New Research About Boomers & Their Insurance Purchase Decisions
By Lianne Wade (Vice President, Customer Insight)
There are 78 million Boomers, so you can’t ignore them. And we’ve uncovered proven, actionable insights about them that can drive bottom line results – without requiring new technologies and infrastructure investment. Is this music to your ears?
We’ve answered the following questions about Boomers and their insurance purchase decisions:
- How can you prompt Boomers to choose more Long-term care (LTC) coverage?
- How can you prompt them to buy Medicare Supplement (MedSupp) insurance coverage?
The Answer Is Rooted In Behavioral Economics.
We are human beings after all, and often we make decisions about our finances which are considered irrational. That is, our decisions may not be in our best interest.
Behavioral scientists have studied the reasons why we make these types of decisions – which don’t fit economic models, by the way – and that study is called Behavioral Economics. There are many principles designed to overcome these biases and motivate people to make decisions which would be in their best interest.
In our study with Boomers, we tested two Behavioral Economics principles in an attempt to change how Boomers think about purchasing LTC and MedSupp insurance.
First, We Tested Temporal Discounting – In Relation To LTC Insurance.
Temporal Discounting places greater value on things you can obtain today and less importance on things in the future.
So how do you overcome Temporal Discounting bias and motivate Boomers to consider purchasing today, versus in the future? You can do this through language and imagery to help Boomers see themselves in the future – even if the future is nearer for them!
Here’s what we found: Boomers chose a higher premium for their LTC insurance when this principle bias was removed and an emotional association was linked with it that increased their response: Comfort.
Next, We Tested Mental Accounting – In Relation To MedSupp Insurance.
Mental Accounting refers to people’s tendency to divide their money into separate mental buckets and treat each one differently.
For retirees, we placed healthcare costs (aka MedSupp insurance) in a bucket separate from their “fun” account – used for entertainment, vacations, etc. – thereby increasing their preference to purchase MedSupp insurance.
Interestingly, in this situation, gender played a role in the emotional association linked to this insurance. For women, the emotional association of Calm resonated with them, and for men, it was Confidence.
Why Emotional Associations Are So Important To Motivating Action.
The great majority of our decisions are made emotionally – as much as 87%! You may think that we are rational beings, but in fact, we are not.
Knowing this, we included emotional associations as part of the language in our study, and they made a difference in increasing intent to purchase.
Understanding Boomers Are The Key To Driving Action.
Insights about Boomers as it relates to insurance behaviors are critical to build strategies for go-to-market campaigns. So what do we know about them?
They were born between 1946 -1964, and have several characteristics which were relevant to this study:
- Known as the “sandwich generation”, as they are sandwiched between taking care of their kids and their parents
- Spend more and save less (more than likely because of the above)
- Many plan to delay retirement, and work past 65; and even plan to start a new career as a “second act” – they are pursuing their passions later in life and are more active than previous generations
But not all Boomers are created equal! Many generations have sub-groups since there can be differences within a large, generational group. For Boomers, these sub-groups are:
- Leading-edge boomers (1946-1955) who may have saved more for retirement than the younger boomers and are less anxious about saving or having enough in retirement (I mean, they are almost there!)
- Trailing-edge boomers (1956-1964) are typically less prepared for retirement, and thus are more anxious about saving and less confident about being prepared in their retirement years
Some actionable strategies to employ.
In summary, we found that you can generate strong results in your marketing campaign by employing these two Behavioral Economics principles, as well as the three previously-mentioned emotional associations that resonated with Boomers.
And because Boomers are not all the same, break down Boomers into sub-segments and based on their unique behaviors around insurance and retirement, employ messaging strategies which will motivate them to purchase:
Learn even more in our E-book: How to prompt Boomers to choose more Long-Term Care coverage and buy Medical Supplement insurance
Want to have a conversation about Wilde Agency’s research findings? Contact Lianne Wade, VP Customer Insight.
E-mail: Lianne.wade@wildeagency.com
Twitter: @liannewade
The post How Behavioral Economics Is Integral To Prompting Action Among Boomers appeared first on Wilde Agency.
