COVID-19 is Good News for the Life Insurance Business, Which Could Also Make It the Ultimate Marketing Conundrum for Them

Overview

Quick, name something good that actually came out of COVID-19? Well, if it takes a minute or two, or three, or four… for you to do so, you’re not alone. Maybe you could say that we discovered new ways of working from home that can save us - and companies - a great deal of time and money. Maybe you could point to the growth of services that catered to us as virus-fearful consumers, like the explosive expansion of grocery and food delivery services that occurred during the pandemic. And yes, maybe you could point to how we found new ways to entertain ourselves and our families without leaving the safety - and comfort - of our own homes, with streaming services becoming the primary way of consuming video content and with people discovering how a little platform called Zoom could enable us to not just work together, but to gather safely with families and friends virtually.

Of course, the downsides - death, sickness, economic devastation, etc. - of the global pandemic have far, far outweighed any positives one could possibly list! Ironically though, there’s one industry that one could say benefits more than any other from the sudden onset of a deadly pandemic that has now claimed the lives of over one million Americans. This is the insurance industry. Recent research shows just how people, particularly younger Americans and those for whom COVID-19 took a direct toll on their family and friends, have a greater interest in securing life insurance than ever before.

And so in this article, we will explore just how much COVID-19 has changed people’s attitudes toward and inclination to buy life insurance for themselves and their children. In doing so, we will see how the pandemic is good news - perhaps very good news - for those involved in selling and marketing life insurance, while it also poses an immense - and tricky - marketing challenge for all in the insurance industry.

How COVID Has Changed Americans’ Propensity to Buy Life Insurance

The data research and consulting firm, CivicScience, recently released a report entitled, “Life Insurance Interest On the Rise for These Two Groups.” In it, their research team presented their findings - both from a current survey of American consumers and from a similar one conducted back in 2020 (both of which had over 50,000 responses) - to see trends in how people of various ages, incomes, and parental status looked at life insurance and how their views had changed in the wake of the COVID-19 pandemic. The long and short of their analysis is this: COVID-19 has sparked a new interest in obtaining life insurance among Americans. As the author of their report, CivicScience’s Laurnie Wilson, put it bluntly: “The gist (is)…in the era of the pandemic, life insurance interest has grown.”

Life insurance has been a relatively stable marketplace over the years, with yes, a natural ebb and flow of customers, insureds, and beneficiaries. Basically, the life insurance marketplace consists of three groups: There are people who have life insurance (and are not looking to add more coverage), people who are not interested (or can’t afford it), and finally, people who are looking to add life insurance coverage as a way to protect their family and their financial well-being. As can be seen in Figure 1 (CivicScience - Experience with Life Insurance Among U.S. Adults, 2022 vs. 2020) below, there has been significant movement among those three groups between the 2020 survey (largely conducted prior to the onset of the COVID-19 pandemic) and the current survey (which was conducted between January and May 2022). First, and indeed most importantly, those Americans who

Figure 1: CivicScience - Experience with Life Insurance Among U.S. Adults, 2022 vs. 2020

Source: CivicScience, “Life Insurance Interest On the Rise for These Two Groups,” May 2022

say that they are indeed “actively planning to enroll in a life insurance policy” (meaning that they are either shopping for or plan to be buying life insurance now or in the near future) rose by a full 7% of the population (from 16% in 2020 to 23% today). When your active market base increases by 7% of the general population, THAT is a big deal! Further, look at what happened with the other two groups of consumers. The stable group of Americans - those who have an existing life insurance policy and say that they are not looking to add coverage - actually fell by 4% (from 52% to 48%) - between 2020 and 2022. This means that insurance companies - and their agents - may well find that their rolls of existing policyholders may well be more open to buying more insurance coverage - for themselves and/or for family members - today over what they were a mere two years ago. Finally, those who consider themselves to be outside of the life insurance market - neither holding an existing policy or looking to buy a new life policy - fell from 32% in 2020 to 29% today. Again, this translates into more sales opportunities to consumers who might not have been considered - or considered themselves - to be prime candidates for buying life insurance as late as just two years ago!

