Outlook For Life Insurance Shoppers In 2022 – Forbes Advisor - Forbes

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Life insurance buyers kept insurers busy in 2021. A sales growth record was set in quarter two and then again in quarter three to levels not seen since 2007, according to LIMRA, an industry-funded financial services research company.

Life insurance sales growth increased 18% during the first three quarters of 2021, and all types of life insurance policies saw sales increases.

What should life insurance shoppers expect in 2022? Here’s a look at some of the trends shaping next year’s life insurance landscape.

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Covid-Fueled Buying

The Covid pandemic has without a doubt been a major driver of higher life insurance sales. As people sought financial security, and dealt with worries about their own mortality, they looked to life insurance as one solution.

With the Omicron virus variant disrupting a return to normalcy, 2022 could very well be another banner year for life insurance sales. Nearly one in three consumers (31%) say they were more likely to purchase coverage due to the pandemic, according to a survey by LIMRA.

When the pandemic eventually goes into the rearview mirror, the life insurance buying spree will likely start to cool.

“Based on historical data from the 1918 pandemic when sales increased significantly for several years following the outbreak, we believe the impact of Covid-19 will continue to influence people to consider life insurance as they plan for their financial futures,” says John Carroll, senior vice president and head of LIMRA’s Insurance Division. “But realistically, the more distant the thoughts of the pandemic become, the more likely consumer demand will wane.”

Fortunately for life insurance buyers, Covid has not led to increases in term life insurance prices. The life insurance price index from Policygenius hasn’t shown significant price changes from January 2021 to now, and only very small changes during the year.

“The biggest pricing change we saw was for 25-year-old female smokers buying $1 million in coverage—their rates dropped by 4.24% from January to December,” says Jennifer Fitzgerald, CEO and co-founder of Policygenius. “I expect term life rates will remain stable in 2022. In 2021, most of our life insurance carriers were regularly repricing in order to remain competitive—in 2022, I anticipate a positive outlook for consumers as carriers continue to adjust their rates to compete for market share.”

No-Exam Life Insurance is More Price-Competitive

One consequence of the pandemic has been that no-exam life insurance options became available faster than they otherwise would have. It was a necessity at a time when no one wanted strangers coming into their homes to administer life insurance medical exams. And insurers are becoming better at pricing policies without using data from medical exams.

“We are seeing that getting a fast, exam-free policy usually meant previously that prospective insureds were going to pay more, but there are now exam-free options that are priced competitively compared to the much longer full health examination buying journey,” observes Jenny Life CEO Chirag Pancholi. Jenny Life is one of the best no-exam life insurance companies in Forbes Advisor’s ratings.

If you want to put a priority on avoiding both a long application process and a life insurance medical exam, you’ll have more options in 2022 than you did in previous years, especially if you’re young and healthy. It’s always a good idea to compare quotes among multiple providers.

It’s Easier to Buy Life Insurance

Expanded choices for no-exam life insurance are just one way it’s becoming easier to buy life insurance. The pandemic also propelled faster implementation of conveniences that were already in the works.

“Consumers’ expectations have evolved, and insurance companies will continue adapting to meet their needs and allow for easier and more efficient purchase, support and claims processes,” says Wade Harrison, Protective’s senior vice president and president of Protection Division. Protective is one of the best life insurance companies in Forbes Advisor’s ratings of life insurers.

“While much of this trend was already in the works prior to the pandemic, the initiative to digitize was definitely accelerated by it,” says Harrison.

Look for these advantages if you’re buying life insurance in 2022, says Carroll at LIMRA:

Video conferencing to meet with your insurance agent or financial advisor
Online applications
E-signatures and e-notarization to speed approval times
E-delivery of policy documents

The Great Resignation Creates More Life Insurance Need

As the “Great Resignation” continues and workers voluntarily (and often happily) leave their jobs, the need for people to own their own life insurance grows. Group life insurance through work generally ends when you leave a job.

“They will need life insurance on the open market outside of worksite benefits,” says Pancholi at Jenny Life. “We are seeing that women are increasingly leaving the workforce to start businesses, become independent operators and stay at home to lead their households. Each of these elements require and will bring more demand for life insurance.”

Life Insurance Need Stretches Beyond Workplace Benefits

Life insurance buyers have flocked not only to individual life insurance during the pandemic but also to workplace life insurance. Whit Corman, spokesperson at the American Council of Life Insurers, reports that group life insurance purchases increased 16.1% in 2020 to $1.4 trillion.

Even if you’ve got life insurance through your workplace, 2022 could be a good year to strengthen your life insurance foundation.

“The important lesson here for consumers is that while coverage from a group policy is adequate for some people, for many others it is not sufficient,” says Cornman. “Group policies tend to provide workers coverage equal to one or two times their salary,” which falls well short of most people’s actual life insurance needs.

Women’s Life Insurance Needs Are Growing

“Even before the pandemic the proportion of women with life insurance coverage was falling,” observes Carroll at LIMRA. “Today, just 47% of women have coverage, compared with 58% of men. This represents the fifth consecutive year of life insurance ownership declines for women.”

Carroll says that about 14% of women (more than 18 million) lost their life insurance coverage in 2020, with more than a third (36%) saying it was due to an unplanned job loss.

And many women had to quit jobs in order to cover family needs during the pandemic, such as school children taking their classes at home via video.

“They’ve had to alter their careers to play an even bigger role in their household,” says Pancholi, and that “has a tremendous imputed economic value.” The high cost to “replace” the services of a stay-at-home mom creates a life insurance need for people who don’t have paycheck-earning jobs.

“The perception that life insurance is exclusively for breadwinners is changing and there is a trend toward recognizing the soft and intangible economic value of moms to their household (chef, housekeeper, CFO, chauffeur, counselor, detective, judge, caretaker, teacher, event planner),” says Pancholi.

If you’re looking at life insurance options, check out these top life insurance tips for 2022.