The COVID-19 pandemic has raised the awareness of the need for life insurance. A recent LIMRA study reveals 75 million Americans are more likely to buy life insurance than they were before the COVID-19 outbreak. Among Americans who purchased life insurance in the past two years, 61% say they are likely to buy more in the year ahead. Depending on household structure, between 73% and 86% of younger Americans (age 18-44) report the highest rates of likelihood to buy life insurance in the next 12 months.
LIMRA surveyed 3,162 consumers in May 2020, identifying various life stages that encompass all U.S. households. Age, marital status and the presence of minor children living in the home are the underpinnings of the eight market profiles created, and are instrumental in assessing the need for life insurance.
Among those who have a child at home, 65% to 88% own life insurance. Partnered parents over age 45 report the highest ownership rate, at 88%. Younger parents are not far behind, with a 77% ownership rate. One in five older couples with children owns group life insurance only.
Nearly three in 10 (29%) of younger couples without children report that both adults own individual life, compared with 50% of younger couples with children. In households led by older
couples over the age of 45, there is a 10-point difference in ownership of individual life insurance by both adults. Both partners in 34% of older couples without children own individual life coverage, compared with 44% for parents.
How People Buy Life Insurance
Our research included asking consumers about their recent life insurance shopping behaviors. LIMRA assessed how consumers make decisions about life insurance — from recognizing the need for life insurance to shopping, obtaining quotes and making a purchase.
Over the past two years, 29% of Americans reported shopping for life insurance. A total of 24% evaluated at least one quote, and 17% purchased coverage. The 2020 research reflects higher activity rates as compared with similar 2019 and 2017 research — shopping, quoting and purchasing rates reported by consumers in 2020 are up significantly.
Income replacement is the most common reason people give for purchasing life insurance. As consumers move through the stages of life, “income replacement” can take on a different meaning and require additional or different coverage. Younger consumers, particularly couples, cited wealth transfer and ensuring a mortgage payoff as their top specific income replacement priorities. Older consumers cited burial and final expenses as their reasons for buying life insurance.
Among adults under the age of 45, the top reason not to buy is due to a concern over making the wrong choice and being uncertain about the value of insurance for the price. Consumers over 45 years of age cited the same reasons for not buying, leading with expense as the top concern. Challenges in choosing a policy were the second-most-cited reason.
COVID-19 has unearthed the financial implications of a loved one’s untimely death. It may also be a wake-up call for all the healthy people looking to lock in insurance premiums while they are healthy, and to protect their ability to get insurance before they need it.
In every stage of life, there are opportunities to meet American consumers where they are and offer solutions to their planning and insurance needs. This is an opportunity for insurers to continue to progress within their local markets and in collaboration with employers to provide insurance products and services that support employees’ financial wellness today and in the future.