It appears that people are rushing to complete their estate planning during the pandemic. The number of life insurance applications from people under age 44 increased by more than 7% in 2020, according to the MIB Group, a data sharing service for insurance companies, which tracks life insurance applications.
NBC News’ recent article entitled “Americans flocked to buy life insurance, prepare wills and trusts last year” says that life insurance applications for the age group had been mostly down over the last several years. So, that’s a big increase.
There are a number of factors that contributed to the spike, but experts point to the pandemic and the insurance awareness it brought on.
People are looking at mortality like they’ve never looked at it before, especially younger adults. Those who felt invincible have been shaken by COVID-19. They now realize we are all mortal.
With millions of jobs lost during the early stages of the pandemic, many workers had to leave behind their employer-paid life insurance through their employee health benefits packages. Roughly 54% of Americans had life insurance earlier this year, most of them through their employers.
Overall, insurance applications are up by 4% this year. Northwestern Mutual, the nation’s largest seller of life insurance last year, sold 15% more life insurance policies from April to September, compared to the same time last year, CNBC reported in October.
Other companies also saw their applications grow as people rushed to complete their estate planning during the pandemic.
In estate planning, the number of people drafting wills and trusts is also on the upswing because of the pandemic. A recent LegalZoom survey found that 32% of people ages 18 to 34 drafted wills because of COVID-19, and about 21% of that group did so because they knew someone who had contracted the virus. Unfortunately, people who use generic legal documents may not have the best provisions for their specific needs.
Reference: NBC News (Jan. 1, 2021) “Americans flocked to buy life insurance, prepare wills and trusts last year”