As the pandemic continues to spread across the globe, Americans remain concerned about their financial situation and the economy, while at the same time expressing confidence in insurance companies and financial professionals.
Since 2008, LIMRA has asked consumers for their opinion about the U.S. economy. In March, May, July and October of 2020, LIMRA expanded this research to include the personal and financial impacts of COVID-19. In our October study, consumers expressed increased sensitivity to the need for life insurance as a result of the pandemic. In addition, a record number of Americans (35%) said they have “extreme” or “quite a bit” of confidence in insurance companies. Confidence in financial professionals — insurance agents/brokers and financial advisors — was shown by 37% of those surveyed, and that’s the highest percentage we’ve seen since LIMRA started tracking this metric in 2008.
If there is any benefit to the pandemic, it has made more people aware of the need for life insurance. We are hopeful they will follow through and get the coverage they need to protect their families. The reality is — even before the pandemic — not enough people had the life insurance coverage they needed. Nearly half of Americans (46%) are uninsured, and many more (33%) say they are underinsured, according to LIMRA’s 2020 Insurance Barometer Study.
This is troublesome because we know people are living paycheck to paycheck. According to our research, one in four American households have less than three months of emergency savings, and one in three Americans say their families would face financial hardship within a month if the primary wage earner died.
On the positive side, LIMRA research shows consumers are more aware of their need for life insurance.
» Nearly three in five consumers express a heightened need for life insurance.
» Half of employees view life insurance offered at work as more valuable to them now as compared with before the pandemic, and two-thirds say they are paying more attention to the benefits their employer offers and the coverages provided.
» 29% of consumers say they are more likely to buy life insurance in the next 12 months because of COVID-19. This represents roughly 75 million Americans.
» The number of individual life insurance policies sold increased in July (12%), August (8%) and September (13%) 2020 compared with the same months in 2019.
Like most industries, social distancing measures have created challenges for the life insurance industry. The most common way people want to buy life insurance is by working with an agent or advisor. The way agents and advisors engage with their clients and prospects had to change due to social distancing.
LIMRA finds that the role of financial professionals in the sale of life insurance products has not diminished and that “in person” really means “with a person’s help.” LIMRA and Boston Consulting Group recently collaborated to survey Americans who shopped for life insurance during the pandemic. For most of these shoppers, a conversation with a financial professional was still central to the life insurance purchase process. In fact, since the pandemic began, a big part of the value that insurers are gaining from technology has come from the “assist” it is giving to financial professionals.
Our research shows 84% of agents and advisors changed the way they communicate with their clients to comply with social distancing recommendations. Prior LIMRA research indicates that advisors had already begun to leverage tools such as videoconference calls, email and other digital tools to stay in touch with their clients. These tools are invaluable at a time when face-to-face meetings are not an option.
From the life insurance company perspective, we know that carriers have taken steps to make it easier for all consumers to apply for a policy during the COVID-19 pandemic. More than a quarter of U.S. life insurers have expanded their automated underwriting practices and postponed or waived paramedical requirements.
Because of social distancing measures, some life insurers also are accepting electronic health records, and are allowing historical exam and lab data in place of an exam. Our research shows the pandemic accelerated adoption of automated underwriting.
The pandemic has provided Americans with a greater understanding of how important life insurance is. Those with life insurance will have peace of mind knowing that their loved ones will be taken care of financially should they get sick and die.