Pandemic's Impact on Life Insurance: A Surge in Sales and a Shift in Consumer Preferences

The Pandemic's Role in Life Insurance Uptake

The COVID-19 pandemic has significantly influenced the life insurance industry, with a notable increase in sales and a shift in consumer demographics. According to the Centers for Disease Control and Prevention (CDC), life expectancy in the United States dropped by 1.5 years from 2019 to 2020, marking the largest one-year decline since World War II. This grim statistic, coupled with the financial instability brought on by the pandemic, has prompted many to seek life insurance as a means of safeguarding their loved ones.

Younger Generations Lead the Charge

A survey by Life Happens and LIMRA revealed that 31 percent of consumers are more inclined to purchase life insurance due to the pandemic. This trend is particularly pronounced among younger demographics, with 45 percent of millennials expressing increased interest. This shift can be attributed to younger individuals having more dependents and higher mortgage debt, necessitating financial protection in the event of their untimely demise. Additionally, younger workers experienced higher unemployment rates during the pandemic, leading them to seek individual coverage to compensate for the loss of employer-sponsored policies.

Digital Transformation in the Insurance Industry

The pandemic has accelerated the digital transformation of the insurance industry. Many insurers have temporarily waived in-person medical exams and streamlined the buying process through simplified underwriting. Companies with robust digital capabilities have seen a 30 to 50 percent increase in online life insurance sales since January 2020. This shift towards digital sales aligns with consumer preferences, as interest in agent-driven sales has decreased, with only 41 percent of consumers preferring in-person purchases in 2020, down from 64 percent in 2011.

For those considering life insurance, it's advisable to explore digital platforms for a streamlined and efficient purchasing process. Additionally, understanding the true cost of life insurance can help dispel common misconceptions, as LIMRA found that many overestimate the expense. For instance, 44 percent of Millennials believed term life insurance costs more than $1,000 annually, while the actual cost for a healthy 30-year-old is closer to $160 for a $250,000 level term policy.