While overall life insurance sales were stalled in the first half of 2020 due to the pandemic and accompanying shutdown, term and whole life insurance products are expected to rebound in 2021 and beyond. This trend will be aided by the adoption of the Covid-19 vaccine and technological advances that allow for a smoother and more efficient application process. Here’s what some industry experts expect to see in the coming year.
KEY POINTS TO REMEMBER
- The COVID-19 pandemic is likely to increase consumer demand for life insurance products in 2021 and beyond.
- Insurers are now doing more of their business with fewer face-to-face interactions, a trend that may continue.
- Consumers also expect faster turnaround times, leading to more automated and expedited underwriting by insurers.
- Insurance prices seem to have stabilized since the sharp increases at the start of the pandemic.
Continuous growth in demand
“Since the start of the pandemic, we have continued to see an increase in interest in life insurance across the industry as Covid-19 has brought the issue of mortality to the forefront for many,” Salene Hitchcock-Gear, Prudential Individual Life Insurance president, told Investopedia.
As economic conditions slowly improve after the vaccine and consumers “become more confident in their financial outlook, we believe life insurance sales will begin to rebound in 2021 and return to pre-vaccine growth levels. pandemic in 2022,” Maureen Shaughnessy, actuary at LIMRA Insurance Research, predicted in a November 2020 forecast.
Similarly, in a recent Lincoln Financial Group survey, more than a third of consumers said they believed life insurance “is more important to own now due to the pandemic, while a third also stated that they had or planned to purchase new or additional life insurance. as a result of the pandemic,” notes Stafford Thompson, Jr., head of life insurance product management for Lincoln.
Less in-person interaction
The pandemic has also had a major impact on how insurance is sold.
Less than a third of people who have purchased life insurance policies since the pandemic have done so solely in person, according to LIMRA. That compares to 44% who bought life insurance policies in person before the pandemic, a spokeswoman for the organization said.
“Most sales that used to be done in person are now done through a hybrid buying process, usually part online and part with a finance professional,” she says. These hybrid experiences are more popular among younger and middle-aged consumers than older baby boomers, LIMRA found.
According to the LIMRA study, 98% of respondents from financial services companies say their customers increasingly want to shop online and use video engagement tools.
Prudential Financial, for example, says it encourages consumers looking for life insurance to research and buy online, whether they choose to buy entirely digitally or if the sale is made over the phone with the help from a financial professional. To reduce in-person appointments, Prudential dropped its paramedical exam requirements for new life insurance policies with face values of $3 million or less in many cases.
A need for speed
Consistent with going live, applicants also expect faster turnaround times, LIMRA found.
According to the 2020 LIMRA/Life Happens Insurance Barometer study, 50% of consumers say they are more likely to purchase life insurance through automated or simplified underwriting than through traditional underwriting, which takes more time.
Insurers are trying to accommodate them, by various means.
For example, Allianz Life Insurance Co. of North America, which sells fixed index universal life insurance (FIUL), did not switch to automated underwriting, but accelerated its underwriting process, while increasing the policy limit. at $3 million. The accelerated process took off during the pandemic and now affects some 40% of its customers, notes Mike McCarty, who heads Allianz’s annuity and life insurance operations. He says the process currently takes about 10 days.
The direction of rates remains uncertain
Some wonder if the arrival of the Covid-19 vaccine will mean lower political rates, but, like many things with the virus, it’s too early to tell, according to Allianz’s McCarty. In the case of Allianz, if an applicant has an active infection, the underwriting process will be postponed until they recover.
“Covid has forced almost all life insurers to implement temporary changes to their underwriting guidelines and processes. However, simply having the virus does not necessarily impact a candidate’s rates,” says Heather Milligan, head of life underwriting and new business for Lincoln.
Like other insurers, Lincoln will defer underwriting for someone who has or recently had Covid-19. If they are suffering from longer term effects of the disease, this would be taken into account in the underwriting process, just like other medical conditions.
Milligan says vaccination would not be a factor in the underwriting process, while Prudential’s Hitchcock-Gear says his company “continues to monitor ongoing pandemic-related developments, including the wide availability of the vaccine.”
Policygenius CEO Jennifer Fitzgerald sees prices stabilizing in the coming months. While premiums soared at the start of the pandemic, by late fall they were rising to near pre-pandemic levels, she says. For example, rates for a 55-year-old male smoker only increased by eight cents per month from October to November after peaking at $12.56 per month from September to October, Fitzgerald noted in a statement. November data release.
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