How Millennials Can Reach Financial Wellness Through Insurance

Hand of statue of Zeus holding a lightning bolt

While most Americans report feeling financially secure, young adults say concerns about financial uncertainty keep them up at night.

It's easy to see why.

As millennials — those born between 1981 and 1996 — navigate the stage of life traditionally reserved for buying homes and starting families, the costs of homeownership and child care are soaring.

Add to that mounting student loan debt and inflation and it's no wonder that a generation of Americans is feeling the pressure.

All this pressure has consequences.

In one recent survey, more than a quarter of millennials admitted to "doom spending" to cope with their financial stress.

Additionally, millennial credit card debt is climbing, increasing 50% from 2022 to 2024.

Amidst these challenges, another trend is emerging that could impact future financial stability.

More millennials, and many Americans, are choosing to forgo insurance or carry the minimum required as a cost-saving measure.

Yet, in making this decision, many are unaware of the pivotal role insurance holds in attaining and maintaining financial wellness.

Millennials' (Mis)understanding of Insurance

Given the numerous headwinds that millennials face, which impact their financial decisions and increase their stress levels, it is crucial to recognize the importance of insurance coverage.

Opting out of insurance or having inadequate coverage can have significant implications for their financial wellness.

However, it's important to understand that this decision is not solely driven by preference.

Affordability hurdles and a misunderstanding of the role insurance plays are key contributors to their decision-making process.

Consider these examples:

46% of millennials need life insurance and cite financial issues as the top reasons for a lack of coverage.
72% of homeowners don't understand liability insurance, despite this being a key component of homeowners insurance that covers damages caused by dog bites, accidents and more.
Of those who have filed a claim on their insurance policy in the past five years, 40% have had an event where their policy did not cover their claim as they had expected.

With skyrocketing premiums and today's hard market conditions, it's understandable why some may opt out or choose lower coverage amounts.

But insurance is not just about peace of mind: It's a smart financial move.

Without insurance, millennials are exposed to considerable financial risks. For instance, inflation is driving up costs to repair damages and replace parts.

When unexpected events occur, such as a car accident or an extreme weather event, the expenses can quickly pile up.

Those with no or not enough insurance are left to foot the bill, which can be far costlier in the long run.

With the average savings of millennials hovering around $9,000 in 2023, one auto accident with injuries could wipe out an entire bank account in one swoop if adequate insurance coverage is not in place.

Finding a Solution That Resonates

Understanding the role of insurance in providing protection against unexpected events is of utmost importance for safeguarding financial futures.

Recognizing the significance of insurance and its ability to mitigate the financial impact of unforeseen circumstances is essential for individuals to secure their long-term financial well-being. So is accessibility to information and services.

However, as the desire for immediate gratification and preferences for digital grows, this poses challenges for traditional insurance models.

Many are navigating insurance for the first time and need guidance to decipher what coverages are needed for where they're at in life.

But they don't want to spend the time researching and going back-and-forth with an agent.

A ffordability and accessibility further compound the challenge.

To address these hurdles, businesses can provide solutions that meet their needs and preferences.

Embrace digital tools with tailored guidance: Some millennials will gravitate towards online platforms and mobile apps for insurance, and in doing so will miss the individualized guidance that comes with traditional approaches of talking with a live, licensed insurance agent, leading to potential coverage gaps. User-friendly digital platforms that combine digital convenience with personalized advice can bridge the gap between technology and tailored support, so millennials receive comprehensive coverage that suits their needs.
Leverage expert guidance for personalized solutions: Millennials seeking clarity on their insurance needs can benefit from consulting insurance brokers for personalized, unbiased advice. These experts have access to an insurance marketplace and can navigate complexities and provide customized recommendations to guarantee that millennials understand their insurance choices and obtain the coverage they require. Additionally, companies aiming to assist millennials in accessing products that necessitate insurance, like mortgages, can collaborate with brokers to offer customizable coverage options, aligning with unique lifestyles and financial circumstances.
Integrate insurance into holistic financial planning: Millennials should come to recognize insurance as integral to long-term financial security. Employers can play a vital role by raising awareness of insurance's significance in financial planning. By providing resources and guidance on insurance alongside other employee benefits, employers can empower millennials to make informed decisions about their insurance needs and seamlessly integrate insurance into their overall financial strategy.

While long-term saving may feel like a distant, nearly unattainable goal for millennials, particularly amid various economic challenges, it's crucial to acknowledge that the financial choices made today hold lasting implications for the future.

Millennials must understand that risking being uninsured or underinsured is a significant financial blind spot.

By recognizing millennials' distinctive mindsets and needs, insurance can be reframed as a fundamental component of financial planning, and businesses have an opportunity to guide their millennial clients and employees toward a more secure and prosperous future.

Shandrilya Lewis is senior vice president of product development, strategy and execution at VIU by HUB.