New Research Uncovers How Millennials Choose Benefits


By Jennifer Beck

 One out of every four Californians is a millennial. Yet a recent study found that even though the state has one of the highest rates of millennials in the country, California ranks at number 22 on the list of best states for millennials to live.

What can California do so the state doesn’t lose millennials — the largest age group in today’s workforce? We may not be able to control housing prices or other costs of living in the Golden State, but brokers and employers do have power when it comes to recruiting and retaining employees.

Consider that the oldest millennials are now in their mid-30s, working their way into management and leadership positions, while the youngest are graduating college and entering the workforce. For the next several decades, this generation’s habits, behaviors and expectations will influence the benefits packages you create to help employers keep this massive age group in the state.

So, what exactly do millennials want from their benefits? And how do they go about deciding which benefits to choose? The answers may surprise you.

The Study

In October 2017, ARAG® commissioned Russell Research to study millennials’ legal insurance perceptions and buying habits. Researchers collected data from 1,000 online interviews with millennials and members of older generations. Additionally, researchers conducted 100 in-depth interviews with millennials to gain more detail and personal insights into their legal insurance purchasing behaviors.

For the purposes of this study, Russell Research defined a millennial as someone born between 1981 and 1997.

How Millennials Select Benefits

When it comes to the benefits enrollment process, millennials take a meticulous approach. In fact, millennials review every single one of their benefit options to see what is available to them. As they review their options, millennials carefully evaluate need and cost, and they “read the fine print.”

Millennials evaluate available benefits using a three-step process:

  1. “What essential benefits do I need?” Millennials talk about prioritizing medical benefits over everything else, followed closely by dental benefits.
  2. Of the remaining non-essential options, which ones am I interested in?” Millennials want benefits that feel personalized and useful.
  3. “Based on my budget, which of these benefits that I want can I afford?” Millennials are more cost-conscious than other generations when it comes to benefits. While 50 percent of millennials consider their budget when selecting benefits, only 42 percent of older generations do.

Other studies have found millennials in general are more financially savvy than other generations. One survey by RBC Wealth Management found that 69 percent of millennials conduct their own financial research (compared to 47 percent of baby boomers and 61 percent of Gen X).

They are focused on short- and long-term planning, and more than half of those surveyed by RBC said they plan to provide a greater level of financial support to their dependents and beneficiaries than they received. To do this, they are educating themselves on their options and making decisions that will help protect them and their assets. 

Millennials and Legal insurance

Based on their financial focus and careful evaluation during the benefits process, you might think millennials are unlikely to select a voluntary benefit like legal insurance. In fact, the study revealed they are more likely (41 percent) to purchase legal insurance compared to older generations (30 percent).

Why the disparity? One reason may be fear of an impending legal issue. Of the millennials surveyed 35 percent believed they would likely experience a legal issue in the next year, while only 26 percent of other generations felt a legal problem was on the horizon.

Fear is a powerful motivator for millennials, an anxious generation who has come of age during a time of rising education costs, growing debt and increasing economic uncertainty. A survey by Merrill Edge found that 80 percent of millennials expect to live through another recession — 30 percent predict one will happen in the next five years. These financial fears spill out into other areas of their lives and make them more risk averse and focused on benefits that can protect them.

When millennials surveyed by ARAG were asked why they would be interested in purchasing legal insurance, two common themes emerged: 

Peace of mind: Millennials understand that uncertainty and risk go hand in hand. For these individuals, having legal insurance is worth the expense because “anything can happen” and they want to be protected even though they understand they may never need to use it. 

Hedge against future expenses: Millennials understand the potentially high cost of legal help and would instead pay for insurance as part of their benefits package rather than have to pay out-of-pocket for legal help in the future. 

What Millennials Want When Deciding to Purchase Legal Insurance

Beyond their likelihood to buy legal insurance, millennials were also asked to share what information they expect to receive when deciding whether to purchase legal insurance. Some key things that should be communicated are:

  • Comprehensive coverage details: Millennials want to know the specific legal matters covered by their plan. They want as much detail as possible about all coverages.
  • Clear outline of services provided: Does the legal plan provide phone advice? In-office consultations? Representation? Online resources? Millennials want to know it all so they can see what they are getting for their money.
  • Potential cost savings: Millennials appreciate plan materials that show how much they can save. They prefer visuals that compare costs.

By Generation: Common Legal Issues

When asked about legal events they experience, the most common issues millennials encounter differ from older generations.

Most common legal issues millennials experience:

  • Buying or selling a car
  • Renting an apartment
  • Birth of a child
  • Credit trouble/debt collection

Most common legal issues older generations experience:

  • Buying or selling a car
  • Caring for aging family
  • Hiring contractor
  • Death of a family member

When it comes to benefits, millennials are protection-minded. They scrutinize their options, weighing needs and costs. And they are more likely than other generations to purchase legal insurance. If you want to offer a benefits package that’s competitive, continue offering innovative offerings that provide real value to millennials. 

Jennifer Beck, ARAG director of customer experience, is responsible for the overall experience of ARAG’s members through the research, analysis, and evaluation of current processes and future trends of both consumer expectations and industry innovations. Jen leads ARAG’s transformation to a customer centric organization designed to promote revenue growth and productivity – with a reputation of providing exceptional customer experiences.  Prior to joining ARAG in 2008, Jennifer worked in specialty qualitative research and public policy research, as well as in marketing management. Jennifer earned her bachelor’s degree in marketing from the University of Northern Iowa. Jennifer is a long-time member and former board member of the American Marketing Association.  She volunteers as a youth educator at her church.