And what is driving the new interest among Americans in buying their first life insurance policy and/or adding additional coverage for themselves or their family members? Clearly, the COVID-19 pandemic is the factor making consumers think - and act - more when it comes to life insurance. In examining CivicScience’s findings as to exactly how having had a personal experience with COVID (personally knowing someone who had the coronavirus) affects one’s perspective on life insurance, one can see that having COVID hit you, a family member, or even a colleague or friend makes a profound difference in consumers’ minds regarding the prospect of buying life insurance. As can be seen in Figure 2 (CivicScience - Experience with Life Insurance Among U.S. Adults by COVID-19 Experience) below, consumers who know someone who had COVID are a full 12 points (26%) more likely to be planning on buying life insurance than those who reported not knowing someone who had COVID (14%). Thus, all things being equal, a person who has had personal experience with COVID is a far better prospect for buying life insurance than someone who has not. Further, at the other end of the scale, for those saying that they don’t have life insurance presently and don’t plan to buy any in the future, there is a 19 point difference between those who reported not knowing someone with COVID (43%) versus those who said they did (24%). So, those who say that they don’t know someone who had COVID (and yes, that might be a bit of a stretch to think that 2+ years into the pandemic, someone would actually say that they have not been impacted by COVID!) are far worse prospects for anyone or any company selling life insurance products than those who do acknowledge that COVID has impacted them directly!

Figure 2: CivicScience - Experience with Life Insurance Among U.S. Adults by COVID-19 Experience

Source: CivicScience, “Life Insurance Interest On the Rise for These Two Groups,” May 2022

CivicScience’s research shows that the two traditional drivers - parental status and income - for buying life insurance still hold true today. First, those with children are far more likely to buy life insurance protection than those without. As can be seen in Figures 3 (CivicScience - Experience with Life Insurance Among U.S. Adults by Parental Status) and 4 (CivicScience - Experience with Life Insurance Among U.S. Adults by Child's Age), parents are more likely to be interested (or at least receptive) to buying life insurance, and the younger a parent’s child/children are, the more likely they are to be seeking to add life insurance coverage. Secondly, income is a

Figure 3: CivicScience - Experience with Life Insurance Among U.S. Adults by Parental Status

Source: CivicScience, “Life Insurance Interest On the Rise for These Two Groups,” May 2022

Figure 4: CivicScience - Experience with Life Insurance Among U.S. Adults by Child's Age

Source: CivicScience, “Life Insurance Interest On the Rise for These Two Groups,” May 2022

variable that cuts both ways with consumers. As can be seen in Figure 5 (CivicScience - Experience with Life Insurance Among U.S. Adults by Income and COVID-19 Financial impact), those consumers who have incomes of less than $50,000 annually are both the most and least likely to be looking to (or even open to) adding life insurance coverage to protect their family. And those individuals who make over $100,000 a year - with the best financial position to spend on life insurance - are both the least interested in buying new life insurance policies and most likely to already have existing life insurance coverage in place.

Figure 5: CivicScience - Experience with Life Insurance Among U.S. Adults by Income and COVID-19 Financial impact

Source: CivicScience, “Life Insurance Interest On the Rise for These Two Groups,” May 2022

Finally, Figure 5 also shows that those who feel better off financially in the wake of the COVID-19 pandemic are more likely to be looking to buy life insurance than those who feel otherwise, regardless of their actual income level. Thus, those having a sense of financial well-being will be the best prospects to whom to sell life insurance, as they will be more apt to look to protect their financial standing for their family.

