Over the past 18 months, the COVID-19 pandemic changed nearly everything in our lives. And although the vaccine has offered hope that we will be able to return to some level of normalcy, the Delta variant has put the timeline of that return in question as infection levels are starting to escalate again.
The pandemic has prompted many of us to reevaluate our physical and financial health. Related to that, LIMRA research finds the pandemic has heightened Americans’ awareness of the need for life insurance. According to the 2021 Insurance Barometer Study conducted by LIMRA and Life Happens, 31% of Americans say the pandemic has made them more likely to buy life insurance within the next 12 months.
However, life insurance ownership has continued to decline in this country. Today, slightly more than half of American adults (52%) have life insurance coverage, down 11 percentage points from 2011. Many more recognize the coverage they have isn’t enough to protect their loved ones’ financial security. In fact, 102 million uninsured and underinsured Americans say they need (or need more) life insurance coverage.
This moment is an opportunity for our industry to fulfill our mission and help millions of families protect their financial future. To be successful, we need to understand the reasons so many put off buying the life insurance that they know they need. Those reasons are 1) it’s too expensive, 2) I have other financial priorities, and 3) I don’t know how much or what to buy. All of these reveal a need for greater education. Here’s where we can help.
Consumers believe life insurance is too expensive, but the research shows that’s because they don’t actually know what it costs. When we asked, half of Americans overestimate the cost of life insurance by threefold. The reality is that a healthy 45-year-old (or younger) can properly insure their family with $500,000 protection for less than $1.50 per day.
Consumers say they have other financial priorities like saving for retirement, paying down debt and paying monthly bills. This demonstrates their limited understanding of the many ways life insurance can support overall financial security. Life insurance can create replacement income to keep families from worrying about their day-to-day bills. It can pay off mortgage or other existing debt, fund educational goals or pay down student loans, and supplement retirement income. Our research shows it also provides peace of mind to families, knowing that loved ones will be protected should the unexpected occur.
Finally, consumers say they don’t know how much or what to buy. This is where our industry must rely on the 330,000 full-time life-licensed agents and advisors to engage and educate their clients and prospects about life insurance. Although there is so much information available online, consumers tell us they worry whether what they are accessing is credible. Our research suggests that most consumers (82%) find the information they get from a financial professional is the most helpful — likely because it is personalized, addressing their specific circumstances.
Yet only 44% of Americans currently work with a financial professional. According to our research, 25% of Americans — equating to 65 million people — are looking for a financial professional. Many of these individuals are living with a life insurance coverage gap. It is incumbent upon our industry to help them close that gap.
The COVID-19 pandemic has been a massive challenge for Americans and everyone around the world. In times like this, we learn and understand our true vulnerabilities. This is what prompted LL Global to come together with seven other trade associations to launch the Help Protect Our Families campaign, an industrywide effort to raise awareness about the importance of life insurance and help insurance carriers, distributors and agents/advisors address the growing coverage gap in the U.S.
September is Life Insurance Awareness Month. The pandemic has significantly increased consumers’ appetite to take the steps to ensure they are properly protected with life insurance. All of us in the industry have both an opportunity and a responsibility to help our fellow Americans get the life insurance coverage they need to protect their loved ones.