The Huge Life Insurance Opportunity in COVID-19: Younger Consumers

For years, insurance sales have been declining, but multiple insurance industry sources say that’s changing.

According to Limra, an insurance industry trade group, just over half of Americans had a life insurance policy in 2020, down from 63% a decade before. However, Northwestern Mutual, the United States’ leading provider of life insurance last year, saw sales increase 15% over April through September compared to the same period last year.

AccuQuote, an online insurance marketplace, has witnessed a 30% increase in policy sales as a result of the epidemic. Founder, president, and CEO Byron Udell compared the phenomenon to panic buying after the 9/11 attacks. He sees customers approaching life insurance in 2022 with the attitude that “I better get it now because I might get Covid and die.”

In addition, Google search traffic for “life insurance” increased 50% between March and May this year compared to the same period last year, according to Fitzgerald. Much of the nation was under shelter-in-place orders at the time, and the virus was still killing thousands of people every day and overloading medical facilities. More than 800,000 Americans have died as a result of Covid-19, and hundreds of thousands of new instances are reported every day.

This life-changing experience has more and more young American families considering life insurance.

According to Limra, an industry research agency, the number of life insurance plans sold increased by 8% in the first half of 2021 compared to the same period a year ago. It’s the highest increase since 1983.

This is helping life insurance businesses like privately held MassMutual, which saw sales increase by more than 20% in the first quarter, and Primerica (PRI), which saw sales increase by 16% in the first three months of the year.

CEO Roger Crandall said in an interview with Yahoo Finance Live that families who would not normally get life insurance due to a restricted budget have made a concerted effort during the recession.

Another shift occurred at the same time: a rise in the number of young individuals purchasing life insurance.

According to MIB Group’s Life Index, applicant activity for life insurance in the United States increased approximately 8% year-over-year in 2020 among those under the age of 44.

“Millennials are actually one of the fastest-growing demographics,” Crandall added. According to Limra, 45 percent of millennials say COVID-19 has made them more likely to get life insurance.

“We believe that’s really encouraging,” Crandall said. “We’ve been substantially spending on technologies to make it easier to obtain insurance coverage, especially going through the health insurance marketplace. … This isn’t just a digitalization of an analog process. We’ve launched a brand-new, fully digital insurance company, and the response has been very positive.”

COVID-19 has convinced nearly a third of customers to be more inclined to get life insurance in the following 12 months, according to the study.

Even after the epidemic has ended, Crandall expects the repercussions of COVID-19 on the life and health insurance market to last for years.

Crandall also believes that requiring extensive medical evaluations before issuing a policy is quickly passing thanks to intelligent automation:

“Although you may need to do that for some big policies and persons with a history of health difficulties, we’re becoming able to employ machine underwriting to get people through the process fast,” he said. “That simply improves the entire purchase process for both customers and agents.”

The life insurance business may be trailing behind other industries in terms of digital transformation, but as more insurers see the financial benefits, the revolution will accelerate. Entrepreneurs who are already ahead of the game are reaping the following benefits:

• AI and data are collaborating to make the business nimbler and more scalable.
• These businesses are taking full advantage of the quantity of data stored on legacy systems and older technology.
• Substantial, untouched target markets — such as younger, new digital clients — can be recruited more easily.
• They can capture more customers in emerging markets that are growing at a faster rate, such as Asian customers who are more willing to make financial decisions online, on mobile devices, or through social media.
• By utilizing data obtained through wearable technology, the firm’s corporate risk profile, as well as the company’s risk with specific policyholders, can be improved.
• They can use new apps and cloud services with greater ease.
• Integrating legacy business lines with various tools and technologies is more seamless.
• They gain a better understanding of their clients, which is essential to boost cross-selling and increase sales across business lines.

The life insurance industry has seen massive growth during the COVID-19 pandemic, as younger people are becoming more and more concerned with leaving a nest egg to their loved ones in case the unthinkable happens. To tap these younger customer segments, who are used to doing almost all their transactions online, insurers need to embrace digital transformation and intelligent automation. That’s where RD Global can help

Contact RD Global Inc today to kick your digital transformation journey into high gear.