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You can add another item to consumers’ pandemic shopping list: life insurance.
The number of life insurance policies sold jumped 11% in the first quarter from the same time a year ago, according to the industry research firm Limra. It’s the biggest gain since 1983, as COVID-related deaths pushed many consumers to buy coverage.
That’s giving a boost to the bottomline of life insurance companies like privately-held MassMutual, which logged a more than 20% rise in first quarter sales and Primerica (PRI), which saw sales rise 16% in the first three months of the year.
In an interview with Yahoo Finance Live, CEO Roger Crandall said families that would typically not buy life insurance because of a tight budget, have made it a priority during the pandemic.
“The interest in life insurance is up. I mean, COVID certainly got people thinking about the need for life insurance and protecting their family,” he said.
For all of 2020, the number of life insurance policies sold rose 2%, the first increase since 2016, but even as the number of policies sold climbed, the average death benefit shrank by 4% to $270,000. Crandall said that implies the industry sold more affordable policies to households with smaller incomes.
That coincided with another change, an uptick in younger people buying life insurance.
Application activity for U.S. life insurance was up nearly 8% year-over-year in 2020 among people under age 44, according to MIB Group’s Life Index.
“We're actually seeing one of the strongest growth segments is millennials,” said Crandall. In fact, 45% of millennials say they are more likely to buy life insurance because of COVID-19, according to Limra.
“We think that's really positive,” said Crandall. “One of the things we've been doing is investing heavily in technology to make it easier to buy life insurance, particularly going through the underwriting process,” he said. “We haven't just digitized an analog process. We've built a brand new, effectively digital insurance company, and the uptake on that accelerated dramatically during the pandemic in 2020.”
Nearly 1/3 of consumers say COVID-19 has made it more likely they will purchase life insurance in the next 12 months.
Even once the pandemic is over, Crandall said the effects of COVID-19 on the life and health insurance industry could linger for years.
Thanks to technology, Crandall said the days of having a medical examiner show up at your home with a scale to start the underwriting process is largely over.
“Although you might have to do that for some large policies and people who've had historical health issues, increasingly, we're able to use machine underwriting to get people through the process very quickly," he said. "That just makes the whole buying process better, both for consumers and for agents.”
Alexis Christoforous is an anchor at Yahoo Finance. Follow her on Twitter @AlexisTVNews.