Income Protection for the Millennials & Gen Zs
Disability income protection insurance may not be on the list of priorities for the millennials and Gen Zs. Just entering the workforce and budget-conscious, young adults are more concerned about growing their wealth than being insured in every aspect of their lives. According to a recent survey, six out of ten Singapore youths prioritise building up their savings. This was followed by prioritising building their wealth (49%) and investing (41%)1.
Singapore has a large population of millennials in the workforce. They make up more than 30 percent of Singapore's labour market based on the Labour Force Participation Rate published by the Singapore Department of Statistics in recent years.
Accidents don’t Discriminate.
With this paradigm shift in the workforce demographic, it’s time for young adults to rethink their perception of insurance. One way to look at it is perhaps as outsourcing their biggest financial risk to a third party (the insurance provider in this case).
We all don’t think about being struck by lightning at every waking moment. Yet life is unpredictable, and misfortune comes uninvited. In Singapore, 2.1% of the student population and 3.4% of 18-49 year olds are people with disabilities, with the numbers rising to 13.3% for those 50 years and older2.
Income Protection as a Safety Net
Loss of income due to accidents, illness, and disease remains an underestimated risk. No matter how young and abled body we are, what happens when we can’t work due to either a temporary or permanent disability? This is when income protection insurance or disability insurance helps to mitigate everyday expenses like car loans, rent, grocery bills, etc. It is designed to meet our day-to-day expenses and is even more essential for those who have just entered the workforce and do not have enough savings to fall back on.
Keeping up with Employee Benefits
With changing requirements, employer-sponsored group benefits should also look at evolving. Other than the more common medical and health coverage, employers can consider innovative solutions such as income protection insurance as part of a more comprehensive package. Also, it doesn’t have to be an ancillary benefit reserved for older people but enjoyed by all employees regardless of age. Employer-sponsored policies are typically more affordable and often tailored to employee’s needs. This allows greater flexibility for employees to choose a plan that fits both their wallet and lifestyle. Something the millennials will appreciate for sure!
Transparency is Key
Another stumbling block among millennials and the younger generations is the lack of adequate knowledge in identifying the various insurance plans and benefits that are available in the market. What do they look for in purchasing a plan? When should they buy it? How much is too much? In addressing these real concerns among potential buyers, some good practices to adhere to among insurance providers can include the following:
1. Make policies easier to read by using plain and fair English without legal jargon.
2. Simplify the claim process so it can be automated and straightforward.
3. Recruit younger sales representatives who can relate to the millennials and Gen Zs.
4. Ensure strict practices on fair selling. Insurance agents are conceived to be driven by commissions, hence the notion that insurance is sold and not bought. Mis-selling and hard selling will only lead to distrust and dissatisfaction among consumers.
In conclusion, if we are employed and have a job, income protection insurance acts as a financial security. It protects our income and creditworthiness when we face unexpected hardship, allowing us to focus on our health and recovery. Regardless of age, that’s something we should all think about in terms of financial planning.
Source:
1.Singapore Business Review https://sbr.com.sg/insurance/news/insurance-not-top-priority-amongst-singapores-gen-zs-and-millennials-poll (August 2023)
2.City of Good https://cityofgood.sg/articles/disabilities-in-singapore/ (April 2022)
