While the pandemic generated conversations about life insurance, 39% of consumers remain without coverage — and those who do have coverage may not have enough.

Over the course of the coronavirus pandemic, life insurance has crept to the forefront of consumer consciousness. According to the most recent LowCostInsurance survey of over 1,000 Americans, more than half of consumers discussed life insurance with a loved one in the previous year, and 13% were persuaded to research life insurance options for the first time. Furthermore, one out of every ten people bought a life insurance policy for the first time, with younger people leading the way by a wide margin.

Despite the fact that 23% believe life insurance is a more valuable investment as a result of the pandemic, nearly 4 in 10 remain uninsured. Furthermore, even among those who do have coverage, it is possible that they do not have enough. For example, 48% of those with employer-sponsored life insurance have no plans to supplement their coverage — and another 19% are unsure — despite the fact that these plans may not always provide adequate protection for most people.

Despite the pandemic's enthusiasm for life insurance among many first-time buyers, the benefits of life insurance are partially or entirely unknown to 55 percent of consumers. And, while young people were more likely than older Americans to talk with their loved ones about life insurance or purchase a policy for the first time in the previous year, they were also less likely to see the benefits of getting coverage.

The pandemic has had vast impacts on Americans’ interest in life insurance, especially among young people

Twenty-three percent of consumers believe life insurance is more valuable now than it was before the pandemic.

During the pandemic, 55% of consumers discussed life insurance with their loved ones, with 24% having more than one conversation. Young consumers were the most likely to have these discussions, with 72 percent of Gen Zers discussing life insurance with friends or family in the previous year, compared to:

• 64% of millennials
• 50% of Gen Xers
• 44% of baby boomers

Young people, including Generation Z and millennials, were also more likely to engage in multiple conversations. Almost one-third (31%) of Gen Zers and 27% of millennials had repeated conversations on the subject, compared to 21% of Gen Xers and 20% of baby boomers.

The enthusiasm that young people expressed for life insurance appears to have translated into action. During the pandemic, one in every eight consumers of all ages researched life insurance options for the first time, with 10% purchasing coverage for the first time. These figures, however, were far higher among young people.

During the pandemic, 23% of Gen Zers researched life insurance for the first time, and 24% purchased their first life policy. Similarly, 19 percent of millennials looked into coverage for the first time, and 17 percent purchased life insurance. These two groups were also the most likely to review their current coverage to ensure it was adequate. Nineteen percent of Gen Zers and twenty percent of millennials admitted to doing so, which is more than double the percentage of older generations in both cases.

Source: LowCostInsurance survey of 1,040 consumers. Respondents could select more than one answer.

29% of people, along with a large portion of the youngest consumers, would rather get a root canal than figure out their life insurance coverage needs — but why?

Despite the high percentages of young people who researched and purchased life insurance during the pandemic, evidence suggests that the younger generations also had negative preconceived notions about life insurance or were less likely to obtain insurance as a result of the pandemic.

Thirteen percent of Americans countered that the pandemic has reduced the value of life insurance in their eyes, with 38 percent of Gen Zers agreeing.

The average person who does not have life insurance baulked at the cost of coverage. Thirty-six percent believe it is an overpriced investment. However, uninsured Gen Xers (49%) and baby boomers (41% ) were the most likely groups to hold these views. Young people were more likely to avoid coverage because they believed they didn't need it, or voice suspicion about the very nature of life insurance..

Only 6% of all people who do not have life insurance do so because they believe it is a scam, but this figure more than doubles for Gen Zers (12 percent ). More commonly, Gen Zers and millennials do not have coverage because no one depends on their incomes (19% for both groups) or because they believe they are too young to qualify (16 percent for Gen Zers and 18 percent for millennials).

Furthermore, because life insurance can be a depressing subject, Gen Zers and millennials were more likely to avoid thinking about it. Regardless of their age, 28 percent of all consumers felt this way on average. This was the most common refrain among Gen Zers (37% ) and millennials (41% ).

However, for both Generation Z and millennials, one of the most common reasons that significant portions of their groups are uninsured is a lack of knowledge about it.

Source: LowCostInsurance survey of 1,040 consumers.

According to the survey, as consumers get older, they are more likely to understand the benefits of life insurance. In comparison to older groups, the younger generations had a more incomplete or absent understanding of those benefits. While 46% of Americans said they understood the benefits of life insurance, only 27% of Gen Zers and 35% of millennials were as certain. In fact, 73 percent of Generation Zers and 65 percent of millennials were at least somewhat – if not completely – unsure about the benefits of life insurance.

How consumers can get the most out of a life insurance policy

While many Americans are unsure, suspicious, or perplexed by the complexities of life insurance, there are three ways for inexperienced consumers to better understand how much life insurance coverage they may require:

• Understand their needs, as well as the needs of their families, if they have one.
• Consider how their lifestyle may influence the type of policy they receive.
• Check to ensure that additional coverage is not required without your knowledge.

Different types of life insurance policies are required by different consumers. This is reflected in the insurance coverage that people frequently carry — or do not carry. For example, while 61 percent of Americans have life insurance, this figure rises by 10 percentage points for parents with children under the age of 18 and falls to 46 percent for those without children. Similarly, LowCostInsurance discovered that 79 percent of those with a household income of $100,000 or more had life insurance, while 64 percent of those with a household income of less than $35,000 were uninsured.

In both cases, data show that people with varying needs, expenses, and living situations consider life insurance to be a useful or worthwhile expense. Consumers, particularly those with low incomes or without families who would rely on their incomes if they died, may naturally regard life insurance premiums as an unnecessary or unrealistic expense, given their individual needs.

Those who believe that life insurance would be beneficial to them should then consider how much coverage their lifestyles necessitate. For example, the amount of coverage purchased is influenced by one's income or the size of one's family. Others, on the other hand, may be able to obtain lower-cost or no-cost insurance plans through employer-sponsored plans after beginning a new job.

As time passes, consumers should consider whether their policy's coverage still meets their changing needs. We discovered that while 55 percent of people were unsure about the difference between term and whole life insurance policies, both types appealed to different consumers.

A policyholder who only has life insurance through their employer, on the other hand, may need to supplement that policy at some point. We discovered that 48% of these Americans have no plans to supplement their employer-sponsored policies; however, those who marry may find that their existing life insurance provides insufficient spousal benefits and may want to consider a supplemental policy.

Methodology

From March 17 to 22, LowCostInsurance hired Qualtrics to conduct an online survey of 1,040 U.S. consumers. The survey was conducted with a non-probability sample, and quotas were used to ensure that the sample base represented the entire population. All responses were reviewed for quality control by researchers.

In 2021, we defined generations as the following ages:

• Gen Zers: 18 to 24
• Millennials: 25 to 40
• Gen Xers: 41 to 55
• Baby boomers: 56 to 75

While the survey included consumers from the silent generation (those aged 76 and up), the sample size was insufficient to include findings from that group in the generational breakdowns.