Research shows benefits brokers and consultants will be sellingmore voluntary benefits over the next several years, and thatGeneration Y will account for almost half of the work force bythen. So who is Gen Y? What do these 30-and-unders think ofvoluntary benefits, and what are their benefits communicationpreferences? And how can you engage this important demographicgroup?

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Just four years from now—in 2015—Generation Y will account fornearly half of all employees worldwide. Generation Y, ormillennials, typically refers to those born in 1980 andafter—members of the first generation to come of age at the startof the new millennium.

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Predictions indicate this generation will be the first in morethan a century that is unlikely to be better off financially thantheir parents. Only about one-fourth of Gen Ys expect things to beeasier for them than the previous generation, according to anAssociated Press poll earlier this year. Maybe that’s becausemillennials have different perspectives on the businessmarketplace, their jobs and the work-life balancing act. They enterthe work force facing the brutal truth that they may never be ableto retire, so they work harder at having a “life” and acareer—now.

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Total rewards packages that incorporate voluntary benefits willplay a key role in not only giving Gen Y workers the flexibility tobalance work and life, but also the ability to build more financialsecurity for them and their families.

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

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The time is right for brokers and consultants to learn moreabout Gen Y, which accounts for a large portion of the populationthat will be buying those voluntary benefits over the next severalyears.

Why ask Y?

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

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

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With 37 percent of 18- to 29-year-olds currently unemployed orout of the work force—the highest share among this age group inmore than three decades—it is fair to say the recession hasimpacted Gen Y’s foray into the work force. However, some of theirfinancial distress is self-inflicted:

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

Naturally optimistic, members of Gen Y tend to be more positivethan their elders about their own economic futures. Stats from thePew Research Center show nine out of 10 millennials believe theyhave enough money or feel they will eventually meet their long-termfinancial 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 mostimportant aspect of job satisfaction, according to the Society forHuman Resource Management.

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

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

Finding financial security

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

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

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There also appears to be an information gap in terms of thetypes of insurance they have and what they might actually need. Forexample, Gen Y employees want protection, but they also want to beable to meet their financial obligations comfortably. They needalternative benefits solutions, such as voluntary insurance, thatreduce their risk and give them the security and peace of mind theyneed, but those benefits must also be affordable.

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

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Typical voluntary benefits that work well to address GenerationY’s needs include disability insurance, life insurance, hospitalconfinement indemnity insurance, cancer and critical illnessinsurance and accident insurance.

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A majority believe they are more likely to find benefits thatmeet their needs in voluntary benefits plans, know that comparableproducts are more affordable than on the open market, andappreciate the workplace as a convenient and time-saving place topurchase them.

Education is key

The workplace continues to be Gen Y employees’ most reliablesource for benefits information, although they do not depend on itas much as their older colleagues. Fifty-one percent list theirworkplace as one of their top three resources, closely followed by50 percent who seek out information online. However, their relianceon online resources may be waning in the last year:

  • The percentage who used insurance company websites to learnabout benefits providers decreased from 44 percent in 2010 to 39percent.
  • The number who visited consumer advice websites fell from 21percent in 2010 to 13 percent.
  • Those who participated in online forums or blogs dropped from12 percent in 2010 to 5 percent.

Although Generation Y’s reliance on family and friends as asource of benefits information continues to diminish, its membersare still considerably more likely to turn to them first than otherworkers are.

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

Form a better connection

A strong benefits communication and education partner can helpbrokers and employers connect with and engage Gen Y employeesthrough these methods:

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Use technology where appropriate.

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They are history’s first “always-on” generation, proficient indigital technology and social media. They are very rarely detachedfrom their mobile devices. While many employers have embracedweb-based, self-service programs as their main tools forcommunicating because they do an excellent job of speeding theenrollment process and recording real-time decision-making foremployees, they do little to help Gen Y workers make informedbenefits decisions. Therefore, technology should supplement, notserve as a substitute, for face-to-face and ongoingcommunication.

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Build on one-to-one counseling.

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Something as complex as insurance can’t be effectivelycommunicated by relying totally on technology and self-education.Having access to a trained benefits specialist who can talk aboutinsurance options, answer questions, clarify product features andhelp uncover Gen Y employees’ most important needs provesinvaluable for them—keeping in mind this is the first time in theirlives they are responsible for making personal benefitsdecisions.

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Combine convenience with good content.

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

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

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Make it interactive.

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

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

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