COVID-19’s Impact on Employees’ Insurance Preferences

BY DAVID BOTTOMS, REBC, RHU, CLU, CHFC
SENIOR VICE PRESIDENT, BENEFITS

Published: March 2021 Cobb Business Journal

For decades, life insurance sales have been dwindling to the point that, according to a 2020 Limra survey, just over half of American adults reported having a life insurance policy down from 63% in its 2010 survey.  Early indications are that COVID-19 may be reversing the tide.

Between March and May of 2020, Google search traffic for “life insurance” jumped 50% and, since April 2020, many life insurance companies have reported significantly increased year-over-year policy purchases with the greatest increase in purchases occurring among younger policyholders.

The cause of this reversal of interest in life insurance coverage is somewhat easy to see given that COVID-19 has heightened our collective awareness of human vulnerability and caused many to consider anew the financial consequences that their untimely demise could have on those they care about.

For employers, the newfound interest in life insurance provides an opportunity for the strategic calibration of benefit plans to meet employee’s needs.  Not only is life insurance coverage typically one of the more inexpensive benefits an employer can provide, an employer-paid life insurance benefit can be provided on a blanket basis with no medical questions for employees. 

Furthermore, voluntary life insurance offered in an employer setting can provide employees with guarantee issue coverage (i.e., no medical questions), low term life insurance rates, the convenience of payroll deduction, and portability provisions such that the employee can take the coverage with them at group rates when or if they leave the employer.  In other words, the provision of life insurance coverage on a voluntary basis costs employers nothing, while providing great value to employees.

But life insurance is not the only employee benefit seeing a resurgence of interest and enrollment as COVID-19 has heightened employees’ general awareness of the importance of insurance and, as a result, there is an increased focus on the intricacies of medical insurance coverage and heightened demand for supplemental benefit offerings in an employer setting, including but not limited to disability protection, critical illness insurance, hospitalization coverage, etc.

The prevalence of online enrollment methodologies can make the communication and enrollment of group insurance plans effective, efficient, and socially distant.  As such, there is little reason for employers not to reexamine their benefit offerings to ensure that they are providing employees with ample opportunity to secure the coverage that they need. 

Sadly, the pre-COVID-19 air of invincibility that led many people to go without health coverage, delay purchases of life insurance, and/or decide that they did not need disability insurance has been punctured.  Hopefully, a silver lining of our shared experience through the COVID-19 slog will be heightened financially literacy and an enhanced degree of forward thinking on the part of both employers and employees such that known financial risks can be minimized vis-à-vis insurance coverage.    

View article in Cobb Business Journal.

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