The “COVID - 19 Effect” on Life Insurance Sales—and How It Varies by Life Stage  

9 Jun 2021

The “COVID - 19 Effect” on Life Insurance Sales—and How It Varies by Life Stage

Estimated read time: 4 minutes

As an insurance advisor, you know firsthand that people are more likely to buy life insurance when certain life events happen, or at particular life stages. You also know that the COVID-19 pandemic is driving an increased interest in life insurance—you’re living it in real time.

Recent industry research has indeed confirmed that life insurance sales are up due to this “COVID - 19 Effect.” In addition, it’s given us a better understanding of which consumer market segments are most affected and what’s driving their decision-making. 

Clearly, there is a window of opportunity for advisors right now. The better you understand current consumer perceptions—and how they vary by life stage—the more effectively you can seize the moment and connect with clients. 

How COVID-19 Has Changed Attitudes toward Life Insurance

It’s a given that timeless life-changing events—i.e., getting married, having a child, buying a home, retiring—often drive life insurance purchases, because they make people more aware of the need to protect their loved ones.

The COVID-19 pandemic is the latest life event to affect people this way. Hearing daily death statistics—or perhaps knowing someone who died from the virus—has forced us to confront our mortality. It’s forced household breadwinners to consider the financial hardships their families would face should they die prematurely.

No wonder life insurance sales are on the upswing. For example, in the U.S., the number of life-insurance policies sold increased by 11% from the first quarter of 2020 to the first quarter of 2021, according to the Life Insurance Marketing and Research Association (LIMRA).

In fact, it’s estimated that nearly one in three people are more likely to buy life insurance over the coming year because of COVID-19. While the specific percentages may vary by country and community, our numbers indicate that this trend is global. 

And that’s not all. Newly-released data indicates that, while the number of policies sold has increased, the average death benefit has decreased by 4% (to $270,000)—an intriguing indication that households with smaller incomes are also purchasing policies.

This is good intelligence to keep in mind when meeting with clients and prospects.

How Life Stage Impacts Buying Behavior

Even before the pandemic, studies indicated that younger adults—Millennials and Gen Z consumers—were more likely to buy life insurance than their older Gen X and Baby Boomer counterparts. After all, they’re more likely to be experiencing those key life events—and building a family is a tremendous motivator, as is building a career and investing in a home.

COVID-19 has intensified these findings. Because of its impact, 45% of Millennials now say they are more likely to buy life insurance, compared to 31% of Gen X consumers and 15% of Baby Boomers, largely to replace lost income and facilitate the transfer of wealth.

Why Your Current Client May Be Your Best “New” Client

Interestingly, it also appears that recent life insurance buyers are more likely to purchase more protection because of COVID – 19 —perhaps because they already understand the financial value of life insurance, but have a fresh appreciation of their risk.   

But age and life stage play a role here, too. Among younger policyholders that were surveyed, 7 out of 10 couples—with and without children—say they’re likely to buy more life insurance now, as did virtually 100% of younger single parents.  

Meanwhile, among older policyholders, those with adult children are more likely to buy more life insurance now than their childless counterparts.

Across the board, now is an excellent time to check in with your existing clients, offering policy reviews and learning if their needs have changed. 

What’s Behind the Decision Not to Buy Now?

It’s also important to understand why some consumers are choosing not to buy life insurance, despite the pandemic. Research indicates that:

  • For younger market segments, the primary reason is fear of making the wrong decision. An advisor who takes the time to educate these prospects on life insurance basics, rather than overwhelm them with sophisticated choices, may find greater success here.    
  • In addition, younger consumers—who may be paying off student loans and other debts—frequently object that coverage is too expensive. The solution may be to emphasize the correlation between rising ages and rising rates, as well as the potentially fleeting nature of insurability.

  • Expense is also the leading reason older market segments—who frequently carry mortgages and other debt—don’t buy. For them, advisors may need to develop larger plans that take their living expenses into account, while stressing the importance of securing life insurance before age and health make coverage unaffordable or unattainable…an argument made more persuasive by COVID-19. 

Connect with People Where They Are

Obviously, we don’t know how long the COVID -19 Effect will continue to impact life insurance sales. In areas where vaccines are harder to come by, it is likely to continue longer. Either way, it’s important to seize the moment.

While the COVID - 19 Effect appears universal, consumers at certain life stages have been more deeply influenced than others. Understanding where people are coming from can help you make more meaningful connections—whether educating prospects, matching families to the right products, or servicing clients as they move from one life stage to the next.

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