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Making the argument for disability cover for millennials



The views expressed in this article are not those of the FIA


Millennials are renowned for their lack of trust in financial services providers – but when it comes to disability cover, this is a hurdle that must be overcome. It’s your job as a broker to make it clear to this at-risk generation that they simply cannot live without disability cover.

Millennials are the market that business is currently dealing with, selling to and learning from. To understand how this segment of the market views insurance in general and disability cover in particular, it’s important to understand their background and motivations.

Although definitions vary, the general consensus is that millennials were born between 1980 and 2000. But where they came from is less important. What matters is where they are now – which is between the ages of 18 and 38 – basically the entire cohort of adults that can still be called “young” in the world right now.

At the bottom end, they are just entering the job market and coming to terms with a world that provides them with very little security – from an economic, environmental and professional perspective. At the top end, they have similar concerns, but may be grappling with the realities of affording a reasonable lifestyle for themselves and their families in such tough and uncertain times.

Even more challenging, these 30-plus millennials may be finding themselves laden with another generational definition: the “sandwich” generation, which means that they are supporting both their young children and their ageing parents, who are coming to terms with the fact that they cannot support themselves in these tough economic times. The concept of “black tax” is also very real for this generation, because black people are also often responsible not just for elderly relatives, but for a far wider network of family dependents as well.

So how does this tie back to insurance? A 2016 Insurance Gap study by the Association for Savings and Investment in South Africa (Asisa) put the insurance gap (the amount by which the market is under-insured) for young adults at R9 trillion in 2016, with disability cover amounting to R4.89 trillion of the shortfall. The figures have grown since then, but for the purposes of this article, we will work with the last official estimates from 2016.

This means that a large portion of the South African millennial population are radically under-insured, especially in the area of disability cover. This is as a result of a number of factors, including all the economic factors already mentioned, which have resulted in tighter household budgets, less support from employers, and at the lower end of the scale, a sense of invincibility that is common to young people.

However, it is vital that brokers communicate to this target market that they are just as at risk – if not more so – than any other generation. In the United States, millennials have been branded as the “worst generation of drivers”, and while the influencing factors are different in South Africa, some of the factors remain true here: millennials are likely to be more distracted by electronic devices while driving, they are driving under pressure on increasingly congested roads, and they are currently the youngest generation of licensed drivers, which means that they are by nature more likely to take risks.

A look at the road death figures illustrates the point. Almost 135 000 people have died in road crashes in South Africa over the past decade. According to information from the Road Traffic Management Corporation, in 2017, 14 050 people died on our country’s roads. This was marginally lower than the previous year’s 14 071, but still higher than any year from 2008 to 2015.

While of course, there are very real concerns about the affects of disability on the individual’s life and financial situation, the broader responsibilities outlined above mean that a disability is not only detrimental to a nuclear family unit, but often to a far broader array of dependents.

If ever a generation has needed disability cover, it’s this one.

Unfortunately, millennials are also renowned for their lack of trust in financial institutions. The global economic crisis in 2008 took place in their impressionable years – or just as they were starting to establish themselves financially, leaving them with the lasting conviction that financial services institutions do not have their best interests at heart. For brokers, this means you have to work twice as hard to win them over and get your points about what they need and why across.

You are required to deliver good customer service to this generation. That’s not different from any other generation, but it is even more imperative that you stick to the principles of service when dealing with millennials. Be open and transparent with them, show them information from reputable sources, don’t be pushy; be informative. At the same time, it might be necessary to push through a sense of invincibility or, possibly, denial. Ask the tough questions about the impact of a disability on your client and their family, and get them to show you what possible solutions they have for this possible outcome. Present to them the very real benefits and financial support that disability cover offers, using compelling arguments based on the realities of their own life situation and the realities facing South Africans today.

And finally, this generation is more tech savvy than any other, often preferring interaction on their own terms with technology than with real human beings. For this reason, wherever possible, introduce tools and platforms that enhance and simplify their experience with you.

There really is an excellent motivation for selling disability cover to this market: it’s a product that will make all the difference to them and their families in the worst of circumstances. Should they become disabled, having disability insurance will mean that their lives can continue positively and securely. Now that’s a financial product worth investing in.

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