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The COVID-19 Effect: A Wake-up Call About the Need for Life Insurance

The COVID-19 pandemic has become a major impetus for many families to consider getting life insurance...

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In American culture, death has become a taboo topic. It’s typically something we don’t want to think about or talk about—because that would only make it feel more real. Instead of viewing mortality as “inevitable,” or simply, a part of life, we hold on to our youth at all costs.

I’m keeping my bell-bottoms on the top shelf of my closest; I’m using that anti-aging cream that every woman swears by; and I’m hitting my living room home gym for a body bootcamp DVD a few times a week.

All to avoid the inevitable—or even just thinking about the inevitable.

The more in tune we become with ourselves, the more difficult it is to acknowledge that our individual self will one day cease to exist. This mindset is especially prevalent among Baby Boomers—the oldest, in their 70s—who are inclined to act young, no matter their age. Yep, Mom’s on Facebook now, and she’s posting more than most of my network on any given day. (Just go with it).

It hasn’t always been this way. Late 19th century Americans viewed death as “familiar,” and naturally accepted it. At that point in history, many people died in their own homes. But as time passed, and medical practices improved, life expectancy increased. And now, death became viewed as an enemy to be defeated, usually in a hospital setting.

“We’ve kind of lost our familiarity with death,” Anita Hanning, Brandeis University associate anthropology professor, and expert in the field of death and dying, told Insider.com. With the advance of modern medicine, we’ve pivoted from viewing death as a natural part of life to precise moment in time that we can possibly “save somebody from.”

But the coronavirus pandemic is radically changing this point of view; it’s a critical inflection point that’s “pushing our nose into the fact of our own mortality.” Every day, the statistics show more and more Americans are dying form the virus. As of January 7, 2021, the total stood at nearly 361,383 deaths, with a crippling fear that we’ll breach the 400,000 mark by March.

It’s this reality, albeit grim, that really changes your mindset. It makes you pause, reflect, and think about things you haven’t thought about before—not out of want, but out of necessity.

As with many other Americans, you might start to see the value of life insurance in a totally new light. In fact, the MIB Life Index, which measures the industry’s application activity, saw a 1.5% application spike in the first half of 2020.

Taking it a step further, CNBC reported that certain companies saw a 15% to 30% surge in application activity from April to September 2020. One executive told CNBC this is evidence of “panic buying.”  Another said the pandemic “forced the idea of financial protection and mortality to the top of mind for consumers in a way very few events have.”

Further MIB analysis showed a 13% increase in applications for those aged 44 and younger in the third quarter of 2020, compared to the same time frame in 2019. Those between ages 45-49 were up 9%, while those 60 and older showed only a 0.4% lift.

All of this represents a dramatic reversal for an industry that saw life insurance ownership among American adults drop from 63% in 2011 to 57% in 2019, according to the research firm LIMRA. You suddenly find yourself living in an uncertain time—with the steady growth of the pandemic leading to greater and greater economic hardship and turmoil. According to Forbes, two-thirds of Americans have been forced to re-examine their finances, and three out of 10 have started to consider buying life insurance.

Industry observers unanimously agree: it’s an ideal time to buy life insurance. Prices have remained steady, and coverage is not being denied due to COVID-19. What you can expect, is a slightly longer application process, with questions around if you have tested positive for coronavirus, exhibited symptoms, or been asked to self-isolate. And note that a positive response to any of these questions could result in delays.

With that aside, and today’s current environment in mind, it’s no surprise that considering life insurance is increasingly top of mind for many Americans. It’s peace of mind, and it’s protection not only for yourself, but for the ones you love—in life and in death.

Certified financial planner and podcast host Barbara Ginty told CNBC, “You don’t want a loved one to experience the tragedy of losing a loved one in addition to a financial tragedy. A financial tragedy is preventable.”

Here are five things to keep in mind as you consider buying life insurance:

  • Evaluate your needs: Consider how life insurance fits into your larger financial strategy. What will best suit your family’s needs? Experts advise huddling with a financial advisor to get the most accurate assessment.
  • Understand your options and the value of each: Term life insurance covers you for a certain time period and can help you protect specific life events; your policy pays out only if you die. Permanent policies (whether universal life, whole life or variable life insurance) cover you for your entire life and generate cash value, which means you can borrow against them.
  • Recognize that COVID-19 has impacted the application process: Before the pandemic, some policies required medical exams; however, this process has been complicated by social distancing guidelines. Some insurers are extending deadlines, while others are relying on data from past exams, or sending healthcare professionals on home visits.
  • Know that you can’t be denied coverage because of a pre-existing condition: However, the nature of that condition will be taken into account by insurers, as will its severity.
  • Be aware that life insurance covers coronavirus claims: There are exceptions. If you file an inaccurate claim, that could lead to a denial. That’s also the case if you allow a policy to lapse, or if you only purchased an accidental death policy.

The coronavirus pandemic has undoubtedly caused a huge mindset shift in many Americans. And that new mindset is here to stay.

It’s transformed the once “taboo” thought of death to a startling reality.

It’s reprioritized our values and beliefs for ourselves and our community.

And it’s enabled us to persevere to ensure our loved ones are always taken care of.

In an unprecedented time, people have come to truly understand the unwavering value of life insurance—and the security and peace of mind it can bring. And for that, I’m grateful.

What we’ve experienced this year has holistically changed our perspective. Now we can finally focus on protecting what matters most.

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