The COVID-19 pandemic continues to impact individuals, businesses, and the overall economy. The economic and social challenges have been disruptive for most of the world and across most industries, including the life insurance industry. Companies have been challenged to find new ways to conduct business and care for their employees, and individuals have had to deal with job loss, sickness, and losing loved ones. While life insurers’ new sales and profitability have been negatively impacted, there is opportunity. Many individuals and businesses have a new view on the importance of life insurance. Individuals now see the value in protecting their financial security, while companies see an increased value in life insurance as a retention and recruitment tool.
Compared to prior years, sales of life insurance fell off sharply in 2020. For the first time in 20 years, the life insurance industry, as a whole, was not profitable.* New sales of all new benefits fell as employers chose not to move coverages during the pandemic. Many opted to “stick it out” instead of going through new enrollments with employees permanently or temporarily laid off, on leave, or working remotely.
While a LIMRA report predicts a potential comeback in 2021, sales are still struggling to get back to pre-pandemic levels as the uncertainty continues in many areas of the country.
Employees are expressing an increased awareness of and appreciation for their employer-sponsored benefits, which typically include life, disability, and supplemental plans. PwC surveyed 6,000 U.S. consumers from May 22 to June 6, 2020. They found that 15% of the survey-takers said they were likely to buy life insurance due to the impact of COVID-19. The study found that 45% of respondents reported financial stress, including job-security concerns, some of which were due to a fear of cuts in benefits.
Another impact of the pandemic is “the great resignation.” A record number of employees are simply saying, “I quit.” As a result, employers are increasingly looking at benefits, such as life insurance, as a way to attract and keep employees. With more employees recognizing the value of life insurance, it’s becoming a vital benefit for employers to offer. More employees, particularly those under 40, are opting in or selecting higher amounts during annual enrollments. This shift in benefit buying behavior has changed how both businesses and individuals think about life insurance and the value it brings.
As the economy recovers and the world returns to a new normal, research suggests that insurers should leverage current benefit buying behaviors — the opportunity to provide financial security to employees while supporting employers in their search for recruiting incentives and employee retention.
*2020 U.S. Workplace Benefits Yearbook, LIMRA