In 2020, people flocked to purchase life insurance amid the looming fear and uncertainty brought by COVID-19. None of us had experienced a global health crisis like this, and, when mortality is at risk, the demand for security increases.
While life insurance policy sales increased 2% overall in 2020, other indicators showed just how much life insurance was brought to the forefront once again, following a decline in policies sold over the decade prior. CNBC reported a 50% spike in Google search traffic for “life insurance” between March and May 2020, while leading carrier Northwestern Mutual saw a 15% increase in policies sold between April and September compared with the year prior. On the annuity side, sales were up $58.6 billion from 2019.
You’d think these numbers would be a good thing for insurance companies and agents, but that wasn’t necessarily the case. The massive influx in applications caused insurance carriers to become increasingly bogged down; applications that once took one to two weeks to review and process were suddenly taking over one month. And thresholds for coverage became even more challenging to meet, with many premier carriers only insuring people if they met a $750,000 coverage threshold. This continues to be the case today for many major carriers.
Luckily, simplified-issue insurance let people who are generally healthy just answer a handful of questions. And, with instant-decision life insurance, many people didn’t have to get a medical exam to enroll in a policy, and a decision was made in two minutes as to whether a carrier will cover that person. Insurance companies have also found easier ways to do underwriting or attending physician reports, which are essentially a doctor's official response regarding a patient's current state of health and health history.
And yet, as the demand increased and both simplified-issue and instant-decision insurance became more prevalent, so did the need for efficient, user-friendly digital insurance quoting and sales platforms. But our industry just hasn’t kept up with the times. It has been using the same antiquated application process for decades.
On the consumer side, the process of applying for life insurance required a 15-page application, doctor’s appointment and various other qualifying factors and steps (if the person doesn’t qualify for instant decision). And, the person would be on the receiving end of many broker marketing calls, and have to pick from 20 companies on the basis of pricing and insurability.
Now, as people’s health and desire for financial security have been in jeopardy, there’s been a needed shift in how we go about buying and selling life insurance. For instance, our platform, Quote & Apply, supports agents in making the transition to digital as seamless as possible. A person can go through our entire application in under five minutes and be quoted a policy (with several coverage options dependent on the person's unique history) right on the spot. There are just six questions (age, gender, height, weight, smoking history and a rating of general health). Insurance companies can directly contact the medical information bureau and a person's doctor through a health portal and make instant decisions while offering numerous policy options.
The implications of COVID-19 spurred this heightened awareness of the importance of life insurance, and I believe that it’s every agent’s fiduciary duty to offer these policies to their clients. Life insurance gets people through the most challenging times of their lives.
We’re not going back to where we were as an industry, even post-pandemic. COVID-19 put a microscope on the issue of our mortality and how life insurance can provide an essential layer of security for people everywhere. COVID simply crystallized the demand for digital wholesale life insurance solutions.
Between the shift to a remote workforce, and the pandemic itself, we had no choice but to evolve; and we now have a chance to create widespread life insurance literacy through this experience.