How Gen X'rs Turning 60 Are Redefining Life Insurance Annuities

The world’s population is aging at an unprecedented rate. This demographic shift is reshaping many industries, with life insurance and annuities among the most affected. As people live longer and retire later, their financial needs evolve, prompting changes in how these products are designed, marketed, and utilized. Understanding these changes is essential for consumers, advisors, and insurance carriers alike.

The Aging Population Trend

Globally, the number of people aged 65 and older is growing faster than any other age group.

According to the United Nations, by 2050, one in six people worldwide will be over 65, compared to one in eleven in 2019. This shift results from lower birth rates and longer life expectancy due to advances in healthcare.

This demographic change means more people will face retirement with longer lifespans, increasing the demand for financial products that provide security and steady income during retirement years.

Impact on Life Insurance Demand

Life insurance traditionally protects families from financial hardship after the policyholder’s death. However, the aging population is influencing both the demand and type of life insurance products:

• Increased Interest in Final Expense Insurance

Older Americans often seek policies that cover funeral and burial costs, which can be expensive. Final expense insurance offers smaller death benefits with easier qualification, appealing to seniors who may not qualify for larger policies.

• Shift Toward Living Benefits

GEN X'rs and BOOMERS want life insurance policies that offer living benefits, such as accelerated death benefits or long-term care riders. These features allow policyholders to access funds if they face chronic illness or need extended care.

• Longer Policy Durations

With longer life expectancies, insurers are offering policies that last into advanced age, sometimes up to 100 years or for life, rather than term policies that expire earlier.

• Higher Premiums and Underwriting Challenges

Older applicants often face higher premiums due to increased health risks. Insurers are adapting underwriting processes to better assess risk and offer more flexible options.

LIMRA recently conducted a study on worldwide demographics, in which LIMRA surveyed the under-40 consumer.

Bryan Hodgens, head of LIMRA research mentions, "The reality is that whether it’s in the U.S. or outside the U.S., we have an aging population. We have fewer people coming in behind it. Birth rates are down. People are delaying some of their life events — things that typically have been triggers for life insurance purchases — such as getting married, having kids, buying a home. All of those traditional triggers for life insurance purchases are getting delayed and happening less frequently.”

While the younger generations don’t appear to be quite ready to buy life insurance yet, the over-60 population has become a saturated market, he said.

“We’ve (placed) a lot of life insurance in this group over time, and we’ve tapped out that market to a certain degree.”

This leaves Generation X, generally referred to as people born between 1965 and 1980. The older members of this age group are hitting age 60, while the youngest are in their mid-40s. This group is looking at a looming retirement as well as financial obligations to both children and aging parents and is a prime market for annuity product solutions.

It truly is an interesting time. For annuities, and the "Gen X" demographic. Are they in the right place at the right time? Here's why, the average age for purchasing an annuity is around age 64. The U.S. is in Peak 65 right now and Gen X is approaching retirement age, so we see Gen X in a near-perfect place to learn all about annuities. Additionally, participants in their employer's 401k and 403b (Defined Contribution Plans) have been asking, for several years, for an option to bank up a guaranteed payout of benefits once retired. Reminiscent of the 'old' pension plans of the 60's, 70's and 80's (many schools, universities and municipalities continue to offer pensions).

An aging population driving sales in certain product categories, but it is also driving product innovation.

Underwriters and large-scale wholesale brokerage houses we talk to feel living benefits inside life insurance products will continue to increase as consumers look for ways to pay for providing more than one solution to their financial concerns (#BeneficialMoney), such as addressing future long-term care costs.

Some examples include; life/combo policies, where long-term care riders have been included in life insurance. Other types of living benefits that will show up on the life insurance side. But for long-term care, it plays into the demographics of an aging population. "Living benefits" are becoming increasingly popular with consumers who are at least a decade or so away from needing care.

A good example of this is LTC riders aren’t just for life insurance. More annuity products also are including LTC riders, which can be an essential accelerated benefit for the policy owner and their family.

The 40's and 50 year old and older generations as well are looking at these combo policies and buying them now once seeing how this reflects today on their pocket-book, verses, the hard to swallow, 15 years out scenario.

Bitter-Sweet comment I hear today from the adult kids - "I know I’ll need it after watching my parents and grandparents face long-term care needs, it's just sort of hard to believe that will be me or my spouse someday." - Joe Simon, joesimon.solutions

With the majority of Americans predicted to need some kind of care in their later years, has the life insurance industry listened and learned, leaning back into this long-term care space because they see the opportunity to help lots of Americans?Possibly, as we look back to the late 80's, when things were really first sprouting in this upstart long term care insurance industry (there was no underwriting data for proper risk and reward actuarily science to be counted on), carriers have learned how to better model future risk and pricing of these products more accurately. 

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