July 9, 2020
The impact of COVID-19 on our health, employment and economy has encouraged many to be more proactive when it comes to their finances. Two-thirds (67%) of Americans say that the pandemic has been a wake-up call for them to reevaluate their finances, according to a new study by Life Happens , a nonprofit dedicated to educating consumers about the importance of life insurance and other related products for sound financial planning.
As the pandemic continues to change work, travel, and social behaviors across the country, families have begin to adjust their spending and financial habits. The study shows changes Americans have implemented include:
- Cutting excess spending - 49%
- Building up savings and emergency funds - 45%
- Focusing on paying down debts - 24%
COVID-19 has caused us to face our own mortality, which is prompting another important change in financial behaviors. People are looking to re-evaluate their life insurance policies. Faisa Stafford, President and CEO of Life Happens, explains that because there is no rhyme or reason to who gets infected, it reminds us that we aren’t invincible. “That is why we start looking for ways to protect ourselves and our loved ones. We use masks and sanitizing wipes. That is also why we are seeing people looking to life insurance as another protection product.” She continues, illustrating the importance of life insurance. “Before the pandemic, close to half (46%) of adults didn’t own life insurance, according to the 2020 Insurance Barometer Study by Life Happens and LIMRA . That translates to millions of families and businesses at financial risk if the worse were to happen. And with many more at risk of losing employer-paid group life insurance because of a potential loss of a job, the time for buying life insurance is now.”
The good news is, post-COVID, life insurance companies are making it easier than ever to get protected. The use of e-signature, no blood or urine tests, and online applications all have made life insurance more accessible to more people. This is a welcome change for many, who have been asking for a more simplified process.
As the process simplifies and people start coming to terms with the reality of living through a pandemic, more are getting protected. Per MIB Group , there was an impressive 5.2% increase in life insurance applications in May 2020, compared to May 2019. Stafford believes that life insurance applications will continue to grow, as indicated by this data, coupled with information from the 2020 Insurance Barometer Study showing simplified underwriting could increase the likeliness to purchase by as much as 50%.
This growth may be especially true among the younger generation. According to Stafford, they are seeing a promising trend among younger adults who are finally recognizing the value of life insurance. The MIB data shows life insurance applications from those under the age of 44 increased even more - a dramatic 7.1% YOY. It seems the realization that we are all susceptible to death and disease is prompting a new generation of people to give life insurance the attention it deserves. And this is even better news when you consider how much less expensive life insurance can be when you purchase it at a younger age.
To help Americans reassess their financial preparedness, Life Happens has free resources and tools, including Life Happens’ Life Insurance Needs Calculator to help evaluate your own life insurance needs.
By Liz Frazier, Contributor
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