Targeting the Middle Market — Where They are and When They Need it

This is the 4th article in a four-part series about the life insurance middle market.

The fact that the middle market both needs life insurance but also has some of the lowest coverage of any demographic has been receiving increasing attention within the insurance industry. In 2016, consulting firm Accenture published a report about the market’s importance to the industry. Ernst & Young’s report, Life insurance distribution at a crossroads, touched on how existing distribution networks have failed to reach the middle market and how it has cost life insurance companies.

The industry knows that it needs to target and reach this market to grow. The question then becomes, how do life insurance providers sell to this market?

The advancements of digital marketing have made targeting people based on life events easier than ever before. Whereas in the past agents would depend on word of mouth or building relationships with hospitals or real estate agents in order to get close to people going through key life events, they can now leverage the online world to do this. Being able to target and retarget people directly online will make the process of finding, winning and managing clients easier and more cost-effective for agents.

Acquisition methods for millennials and the middle market are different than in the past, but the selling points are much the same. Target the middle market based on life events. These events, marriage, buying a house, having children, still tend to follow a predictable timeline. And each life event represents an opportunity to capture their business.

When a couple gets married, it’s only natural that they’d think of protecting their spouse’s future. With the rise in dual-income households, many families would not be able to meet their debt obligations without two incomes. Most millennials age 25–34 also have an average of $42,000 of debt, with credit cards making up the biggest chunk of that debt. If anything were to happen to one partner, the surviving spouse would undoubtedly struggle to pay rent or the mortgage or to pay off their debt.

Millennials are in debt due to the combination of student loans, and soaring housing prices combined with stagnant wages. They are keenly aware of their debt, which makes it an excellent selling point when pitching this market.

Buying a house is often the next step after marriage, though insurance agents shouldn’t overlook the rise in single homebuyers in their marketing efforts. Like many events, this step is happening at an older age. The median first-time homebuyer in 2017 was thirty-two years old, but this remains an excellent life event to tie to life insurance.

Another common life event is having children. While fertility rates have dropped, 94% of Americans do still want to have children, though they have fewer kids than in the past. The reasons for this relate more to the earnings penalties that women face when they leave the workforce to care for children, the expense of raising kids, and of course that high debt load. If anything, this means that the middle market of today needs life insurance more than they did in the past.

According to a Deloitte survey of this market, having a child led to a 43% likelihood that someone in the middle market would purchase life insurance if they were made aware of the need. An important takeaway of their survey was that this market needed to be educated about their options and why life insurance is right for them.

The last bullet point, change in financial situation, is harder to identify but still significant. Employer-provided life insurance often ends once the employee has left the company. Fewer employers are offering this benefit or making it convertible to continue it after employment. Job loss, as tough as it can be, is a time when many people realize that they need coverage that is independent of their employer.

Despite the need for the life insurance distribution network to digitize to reach this market, agents can remain confident in the fact that the selling points that have served them for decades remain true.

Over the past few weeks, we have examined who exactly the middle market is, why they need life insurance so badly, why they aren’t being sold to and how to target them. At Breathe Life, it is hugely important to us that the middle market begins to get educated on and purchase life insurance policies. Their financial security depends on it and we’re here to make that happen.