In today’s insurance market, companies face a choice of markets to target:

• Do we service the baby boom generation’s needs for retirement income?
• What about long term care and other healthcare needs?
• Do we look to the “Gen Ys” or “Millennials” who are just entering the marketplace, and whose needs are more in income protection and life insurance?

As these are clearly very different needs, focusing on one group—and developing products that appeal to that generation—will give a company greater chance of success.

Baby boomers are an attractive market.The need is staring them in the face and they are very concerned about how they will face their retirement years. While the upscale market can afford coverage, this market is already highly saturated with insurers seeking their business.

The middle or mass market is underpenetrated, but also likely to be hard-pressed to afford some of the current off-the-shelf solutions. It is said that their average 401(k) balance is approximately $88,000, and for those unlucky enough not to have a 401(k), the average savings is a paltry $38,000.

Layer on top of this the results of a 2006 Allstate survey that found 60% of respondents saying they are saving enough for retirement, and it means the case we need to make has to be even more motivating to them.

According to an article in the winter 2005/2006 issue of Visions by Kemper, Komisar and Alecxish entitled, “Long-Term Care Over an Uncertain Future: What Can Current Retirees Expect?” 69% of people retiring at age 65 can expect to use approximately three years of long term care services. The article goes on to say that a 65-year-old retiring in 2005 would need on average $47,000 (on a present-value basis).

How much will healthcare cost? According to the Employee Benefits Research Institute’s (ebri.org) December 2010 Issue Brief No. 351: By 2020 a 65-year-old married couple without an employer-based health plan and with median drug expenses could need a total of $365,000 to $454,000 to pay for Medigap, Medicare Part B and Part D premiums and out-of-pocket drug expenses.

Thus, their $88,000 savings must cover, on average, $47,000 in potential long term care costs and another estimated $410,000 in health insurance costs and they have not even begun to factor in other living costs. Clearly, younger members of the baby boom generation need to be motivated to think more about their future and finding a path to get there.

With all the attention being paid to baby boomers, are they really the largest current generation? Despite the lack of conversation, it is the Gen Y that in fact has the bigger population. Their importance over time will only grow. It is thus an important customer to understand. Those who can win their loyalty will get the spoils.

Unlike previous generations, Gen Y is not possession-focused. According to an article by Sarah Sladek, “Why Gen Y Won’t Buy What You’re Selling”: “Gen Y is unique from other generations in the buy-sell continuum for other reasons, as well. For example, this generation:

• Trusts their peers first and their parents second
• Hates to be sold anything
• Actively researches prices and reads reviews before making a purchase
• Expects exceptional service, like Amazon.com, which tells them which products they might like
• Seeks to do business with ethical, environmental companies
• Values customization, customizing everything from their music to their jeans and soda”

Therefore, to sell to this generation, it is important to make them understand how life insurance addresses their unique traits. A generation that grew up with technology instead of being introduced to it as adults, they want products that they believe will make people’s lives better, help them form a community with others, or connect people with something bigger than themselves.

Sales therefore need to be a way to connect people and to build a community. The message has to be made in a powerful and easy way to understand the language. Think Apple commercials where they show what their product can do.

How do we serve these two generations with such different needs and attitudes towards purchasing products? Is it necessary to focus products on one generation’s needs while ignoring the other? Will there be areas of common ground even though their needs and attitudes are so different? I will be looking at ideas on how to address these issues in future blogs.