is becoming a must-have financial product for this consumer segment. Moreover, changing lifestyles and habits among millennials often lead to complex health conditions. Protecting oneself against such conditions usually necessitates advanced diagnostics and treatments, which don’t come cheap. Insurance policies, therefore, are increasingly becoming a significant tool for both personal and financial wellness among this demographic. More importantly, Millennials are breaking away from the tradition of buying health insurance offline and opting for online platforms. This is largely due to the high amount of information asymmetry in offline channels and the lack of options to study and compare various insurance products. According to a research by research firm LexisNexis, around 30 percent consumers between the ages of 25 and 34 years said that they bought their health insurance policies online.
Millennials’ awareness regarding the increasing costs of healthcare and the need to have an adequate safety net to secure their financial health is increasing steadily. Thus, in order to connect these consumers to the right products, digital insurance marketplaces are emerging as a conduit for them to access a variety of information on multiple products in a streamlined manner, leverage online, automated advisory services, and, ultimately, purchase the products that are best suited to their needs.
In a highly interconnected digital ecosystem such as this, it is imperative for insurance providers to keep up with changing market dynamics, evolving consumer behaviour, and more importantly, leveraging digitisation to the maximum to deliver additional value proposition to young digital customers.
(Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the views of YourStory.)