It’s no secret that the demographic makeup of a financial institution’s membership is changing. As Boomers near retirement, their children are entering the mid-career phase of their lives, and their grandchildren are starting their financial journey. Each of these demographic segments has different product and service needs, as well as differing expectations from their financial service providers.
While those nearing retirement age may be looking for ways to diversify their portfolio or develop a sound estate plan, their Millennial children likely have all of their proverbial eggs in the earning and wealth development basket. This demographic segment is likely the largest—and riskiest—segment of your loan portfolio. Millennials are in the phase of their lives where they are taking out mortgages, multiple car loans, home equity loans, and credit card accounts.
So you can probably see how they may pose a risk to your financial institution should default come into the picture. Even more shocking, only 10% of Millennials have enough life insurance in place to cover their major expenses and obligations according to New York Life’s 2018 Life Insurance Gap Survey. This same survey states that while Millennials do have some life insurance in place, they have a $352,000 coverage shortfall.
Taking a look at our population as a whole, a 2016 LIMRA Ownership Study found that 37.5 million households do not have any life insurance at all which means that 30% of U.S. households are completely uninsured. Chances are part of that population works with your financial institution. There is a silver lining in this research though, particularly for financial institutions, as the LIMRA findings identified that trust is the number one factor that comes into play when an individual does indeed purchase life insurance coverage. This can provide your financial institution with a key competitive advantage to addressing the underinsured borrowers in your loan portfolio.
The above excerpt is an introduction to our recently published ebook, Shifting Focus to Your Underinsured Borrowers. In the ebook we detail how financial institutions can provide valuable solutions to their underinsured borrowers through education to help them avoid default and protect their loan portfolios.
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