Faced with their own mortality, more Americans are thinking about buying life insurance—or increasing their life insurance coverage—during the current coronavirus pandemic, according to a new survey from LendingTree and its subsidiary, ValuePenguin, a personal finance research website.
“We did this piece in response to a surge of visitors to our site looking for information on life insurance after the Covid-19 pandemic started,” Divya Sangam, communications manager for LendingTree, said via email. “We also heard from industry colleagues about a huge surge of life insurance applications and we wanted to get more consumer insight into this trend.”
There’s just one problem: Many Americans admit to not knowing very much about life insurance, according to the study.
ValuePenguin commissioned Qualtrics to conduct an online survey of 1,136 Americans from May 5 to May 8, with the sample base representative of the overall national population.
When asked whether the coronavirus pandemic had influenced their likelihood of getting life insurance, 25% of study participants said they were more likely to get life insurance coverage. When broken down by gender, 38% of men indicated they were more likely to buy life insurance now versus just 14% of women.
Although a majority (65%) of respondents said they already had life insurance in place, 60% of those respondents said they were not very familiar with what it did; one-third said they knew "a little bit;" and 9% said "not really."
Life insurance, which issues a cash payment on the policyholder’s death, can help parents with children, people with debt, or anyone with dependents breathe a sigh of relief knowing that their financial obligations will be paid in full in the event of their demise.
Another 30% of respondents said they didn’t know how much life insurance they needed. Most guessed an amount too low for their personal needs, which depend on individual circumstances. Only 10% knew that the rule of thumb in estimating the amount of coverage they needed should be at least equal to 10 times their annual salary, ValuePenguin said.
Chris Moon, insurance product manager at ValuePenguin, discussed the study’s findings via email. He indicated that the pandemic not only underscored the need for greater public education about life insurance, but that how and to whom it was marketed to was just as important.
“[The pandemic] really demonstrates the significant gender gap in financial planning and end-of-life planning,” he said. “[It] will likely accelerate the transition from traditional forms of underwriting that involve physical exams to an online-driven application and sales [experience].”
ValuePenguin, founded in New York City in 2013, is a wholly owned subsidiary of LendingTree, a Charlotte, N.C.-based company that bills itself as the country’s largest online lending marketplace.