What You Need to Know
- MIB application activity figures show more consumer interest.
- Deloitte survey results suggest that COVID-19 has had a bigger impact on younger consumers than on older consumers.
- Many consumers still resist the idea of buying life insurance at all.
It’s not surprising that the COVID-19 outbreak spurred a significant boost in life insurance activity. Fear has always been a prime factor in life policy sales, and concern about the potential for infection, severe illness, and possible death has certainly been prevalent during the pandemic.
MIB’s Life Index shows U.S. applications rose by 4% in 2020, the biggest full-year increase in the last decade, bolstered by a 14.1% spike in July and a 7.6% jump in October. This growth trend has continued into 2021, according to MIB, with applications up overall by 10.1% for the first quarter and 18.5% in March over the same month in 2020, when the pandemic first hit the U.S. market.
In the best of times, however, life insurance can be a hard sell. Unlike auto insurance, which is usually required by law, individual life insurance is a discretionary product. That means it’s an easy purchase for most people to put off — sometimes permanently. It may be even harder to sell supplemental life insurance to millions of individual buyers who already have simple term coverage through their employee benefit plan.
Yet individual life insurance should be a critical component of most financial security plans, as many potential buyers appeared to realize during the COVID-19 outbreak. Indeed, Deloitte’s research indicates that the pandemic did make consideration of a life insurance purchase front of mind for many individuals, who were likely concerned about the possibility of contracting and perhaps not surviving a COVID-19 infection.
The pandemic even spurred an increase in life insurance interest among many current policyholders who said they didn’t feel they have as much coverage as they might need, according to a recent U.S. consumer survey by the Deloitte Center for Financial Services. For example, our study revealed that 40% of respondents who had purchased a policy but felt underinsured said they were considering increasing their coverage because of the pandemic.
Deloitte’s survey results also indicated that younger respondents appeared more interested in increasing mortality coverage due to concerns prompted by COVID-19, while appeal generally waned as age increased. This could be because younger people are more likely to have children to be concerned about, as well as higher amounts of outstanding mortgage or student debt to cover. Moreover, younger workers experienced 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 group policies.
However, as mentioned earlier, it can be difficult to sell life insurance, even in the wake of a deadly pandemic. Only 14% of lapsed buyers surveyed by Deloitte (those who once had policies that have since been terminated), as well as only 20% of those who never had mortality coverage, said they were interested in buying life insurance, despite COVID-19 concerns.