A MetLife study reported nearly two-thirds of brokers and consultants (58 percent) see the potential to sell more voluntary benefits and ancillary products over the next three years. And more than half of brokers and consultants in the same study said they expect to see a rise in importance for the benefits offered by employers on a voluntary basis, including disability, life, long-term care, dental and critical illness.

The time is right for brokers and consultants to learn more about Gen Y, which accounts for a large portion of the population that will be buying those voluntary benefits over the next several years.

Why ask Y?

Millennials are now considered to make up the largest generation in American history, outnumbering baby boomers and growing to three times the size of Generation X (those born between 1965-1979). They are expected to have an even greater influence on politics, culture and the workplace than baby boomers.

Gen Ys are job hoppers. The average 26-year-old has already had seven jobs, and many of them (37 percent) say they jumped ship repeatedly because they simply needed a change.

With 37 percent of 18- to 29-year-olds currently unemployed or out of the work force—the highest share among this age group in more than three decades—it is fair to say the recession has impacted Gen Y’s foray into the work force. However, some of their financial distress is self-inflicted:

• This generation is the least likely to be covered by health insurance. Only 56 percent of those working say they’re covered by some form of health plan.
• Just 58 percent pay their monthly bills on time.
• Nearly 70 percent of millennials are not building up a cash cushion, and 56 percent admit they haven’t done anything to build retirement or financial security.
• Forty-three percent are accruing too much credit card debt, with the average Gen Y holding three credit cards and 20 percent carrying a balance of more than $10,000.

Naturally optimistic, members of Gen Y tend to be more positive than their elders about their own economic futures. Stats from the Pew Research Center show nine out of 10 millennials believe they have enough money or feel they will eventually meet their long-term financial goals.

The value of benefits

Most employees—both young and old—feel benefits are important. In fact, 60 percent of millennials list benefits as the second most important aspect of job satisfaction, according to the Society for Human Resource Management.

However, Gen Y workers tend to be woefully underinsured. Another survey by Harris Interactive for Colonial Life shows millennials were the least likely working group to take advantage of workplace insurance—not just ancillary coverage such as life, disability, accident or long-term care, but major health plans as well.

Sixty-seven percent of Gen Y believes government plans, such as Social Security, will not be available to them when they retire, forcing them to rely more heavily on a combination of employer-sponsored retirement plans, such as 401(k)s and personal investments to meet their living expenses when that times comes. Interestingly, during the past two years, studies have shown the youngest generation in the work force is becoming increasingly more engaged in learning about the benefits that can help protect them financially. This most likely is due to the combination of the recession’s lingering effects, impending health care reform and, quite simply, an increased level of maturity. As a group, they are also much more optimistic about future coverage at work than the general population of workers. A Colonial Life survey found half of them think companies will continue to offer the same types of insurance in the next five years that they currently offer.

Finding financial security

Gen Ys make up the largest group of employees that says having a choice in benefits that meet their needs is extremely important for building loyalty, according to MetLife. The question then becomes: Do they truly understand how their benefits, especially voluntary insurance, can work for them—especially in the event of the unexpected?

Relatively few have accumulated enough assets or personal wealth to carry them through bad times. They are the least likely of any generation to own their homes, and a majority of millennials recognize they are not saving as much as they should. Still, of all the generations currently in the work force, Gen Ys are the least likely to understand their benefits, which may explain why they are also the least likely to take advantage of workplace insurance.

There also appears to be an information gap in terms of the types of insurance they have and what they might actually need. For example, Gen Y employees want protection, but they also want to be able to meet their financial obligations comfortably. They need alternative benefits solutions, such as voluntary insurance, that reduce their risk and give them the security and peace of mind they need, but those benefits must also be affordable.

Voluntary benefits pay directly to insureds, allowing them to use the benefit as they see fit—something that appeals directly to the heart of millennials. They can choose to apply the money they receive to their medical expenses, such as deductibles, treatment bills, rehabilitation or home health care expenses. Or they can use the money for nonmedical expenses, such as mortgages, groceries, electric bills, child care, or travel to and from a treatment center.

Typical voluntary benefits that work well to address Generation Y’s needs include disability insurance, life insurance, hospital confinement indemnity insurance, cancer and critical illness insurance and accident insurance.

A majority believe they are more likely to find benefits that meet their needs in voluntary benefits plans, know that comparable products are more affordable than on the open market, and appreciate the workplace as a convenient and time-saving place to purchase them.

Education is key

The workplace continues to be Gen Y employees’ most reliable source for benefits information, although they do not depend on it as much as their older colleagues. Fifty-one percent list their workplace as one of their top three resources, closely followed by 50 percent who seek out information online. However, their reliance on online resources may be waning in the last year:

• The percentage who used insurance company websites to learn about benefits providers decreased from 44 percent in 2010 to 39 percent.
• The number who visited consumer advice websites fell from 21 percent in 2010 to 13 percent.
• Those who participated in online forums or blogs dropped from 12 percent in 2010 to 5 percent.

Although Generation Y’s reliance on family and friends as a source of benefits information continues to diminish, its members are still considerably more likely to turn to them first than other workers are.

As this younger generation continues to populate the workplace, employers must keep in mind this group’s preferences for how it wants to get information. The message to them does not need to change for the most part, but the delivery mechanism does.

Form a better connection

A strong benefits communication and education partner can help brokers and employers connect with and engage Gen Y employees through these methods:

Use technology where appropriate.

They are history’s first “always-on” generation, proficient in digital technology and social media. They are very rarely detached from their mobile devices. While many employers have embraced web-based, self-service programs as their main tools for communicating because they do an excellent job of speeding the enrollment process and recording real-time decision-making for employees, they do little to help Gen Y workers make informed benefits decisions. Therefore, technology should supplement, not serve as a substitute, for face-to-face and ongoing communication.

Build on one-to-one counseling.

Something as complex as insurance can’t be effectively communicated by relying totally on technology and self-education. Having access to a trained benefits specialist who can talk about insurance options, answer questions, clarify product features and help uncover Gen Y employees’ most important needs proves invaluable for them—keeping in mind this is the first time in their lives they are responsible for making personal benefits decisions.

Combine convenience with good content.

Current benefits materials and communications don’t seem to resonate well with Gen Y workers. In particular, Gen Y women are much less likely than Gen Y men to find the communications they receive about their benefits very informative. This includes information about how much they’ll pay for insurance benefits, how their take-home pay will be affected by their selections, what the plans cover, how much coverage they or a family member might need, and why they or a family member might need different types of coverage.

The greatest success comes when communications are kept simple and free from most industry jargon. It’s not only important to use communications millennials understand, but also those they can relate to in terms of cultural preference (family, social values, traditions, attitudes, beliefs, language, etc.). Think in terms of brevity and to-the-point content, much like the information they get online when they search for restaurants and movie reviews.

Make it interactive.

Employers can make the simple stand out and better engage their youngest workers by using video, audio and social media, and repurposing materials with new headlines, themes and updated colors that better reflect today’s culture. They also can incorporate more “consumer-oriented” content that uses multimedia and interactive tools.

As benefits decision-making continues to shift more toward employees, Gen Y workers will naturally become increasingly eager for more information and tools to maximize their benefits investments. They will want more advice and counsel—more best-practice ideas on which to base their decisions. And remember: Nothing is more interactive than talking to someone in a one-to-one benefits counseling session.