February 12, 2021
Businesses Shed Jobs Amid Slow Vaccine Rollout
Consumer Prices Remain Flat
Surprising Pandemic Shopping
We can now add another item to the list of things in high demand since the start of the pandemic. Along with toilet paper, baking ingredients, fitness equipment, loungewear, home décor, and laptops, people have been purchasing more life insurance.
The Wall Street Journal (WSJ) reported this month that applications for life insurance policies surged in 2020 in the U.S., with the industry experiencing the highest year-over-year annual growth rate since 2001, according to MIB Group Inc., an insurance industry organization that tracks applications. Over the past ten years, the percentage of Americans with life insurance has been declining, with just over half of American adults reporting having a life insurance policy in 2020, down from 63% a decade earlier, according to the Life Insurance Marketing and Research Association. In this pandemic, many people who may have put off buying life insurance decided it was time to get this piece of their financial house in order, particularly for those under age 45. Applications were up 7.9% in that age group, compared with a 3.8% increase for consumers 45 to 59 years old, and a small decline for those 60 and older. Life insurance offers protection if a primary breadwinner passes away: it can fill in the immediate gap in income for a family, help pay off a mortgage, and cover other expenses.
Experts say concerns about job security and an uncertain economy drove individuals to seek out a financial stop gap to protect their families. Many employers offer group life insurance as part of their employee benefits package, but the pandemic brought business closures and layoffs. The unemployment rate jumped to 14.8% in April 2020 from 3.5% in February 2020. Individuals who were furloughed or lost their jobs were losing their life insurance benefits and looking for ways to replace it. Additionally, the amount of life insurance offered through an employer typically isn’t enough for employees with a non-working spouse, a mortgage, a family, or special needs dependents, so workers often augment their employee insurance with supplemental coverage. In addition to the pandemic’s impact on the economy and employment figures, the death toll from COVID seems to have had an impact on Americans’ sense of mortality and desire to provide for loved ones should something unexpected happen.
The WSJ states that many large insurers reported record sales last year. New York Life Insurance Co. realized its best December ever for the 175-year-old company, with double-digit percentage increases in both the number of life insurance policies sold and new sales premium. New sales premium topped $1 billion at Northwestern Mutual Life Insurance Co. for the first time, nearly an 8% increase over 2019.
Financial security has become a priority for many Americans over the past year. Some life insurance companies have adjusted their practices to help individuals whose income has been affected due to layoffs or furloughs as a result of the pandemic, instituting grace periods for payment of premiums or making other accommodations to allow policyholders to retain coverage. Others have revised their medical exam requirements to help more individuals purchase insurance policies in lieu of stay-at-home orders, with some waiving the in-person medical exam. Our advisors recommend that anyone who provides financial support to a dependent have enough life insurance to replace that support for as long as it’s needed. Married couples — even those without kids — can use life insurance to ensure that each spouse can maintain their standard of living if the other spouse passes away. If you have any questions about your life insurance coverage or the type of policy that may be right for your circumstances, please do not hesitate to call our office to speak with one of our advisors.