Call it a tale of two mindsets. The millennial generation wants to buy insurance (especially life insurance), but concerns about personal data safety may be holding them back.
According to new analysis by the Employee Benefit Research Institute, millennials prefer life insurance over retirement benefits, and by a fair margin.
“While millennials are less likely than Baby Boomers and Gen Xers to report health insurance as the most important benefit they receive at work, millennials are more likely than Baby Boomers or Gen Xers to report that they value life insurance as the most important (employee) benefit, EBRI reports.
Gen-Anxious fears data breeches
That’s to the credit of younger Americans, who see the wisdom in obtaining life insurance policies at an early age.
But there’s a caveat: Before younger Americans sign off on any insurance policies, they’re wary of placing their personal data at risk when they buy a policy.
There’s good reason for that. As technology has become so pervasive, the paths to a data breach have become pervasive, too.
“When baby-boomers were growing up, the only way to become a victim of identity theft was if a thief rooted through garbage for sensitive receipts,” notes Joe Ross, president of CSID, an Austin, Texas-based data security firm. “Now, millennials have more ways than they can count to inadvertently give away their digital identities.”
Fraud strikes 25% of people 18-24
Monica Eaton-Cardone, chief operating officer at Clearwater, Fla.-based Chargebacks911, says younger Americans who shy away from financial tools, like life insurance, stock brokerage accounts or health care accounts, may have good reasons to do so.
“Numerous studies, such as the annual Javelin Identity Theft Report, show that millennials tend to be the most vulnerable demographic to identity theft and financial fraud,” she says. “These reports suggest that nearly a quarter of all people ages 18-24 will become a victim of fraud.”
See also: Women don't have enough life insurance
To get on track, and to better protect their financial data, Eaton-Cardone says millennials need to be more proactive with their personal data – but that’s not happening yet.
“Younger people tend to have a more casual attitude toward fraud – such tendencies as over-sharing, utilizing weak security measures online and broadcasting personal information via public Wi-Fi networks are all fairly common among millennials,” she says. “This same age group also tends to check their credit score or other indicators of fraud less frequently, and are more trusting than their parents that companies with whom they share information will keep that info safe.”
That indifference has to change, and even actual millennials admit that.
"Like people in all categories, millennials have myriad views when it comes to financial fraud, but while we're most certainly concerned, we're also tech-savvy, 'digital natives' who have grown up with a certain tolerance for things like cyber-hacking,” notes James Goodnow, a 34-year-old attorney in Phoenix, Ariz. “In that sense, we're more open to adopting things like mobile pay options, while another generation may be reluctant to give up their credit cards.”
Millennials grapple with skepticism
Goodnow suggests credit report and credit monitoring services as one way to watch for fraud, as well as alternatives offered by the credit bureaus, such as a credit freeze. (Americans also can get a free copy of their credit reports once a year from the three major credit reporting agencies at AnnualCreditReport.com.)
“Everyone should ideally protect their personal info and limit what they share and store from a financial perspective online,” Goodnow says.
They may have to overcome some historical and emotional hurdles first, he adds.
“Conversely, millennials have come of age in an era where we've witnessed the tech bubble burst; survived the housing bubble of 2007 and 2008; and then seen people like Bernie Madoff be revealed as the ultimate fraudster, so we're incredibly wary of abuses in the financial sector,” Goodnow notes. “Thus, we have a reluctance towards traditional investments like life insurance -- whereas an older generation may take a longer view of the financial services markets."
Yet millennials need a longer-term view themselves, especially pertaining to life insurance. If they can get over their skepticism over data security linked to their financial accounts, they will become even stronger insurance industry consumers.
First, though, insurance companies have to demonstrate to younger Americans they have their back, in terms of data security. There’s still some work to do on that front.