Many top life insurance firms are noticing that consumers are buying more life insurance policies since the COVID-19 epidemic began earlier this year. Some of the firms say that there have been double-digit increases in the number of policies they’ve sold. The increase is likely due to Americans having a greater fear of death amid the uncertainty of the viral outbreak. Consumers are more aware than ever of the financial ramifications associated with one’s death.
Life insurance sales had been going down for many years. Prior to the pandemic, approximately 50 percent of Americans said they had a life insurance policy. This represented a decrease of 63 percent compared to a decade ago.
But, now there’s a resurgence of the purchases of life insurance policies since the coronavirus, with younger adults leading the way, buying greater numbers of policies since the outbreak began in the spring.
According to MIB, an insurance analytics firm, Americans under the age of 44 increased their life insurance applications by 13 percent in the third quarter. The 45 to 59-year old age group applied for insurance by more than 9 percent in the same quarter. The 60-plus age group, however, only showed a 0.4 percent increase in life insurance applications.
Google searches for life insurance increased by 50 percent between March to May.
Since the virus has spread across the U.S., more than eight million Americans have contracted the virus, and at least 218,000 of them have died. Some experts estimate that deaths might double before the end of the year. Americans now want to be more prepared than ever in the face of an increased mortality risk.
Jennifer Fitzgerald, CEO and Co-Founder of Policygenius, said, “It’s forced the idea of financial protection and mortality to the top of mind for consumers in a way very few events have.” Policygenius is an online life insurance marketplace. Fitzgerald said her firm got a lot of business from Google search inquiries, particularly earlier in the pandemic when shelter-in-place orders were in effect.
Another online life insurance vendor, AccuQuote, also saw increases in sales by 30 percent. Experts say consumers are drawn to online brokers because most don’t require a medical exam to approve coverage, especially for policies under $1 million. Many consumers are also trying to avoid face-to-face encounters that increase their risk of exposure to the virus.
Meanwhile, the largest life insurance seller in the U.S., Northwestern Mutual, said it had 15 percent more life insurance policies sold between April and September when compared to the same period last year.
Manoj Upreti, a life insurance analyst for the Aite Group, said that the second half of the year is likely to show more increases in life insurance purchases. “Life insurance is for everyone. There’s nothing only older people need to have,” Upreti said.
As for which type of life insurance Americans are buying more of, term life insurance seems to be getting more sales. Experts say it’s less expensive than whole or universal life. With term life insurance, a consumer purchases the policy for a set number of years, usually 10 to 30 years, rather than buy a permanent policy.
Valmark Financial Group CEO, Larry Rybka, said that term insurance is all the majority of consumers need. “They want to take care of their kids, pay off their mortgage, and they only need the coverage for a period of time,” said Rybka.
When it comes to approving a life insurance claim due to a COVID-19 death, a firm can’t deny the claim. However, many firms are restricting their underwriting rules for certain groups if they’re at an increased risk of dying from the coronavirus.
Byron Udell, Accuquote’s CEO, said: “Those that are over 60, and especially over 70, have been affected in terms of their ability to buy anything if they are impaired with heart and lung, diabetes, obesity, etc.”