Why Are More Americans Buying Life Insurance?
Over the past couple decades, fewer Americans have purchased life insurance directly. Many have depended on their employer for coverage or decided to go without, assuming the costs were too expensive. Yet attitudes have changed over the past year. As a result of the COVID-19 pandemic, more consumers are purchasing life insurance for themselves.
Changing Life Insurance Trends
At the start of 2020, slightly more than half of all Americans had a life insurance policy, down from 63 percent 10 years before, according to insurance industry group LIMRA. As the pandemic unfolded, Google searches for “life insurance” surged in the early months, increasing 50 percent from the same period a year before.
Applications from potential policyholders ages 44 and under increased seven percent compared to the previous year. LIMRA further found that 36 percent of surveyed Americans intended to purchase coverage over the next 12 months.
In support of these findings, Northwestern Mutual experienced a 15 percent year-over-year increase in life insurance policies, while MassMutual’s Haven Life Insurance experienced a 34 percent jump.
Who’s Taking Out Life Insurance?
Younger consumers – those under 44 – are behind this trend. This demographic is responsible for a 13 percent increase in life insurance applications for the third quarter of 2020, based on data from insurance analytics company MIB.
Further supporting these findings, NerdWallet found that Millennials were more likely than older generations to take out life insurance during the pandemic. They contributed to over 40 percent of the increase, compared to 30 percent from Gen X consumers and five percent from Baby Boomers.
According to LIMRA, approximately 45 percent of Millennials surveyed were interested in taking out life insurance over the next year, compared to 31 percent of Gen Xers and 15 percent of Baby Boomers.
Types of Life Insurance Policies
During the pandemic, consumers have primarily been purchasing term life insurance for its set deadline and affordability. In comparison, universal or whole life both use a permanent format and have higher premiums reflecting an unending term.
Why More Consumers Are Purchasing Life Insurance
A few key factors are behind the uptick in life insurance policy applications:
- Younger consumers are now thinking about their future and mortality, which might involve a growing family or planning a funeral.
- NerdWallet found that some consumers were taking a what-if approach in relation to a potential COVID-19 diagnosis.
- During the first few months of the pandemic, 22 million jobs disappeared, eliminating both employer-sponsored health and life insurance plans. As individuals recovered, they made the decision to purchase life insurance for themselves.
- Based on data from NerdWallet, more parents made the decision to purchase or increase their coverage, compared to Americans without children.
- Millennials are becoming more knowledgeable about life insurance costs. Previously, many dismissed it as too expensive but as they do more research, the cost for a term life insurance policy starts to look more budget-friendly.
Are you considering a life insurance policy? Start your search with Ion Insurance. For more information, contact us today.