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How the Pandemic Is Driving the Insurance Market: MDRT

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What You Need to Know

  • Amid the ongoing pandemic, Americans have significantly changed their approach to insurance and preparing for the worst.
  • Among respondents who have acquired new insurance policies since March 2020, 42% cited the pandemic as a factor in their decision.
  • Most participants underestimated the chances they will eventually need long-term care.

With the pandemic showing no signs of abating, a new study from MDRT, an association of life insurance and financial services professionals, finds that American consumers have significantly changed their approach to insurance and preparing for the worst.

Among study participants who have acquired new insurance policies since March 2020, 42% cited the pandemic as a factor in their decision, higher than all other options. And 51% of those participants said it was the primary factor in their decision.

Respondents reported other reasons for acquiring new policies, including wanting to provide for family, a major life event and new personal concerns about potential future disability or long-term care needs.

Among study participants with a financial advisor, 55% said the pandemic was their top reason for acquiring a new policy, 43% cited marriage, divorce or a new child, 39% said they wanted to provide for family after their death and 29% had new concerns about personal disability or long-term care.

Among those without an advisor, 39% said their main reason for acquiring new coverage was the pandemic, 34% said wanting to provide for their family after their death, 21% cited new personal disability or long-term care concerns and 16% said marriage, divorce or a new child.

G&S Business Communications fielded the online survey on July 23 among a representative U.S. sample of 1,051 adults. According to MDRT, the poll was conducted before the updated guidelines on mask-wearing for vaccinated individuals were announced by the Centers for Disease Control and Prevention. It was also conducted before the before the Department of Health and Human Services announced that long COVID may qualify as a disability under the Americans with Disabilities Act.

Growing More Anxious

Fifty-four percent of participants said the pandemic has made them more anxious about dying early, becoming disabled or needing long-term care, including 21% who said the pandemic has made them much more anxious. 

Sixty-one percent of those with at-home dependents expressed increased anxiety about dying early, becoming disabled or needing long-term care, compared with 50% without at-home dependents.

Thirty-eight percent reported that the pandemic had not made them more anxious about the possibility of early death, disability or needing long-term care. Eight percent purported to have become less anxious.

Underestimating Need

As so-called long COVID becomes a growing effect of the pandemic, 69% of survey participants underestimated the chances of a 20-year-old acquiring a long-term disability before retirement. Only 20% correctly responded that a quarter of today’s 20-year-olds will acquire a long-term disability before retirement.

Similarly, two-thirds of respondents underestimated the chances of a 65-year-old needing long-term care before death. Only 21% said 7 in 10 of today’s 65-year-olds will need long-term care.

According to the survey, Americans with financial advisors are no more informed than Americans without advisors.

Seventy-five percent of respondents with financial advisors, 69% without an advisor and 60% of those who once had an advisor underestimated the chances of a 20-year-old becoming disabled. None of these differences are statistically significant, MDRT said.

The survey found similar statistically insignificant underestimates by these three groups of the chances of a 65-year-old needing long-term care.

MDRT noted that the survey was fielded before the U.S. Department of Health and Human Services announced that Long COVID may qualify as a disability under the Americans with Disabilities Act.

Motivated to Acquire or Maintain Policies

Thirty-one percent of respondents said the pandemic has motivated them to acquire or maintain life, disability and long-term care insurance. This includes 41% with at-home dependents and 26% without them.

One in 3 consumers with advisors, without advisors and those who previously had one said the pandemic made them feel more driven to acquire or maintain coverage.

Fourteen percent said the pandemic had made them less motivated to acquire or maintain coverage, while 55% said it had not changed their outlook.

At the same time, 24% of respondents who formerly had advisors said the pandemic has made them feel less driven to acquire or maintain coverage, compared with 10% who have advisors and 12% who do not.

Adding a New Policy

Thirty-six percent of respondents who have insurance said they acquired at least one new policy since March 2020, including:

  • New life insurance policy: 26% with at-home dependents, 10% without them.
  • New long-term disability policy: 12% with at-home dependents, 5% without.
  • New long-term care insurance policy: 11% with at-home dependents, 3% without.
  • New health insurance policy: 35% with at-home dependents, 20% without.

MDRT said these findings may reflect the chaotic employment situation in 2020 more than proactive financial planning.