Analysis

COVID has, no doubt, been good for insurance sales. According to the latest statistics compiled by the industry’s trade association, LIMRA, life insurance sales in calendar year 2021 were the best of any year since 1983! In fact, last year, new life insurance premiums were up 20% year-over-year! So, if you’re in the insurance business - or perhaps thinking of entering the field of life insurance sales as a career - what should you make of the fact of the matter is that COVID is good - perhaps very good - for your business?

As a strategic management consultant and professor looking at the marketing aspects of this conundrum, I have to say that this is both an extremely favorable - and extremely dangerous - development as both insurance companies and their individual salespeople look at how to market life insurance policies in the wake of COVID. Yes, consumers today are undoubtedly much more aware of their own mortality due to a million Americans having died from COVID-19 over the past two years. Having had COVID-19 yourself and/or having had just one (or more) mother/father/grandfather/grandmother/spouse/child/close friend/boss/work colleague, etc. having either COVID - or dying from the coronavirus - does make one much more likely to be interested in buying a first life insurance policy or adding additional life insurance coverage. So the operative question then is how - both on a micro (company-level) and a micro (individual salesperson level) basis - should those in the life insurance industry market such financial protection today?

This is a delicate - very delicate - marketing conundrum! No doubt, COVID will be the proverbial “elephant in the room” in terms of how insurance is sold - and bought - not just in the short-term, but perhaps for decades to come. The pandemic brought about a great deal of fear, uncertainty, financial insecurity, and more - all of which help sell the notion of life insurance as a necessity in the minds of consumers. And the “COVID experience” is likely to be a very real, milestone memory for almost all of us, from the oldest (for whom the coronavirus provided especially deadly) to the youngest (who saw their lives and the lives of their parents - and grandparents thrown into turmoil due to the pandemic). As such, the memories of COVID - both in the short and long-terms - are likely to be strong motivators for the “why” people will be both receptive to, and even seek out, life insurance coverage for both themselves and their family members.

The question then is this: How overtly should insurance companies and their agents be as they seek to capitalize on the lingering fears that the COVID experience has stirred-up in us? This will be a fine, fine line to walk, both on the corporate level (in terms of their marketing campaigns, themes, and advertising) and on the individual agent level as well. If a company is too direct in linking its advertising and promotional materials to COVID fears (i.e. with messaging to the effect: “You never know when the next pandemic will strike, are you prepared?”), it could provoke not just public backlash, but perhaps become a PR nightmare - even causing a reputational risk for the insurance carrier. Likewise, in the age in which we live, where almost everyone has a high quality video camera in their pocket, an agent who goes too far in using COVID fears in his or her sales pitch to a potential client, that sales interaction might not offend one consumer, but could “go viral” and in just a matter of hours, be seen by thousands, perhaps hundreds of thousands or more, of potential consumers. And so quite quickly, the actions of just one sales representative in one single sales encounter could cause significant PR damage for an insurance company! No matter how much training, no matter how much messaging, no matter how much reminding is done to reinforce the limits of how far one should go in “selling with COVID,” mistakes will be made as lines are crossed - both on the corporate and individual sales levels; the only question is how bad - and how impactful - these errors, both of intentional and unintentional, will be.

And so in the final analysis, the COVID experience makes for both a very friendly marketing environment, and yet, one that is very treacherous and delicate as well. I would caution both insurance companies and insurance representatives from too directly playing “the COVID card.” Yet, the emotions and memories that the pandemic has placed in all of us are very real. And yes, they will factor into life insurance buying decisions - and favorably so. So, carefully tailored marketing that makes COVID a part of the focus, but not THE focus, of marketing and sales efforts, will be a smart part of the way insurance will be sold for years to come. The challenge will be how to do so tastefully - and effectively - on both the company and individual sales agent levels. And to that I would say good luck - as it will be a delicate, delicate dance to get it right!

About David Wyld

David Wyld is a Professor of Strategic Management at Southeastern Louisiana University in Hammond, Louisiana. He is a management consultant, researcher/writer, publisher, executive educator, and experienced expert witness. You can view all of his work at https://authory.com/DavidWyld.

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