President and CEO, LIMRA, LOMA, and LL Global, Inc.
This month marks the one-year anniversary of COVID-19 being declared a pandemic by the World Health Organization.
The crisis has brought physical, emotional, and economic distress to so many. More than 29 million Americans have been infected with COVID-19 and more than 530,000 have died as a result in the United States alone. While we all expect a much brighter future as vaccinations become more widespread, none of us will forget the damage and destruction this virus has caused.
As a not-for-profit trade association, LIMRA studies consumers’ attitudes, preferences, and behaviors regarding life insurance and other financial products. One important insight we learned is that many American families were in a difficult financial position before the pandemic began.
By the numbers
In 2020, 42 percent of households said they would face financial hardship within six months if the primary wage earner were to die prematurely. For 25 percent of households, financial hardship would set in within one month. I suspect these numbers are even worse today given the high unemployment levels experienced throughout the pandemic.
We also know Americans’ awareness of the need for life insurance is greater today than it has been in years. According to LIMRA research, 31 percent of adults say they are more likely to purchase life insurance in the near future as a result of the pandemic, and 34 percent of people who already own insurance say they are more likely to purchase more coverage in response to COVID-19.
Overall, our research estimates that 60 million American households are uninsured or underinsured, without enough to fully cover their needs. As an industry, our mission is to help consumers achieve a level of financial peace of mind that comes with knowing their loved ones are protected. Ultimately, it is up to every American to take action.
Periodically, we investigate why Americans don’t purchase the amount of life insurance their families’ need. The answers have been consistent in each study we have done.
First, consumers say they don’t take action because they think insurance is too expensive. Yet that same research shows that half of consumers overestimate the cost of life insurance by as much as three times the actual cost. 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/day.
Second, consumers are also intimidated by the process — they think it’s too complicated and takes too long. However, advances in technology have streamlined the underwriting and application processes, making it easier to apply and quicker to be approved for life insurance. In fact, today, more companies are approving insurance via automated underwriting than ever before with greater reliance on background checks and less reliance on paramedical exams.
Third, many consumers say they just don’t know where to start. There is so much information available online and consumers tell us they worry whether they are accessing credible information. Our research suggests that most consumers (82 percent) find the information they get from a financial professional is the most helpful — likely because it is personalized, addressing their specific circumstances. So, our best guidance is to find three financial professionals in your local community and interview each one to see with whom you would be most comfortable. For most people, having someone on their side to navigate this process with is worth the additional expense.
The COVID-19 pandemic has been a massive challenge for Americans and for all people across the world. In environments like this, we learn and understand our true vulnerabilities. I encourage all of you to make sure you have adequate life insurance coverage to protect your loved ones.
Now is the time to take action.