The past three years have been anything but predictable. Changes in consumer demand throughout the pandemic and resulting economic uncertainty have led to a lot of fluctuation in life insurance sales. In this article, we’ll examine the life insurance market during and after the height of COVID-19 and explore what the future might hold.
Pandemic woes skyrocket life insurance sales
The year is 2020. (Don’t panic, we’re just setting the scene!). The World Health Organization has just declared COVID-19 to be a global pandemic and confusion and misinformation about the dangers of this new virus are high. Suddenly, millions have lost their jobs, the world has shut down, and death tolls are rising to alarming rates. As people sit at home with nothing to do but watch while media outlets tally the increasing number of coronavirus-related fatalities, it’s no surprise that fear and uncertainty about their own life expectancy begin to creep in.
Consumers, suddenly afraid the virus might lead to their untimely passing, rushed to protect their loved ones post-mortem with a life insurance policy. As a result, demand for life insurance skyrocketed and by 2021 life insurance sales hit record high growth.
Economic uncertainty led to a decline in life insurance sales
Just two years later, as pandemic-related fears began cooling off, consumer worry turned toward a new pressing issue – the state of the “post-coronavirus” economy. High inflation and talk of an impending recession, driven in large part by the pandemic, now had budget-conscious consumers thinking twice about their purchasing decisions.
The impact of high inflation and economic uncertainty hit middle income consumers especially hard, and many individuals put off buying anything they deemed unnecessary, including life insurance. Not to mention, with millions of people now vaccinated against COVID-19, purchasing life insurance became a lot less urgent for otherwise-healthy people.
So the numbers started to fall. Following record growth in the tail end of 2021, total new annualized life insurance premiums dropped 13 percent by the end of 2022 with all product lines – including whole life, variable universal life, indexed universal life, and fixed universal life – trending downwards.
The future of life insurance sales
From pandemic-fueled highs to recession-fueled lows, the life insurance market has seen some drastic changes over the last three years, but what does the future look like? While it’s still too early to talk exact numbers, early predictions give us an idea of what might be in store.
The Life Insurance Marketing and Research Association (LIMRA) forecasts life insurance sales to be relatively flat throughout 2023, but anticipates more growth in 2024 hinging on the improvement of the overall economy. And that seems to be the way things are shaping up. Overall, recession fears have decreased and inflation rates are starting a slow, but relatively steady, decline.
If things continue as they are and talk of a recession eventually fades out, then consumers will once again be more willing to spend. Currently, 48 percent of American adults don’t have any amount of life insurance. Younger adults with lower incomes make up a large part of this group, but with inflation rates finally dipping, there’s an opportunity to shrink the gap.
Gen Z adds new opportunity to the life insurance industry
One factor that could see the life insurance market experiencing new growth in the coming years – Gen Zers. 2023 represents the first year that there will be more adults in Generation Z than adolescents. As these individuals transition into adulthood, they may start thinking more seriously about a life insurance policy. These digital-natives could add more than 6 million new customers to the life insurance market by 2025. Importantly, if and when the next generation starts shopping for life insurance, it’ll likely be through digital platforms. So providing user-friendly mobile experiences for shopping and servicing insurance policies will be key.
Increased demand for employee benefits could drive life insurance sales
Even with immediate fears cooling off, COVID-19 shifted many consumers’ long term priorities. The pandemic led people to place higher importance on their physical and mental health as well as that of their loved ones. As a result, employers can predict their employees to demand more workplace benefits to address these concerns, including paid family leave and life insurance.
With multiple industries (including insurance) facing a talent crisis, employers are currently looking for new ways to attract and retain talent. For many companies, this means expanding their workplace benefits package to include these more sought after offerings.
Agencies should prepare to meet higher demand
In addition to the pandemic shifting the life insurance market, it also shifted the insurance industry’s reliance on digital tools and how agencies, carriers, and MGA/MGUs leverage them for business. Nowadays, pandemic-related woes may be few and far between, but the digital transformation it created in the insurance industry still very much holds.
As life insurance sales start to increase again, and with a whole new generation coming to the purchasing table, insurance agencies need to prepare for the potential of scaling their producer force quickly. If you’re interested in seeing how AgentSync can help you do this without sacrificing cost or compliance, contact us today or watch a demo.