Young Americans Rushed to Buy Life Insurance During the Pandemic & Now Over 20% Regret It

To date, the COVID-19 pandemic has taken over 3.65 million lives worldwide, including over 595,000 in the United States.

Such monumental loss of life has forced many to weigh their own mortality, and this has created a flash flood in the life insurance industry.

Google Search traffic for “life insurance” spiked 50% between March and May of 2020 compared to the same period in 2019. Northwestern Mutual, one of the country’s largest life insurance companies, had a 15% year-over-year bump in the number of policies it sold between April and September of 2020.

Now with the pandemic drawing to a close, was the rush to buy life insurance truly worth the price or was it a panic buy?

Expertise.com surveyed 1,000 adult Americans and found that while younger consumers were the driving force behind increased life insurance sales during the pandemic, many now regret their decision to purchase coverage.

Spurred on by the Pandemic, Young Americans Drove the Life Insurance Surge

The first question of this survey asked 1,000 adult Americans if they owned a life insurance policy before the start of the COVID-19 pandemic (March 2020).

64% did, while 36% did not. Amongst the 36% that did not, here’s how the age breakdown looked:

  • 15% between 18 and 24
  • 27% between 25 and 34
  • 29% between 35 and 44
  • 16% between 45 and 54
  • 13% over 54

So while a combined 71% were between the ages of 18 and 44, just 29% that did not own a life insurance policy were 45 or older.

The vast majority of Americans who did not own a life insurance policy pre-pandemic were younger Americans. A few questions later, we then asked this group if they have bought a policy since the pandemic began.

25% of all Americans jumped to buy a life insurance policy as a result of the pandemic. In fact, 64% from this cohort cited “the coronavirus pandemic and fears over contracting COVID-19” as the main reason they purchased a policy.

And while younger Americans hadn’t owned life insurance prior to the pandemic, our data showed the script was flipped once the pandemic began. Amongst the 25% that bought life insurance after the pandemic started, the age breakdown looked like this:

  • 21% between 18 and 24
  • 32% between 25 and 34
  • 26% between 35 and 44
  • 16% between 45 and 54
  • 6% over 54

Within this newer group of life insurance policy holders, a combined 79% were between the ages of 18 and 44, while just 22% (rounded) were 45 or older.

Tim DeMars, a Consulting Actuary at Lewis & Ellis, wrote the following on this trend:

“It seems that the need for a solid life insurance policy is finally sinking in for the demographics underwriters have long been trying to crack: millennials and Generation Z. MIB data shows that applications among people under the age of 44 were up nearly 13% on an annual basis in the third quarter [in 2020].”

Fast forward to today however and many of these younger Americans now regret their life insurance panic purchase.

At Least 21% Now Regret Their Decision to Purchase Life Insurance During the Pandemic

When we asked those consumers who purchased life insurance as a result of the COVID-19 pandemic if they now regret their decision, here’s what we found:

With at least 21% now regretting their decision and another 13% who opted not to answer the question, buyer’s remorse is plentiful when it comes to the pandemic purchasing of life insurance.

Broken down by age, a combined 74% of respondents between the ages of 18 and 44 regret buying life insurance during the coronavirus pandemic while just 26% over the age of 45 shared the same sentiment.

We then followed up with the 21% who regretted their life insurance purchase to ask if they will cancel their policy now that the pandemic appears to be winding down. 9% have already canceled it, 16% indicated they will cancel it eventually, 26% were not sure either way, 41% will not, and 9% opted not to say.

The data from this series of questions shows it was mainly younger Americans who catalyzed the red-hot life insurance market we have witnessed during the COVID-19 pandemic. The data also shows many of these pandemic-induced, younger policy holders may have jumped the gun on buying life insurance before fully assessing the situation.

The next series of questions looked into how COVID-19 has impacted the life insurance landscape.

Having COVID-19 Raised Life Insurance Prices, Made Approval Difficult

Life insurance companies are running businesses, and as a result, they ideally want to insure the healthiest, lowest-risk people. For a consumer, having COVID-19 made it hard to fit that bill.

Take this from CNBC:

“Life insurers can’t deny insurance claims due to Covid-19, experts said, but many firms have restricted underwriting for some groups who are at greater risk of death if they contract the virus. Some insurers have raised premiums for new buyers and many that haven’t likely will in the future, especially for longer-term insurance.”

Amongst our poll participants who purchased a life insurance policy after the pandemic started, 29% contracted the COVID-19 virus and were aware of it before buying their life insurance policy.

These respondents were asked if having COVID-19 impacted their life insurance experience.

Whether it was raised prices or having difficulty finding a willing insurer, a positive COVID-19 test made the life insurance purchasing process difficult for the majority of applicable consumers.

Not only did the coronavirus pandemic have an impact on life insurance pricing and approval chances, but the survey also showed COVID-19 may change the way people shop for life insurance.

Consumers Now Getting Life Insurance Online, Bypassing In-Person Exams

We live in an ever-increasing digital world and when the COVID-19 pandemic kept us sheltered at home, the digitization process only picked up pace. This is true even for a traditional, face-to-face industry like insurance.

Take this statistic from 2018 for example: 29% of all consumers said they would purchase life insurance online.

