Millennials will soon outnumber Baby Boomers, but that doesn’t mean insurance agents should ignore older sales prospects.
Insurance agents are increasingly targeting millennials — and with good reason. After all, millennials are just now entering their prime insurance-buying years as they launch their careers and start their families.
With that said, insurance professionals would be making a big mistake by overlooking Baby Boomers. Although Pew Research estimates that millennials — defined as Americans between 20 and 35 — will become the nation’s largest demographic by 2019 at 73 million, Baby Boomers — defined as Americans between 52 and 70 — will still come in at 72 million.
When Insured Retirement Institute (IRI) recently surveyed roughly 800 people between the ages of 55 and 71, the results highlighted this age group’s top-of-mind concerns as they enter their golden years. Just 33% of respondents said they believed that they had saved enough money to see them through retirement, while only 36% were confident that their funds would pay for their healthcare expenses. Even more alarming, only 23% had planned for the possibility of long-term care.
At the same time they express those doubts, however, many Baby Boomers may be unaware that an insurance solution is available for each. Indeed, less than 20% of the survey’s respondents said they had discussed insurance coverage with an advisor. If insurance agents aim to market to this generation and expand their book of business beyond millennials, they can boost revenue with these three insurance products for the Baby Boomer generation.
1. Medicare Supplement Plans
The market for Medicare Supplement insurance will only grow as Baby Boomers age into eligibility. However, the IRI survey revealed that little over half of the Baby Boomers it polled had talked to an agent or advisor about Medicare Supplement plans.
Since Medicare doesn’t cover 100% of healthcare expenses, agents should present the various supplemental plans available to fund those uninsured costs. Backed by private insurers, Medicare Supplement plans pay for out-of-pocket expenses like deductibles, premiums, and co-pays not covered by Medicare. After reviewing their client’s medical history, agents can recommend a plan that fits their client’s budget and expected healthcare needs.
2. Long-Term Care Insurance
Despite the importance of setting aside money for medical expenses during retirement, many Baby Boomers haven’t created financial plans in the event of serious, prolonged illness. According to the IRI survey, less than 70% had discussed how to deal with a long-term care event with an agent, and only 54% had brought up the subject of a long-term care plan.
Long-term care expenses can tax even the healthiest retirement account, as a recent report from the National Association of Insurance Commissioners and the Center for Insurance Policy and Research found. On average, people over the age of 65 will spend two years receiving intensive long-term healthcare, which far exceeds the maximum 100 days of coverage allowed by Medicare.
A long-term care policy plugs that gap, covering the costs of different types of care, from in-home to assisted living. The older the person is when he or she purchases a policy, the higher the premium, so agents should encourage Baby Boomers to get onboard sooner rather than later.
When asked to rank the top feature they look for in a retirement investment product, 41% of the Baby Boomers in the IRI survey pointed to guaranteed monthly income. Once again, Baby Boomers appear to overlook an insurance product — the annuity — that can provide that steady flow of income. Indeed, only 14% indicated that they planned to purchase a lifetime income annuity with their 401(k) funds. A smaller percentage — 3% — told IRI pollsters that they had already made such an investment.
As they approach retirement, Baby Boomers need investments that provide some protection against stock market downturns while also promising a measure of income growth. Given those preferences, two annuity products that insurance agents can review with their Baby Boomer clients are indexed annuities and fixed indexed annuities. Both offer a reliable income stream in retirement as well as tax benefits that insurance agents should be ready to explain.As the IRI survey makes abundantly clear, Baby Boomers are in need of insurance solutions to short- and long-term issues that agents are strategically positioned to solve. Agents who target this sizable generation will find a receptive audience for their products and services — as much as they would with millennials. In the end, it’s just a matter of selecting the right policies for the right Baby Boomer clients.