By Maria Sassian, Triple-I consultant
The COVID-19 pandemic contributed to a decrease in life expectancy in the United States for the first time in decades, according to the Centers for Disease Control and Prevention (CDC). After climbing steadily for many years, life expectancy fell by 1.5 years from 2019 to 2020 – the largest one-year dip since World War II, when it declined by 2.9 years between 1942 and 1943.
Life expectancy at birth for the total population declined from 78.8 years in 2019 to 77.3 years in 2020. The grim prospect of mortality, as well as the financial havoc wrought by the pandemic, has led many people to consider protecting their loved ones with life insurance.
A survey by Life Happens and LIMRA published in April 2021 found that about 31 percent of consumers said they are more likely to buy life insurance because of the pandemic. And the latest data show they followed through on that intention. Total U.S. life insurance premium increased 21 percent in the second quarter 2021, the largest year-over-year increase since third quarter 1987. For the first half of 2021, total premium increased 18 percent, compared with the first six months of 2020, LIMRA reports.
Life insurance is now attracting younger customers. LIMRA’s survey shows that 45 percent of millennials said they are more likely to buy life insurance because of COVID-19. This increased interest could be explained by the fact that younger people are more likely to have children who are minors and higher amounts of outstanding mortgage debt to cover if they died. Younger workers also faced higher unemployment rates throughout the pandemic compared to older workers, so they may have purchased individual coverage to make up for the loss of employer-sponsored policies.
Decisions about buying a policy or increasing coverage also vary by race. Deloitte research found that underinsured Hispanic/Latino buyers were most interested in increasing life insurance coverage as a response to the pandemic, followed most closely by Black buyers. Deloitte speculates that this is due to the higher unemployment rates among Black and Hispanic/Latino people during the pandemic, which resulted in the loss of employer-sponsored life coverage. Overall, Black and Hispanic/Latino people were disproportionately affected by COVID-19.
September is Life Insurance Awareness month, and now turns out to be a good time to get the coverage. Insurers have made it easier to buy policies during the pandemic. Many companies are temporarily waving in-person medical exams and streamlining the buying process with simplified underwriting.
Companies with the strongest digital capabilities are benefitting from a 30 percent to 50 percent increase in online life insurance sales since January 2020, according to Deloitte. Consumers like shopping online, and interest in agent-driven sales is decreasing, with just 41 percent of consumers saying they prefer to buy in-person in 2020 – down from 64 percent in 2011.
People who get life insurance don’t tend to regret it. In fact, LIMRA reports that that almost 40 percent said they wished they had purchased it at a younger age. And while many people believe life insurance is too expensive, most overestimate the cost. LIMRA found that 44 percent of Millennials thought the cost of term life insurance was more than $1,000 a year, when it’s closer to $160 for a healthy 30-year-old to own a $250,000 level term life insurance policy.