Now, look at what our survey found:

In a massive reversal, 64% of Americans who bought a life insurance policy during the pandemic bought their policy online, while 21% still went the in-person route, and 14% opted not to say.

If online life insurance is proven to be reliable and secure as time goes on, expect to see this trend increase even further as young, tech-savvy consumers progress to the age of a common life insurance customer.

Additionally, it appears the COVID-19 pandemic is bucking another traditional life insurance experience: in-person medical exams.

Amy Danise of Forbes wrote the following:

It’s also a prime time to make an [life insurance] application that won’t require a medical exam. In the past, buying a no-exam policy usually meant paying more because the insurer had less information on you to assess their “risk” in selling you a policy. ‘The labs, doctors’ visits, documentation and in-person meetings made the whole experience lengthy and cumbersome,’ says [Brooks] Tingle of John Hancock. ‘The pandemic made all those steps impractical, if not impossible.’”

Here’s what data from the survey showed:

More than half (53%) of consumers who bought a life insurance policy during the pandemic did not have to take an in-person medical exam, while just one-third of respondents did.

From bringing in a younger generation of buyers to taking the industry online, the COVID-19 pandemic has had a significant impact on the life insurance space and it’s reasonable to think many of these changes will be permanent.

Methodology

All data found within this report is based on a survey commissioned by Expertise.com and conducted online by survey platform Pollfish. In total, 1,000 adult Americans were surveyed. The appropriate respondents were found via Pollfish’s age filtering feature. This survey was conducted on June 1, 2021. All respondents were asked to answer all questions truthfully and to the best of their abilities.

Full Survey Results

(To see the survey data in an Excel file, which includes extensive demographic data, please email me at [email protected])

1. Before the start of the coronavirus pandemic (March 2020), did you already own a life insurance policy?

  • 64% of respondents answered “yes”
  • 36% of respondents answered “no”

2. (Asked only to those who answered “yes” to Q1) As a result of the coronavirus pandemic experience, do you think you will ever cancel your life insurance policy?

  • 7% of respondents answered “yes”
  • 87% of respondents answered “no”
  • 6% of respondents answered “I’d rather not say.”

3. (Asked only to those who answered “yes” to Q1) As a result of the coronavirus pandemic experience, did you either expand your current life insurance coverage or buy an additional life insurance policy?

  • 15% of respondents answered “Yes, I expanded my current coverage.”
  • 9% of respondents answered “Yes, I bought an additional life insurance policy.”
  • 27% of respondents answered “Not yet, but I am considering it.”
  • 46% of respondents answered “No, and I’m not considering it.”
  • 3% of respondents answered “I’d rather not say.”

4. (Asked only to those who answered “no” to Q1) As a result of the coronavirus pandemic experience, did you buy a life insurance policy during the pandemic?”

  • 25% of respondents answered “yes”
  • 75% of respondents answered “no”

5. (Asked only to those who answered “no” to Q1 & “yes” to Q4) Was the coronavirus pandemic, and fears over contracting COVID-19, the main reason you bought life insurance?

  • 64% of respondents answered “yes”
  • 21% of respondents answered “no”
  • 14% of respondents answered “Not sure/I’d rather not say.”

6. (Asked only to those who answered “no” to Q1 & “yes” to Q4) Now that the coronavirus pandemic appears to be nearly over, do you regret buying life insurance during the pandemic?

  • 21% of respondents answered “yes”
  • 66% of respondents answered “no”
  • 13% of respondents answered “Not sure/I’d rather not say.”

7. (Asked only to those who answered “no” to Q1 & “yes” to Q4) Now that the coronavirus pandemic appears to be nearly over, do you think you will cancel your life insurance policy?

  • 9% of respondents answered “I already cancelled it.”
  • 16% of respondents answered “Yes, eventually.”
  • 26% of respondents answered “Not sure yet either way.”
  • 41% of respondents answered “No, I like having it.”
  • 9% of respondents answered “I’d rather not say.”

8. (Asked only to those who answered “no” to Q1 & “yes” to Q4) How did you buy your life insurance policy?

  • 64% of respondents answered “online”
  • 21% of respondents answered “in-person”
  • 14% of respondents answered “I’d rather not say.”

9. (Asked only to those who answered “no” to Q1 & “yes” to Q4) Did you buy whole or term life insurance?

  • 41% of respondents answered “whole”
  • 42% of respondents answered “term”
  • 17% of respondents answered “Not sure/I’d rather not say.”

10. (Asked only to those who answered “no” to Q1 & “yes” to Q4) When buying your life insurance policy, did you have to take an in-person medical exam?

  • 33% of respondents answered “yes”
  • 53% of respondents answered “no”
  • 13% of respondents answered “I’d rather not say.”

11. (Asked only to those who answered “no” to Q1 & “yes” to Q4) Before buying your life insurance policy, did you knowingly contract COVID-19?

  • 29% of respondents answered “yes”
  • 71% of respondents answered “no”

12. (Asked only to those who answered “no” to Q1, “yes” to Q4, & “yes” to Q11) Did having COVID-19 have an impact on your life insurance shopping experience?

  • 27% of respondents answered “Yes, it made it hard to find an insurer willing to accept my application.”
  • 38% of respondents answered “Yes, it raised my prices.”
  • 19% of respondents answered “no”
  • 15% of respondents answered “Not sure/I’d rather not say.”