Young Adults Are Buying Life Insurance Like Hot Cakes in 2021

Life insurance sales just witnessed a 4.0% growth for 2020, even though only about half of Americans have an active policy. “According to insurance analytics firm MIB, the third quarter (July 1 through September 30) generated the biggest quarterly gain in sales since 2011 at 9.2%,” says Mark Friedlander, the Director of Corporate Communications for the Insurance Information Institute.

[ Read: The Best Life Insurance Companies for 2020 ]

The rise of life insurance applications during the coronavirus pandemic is no coincidence. “It’s not surprising that we’re seeing increased interest in life insurance,” says Whit Cornman, Director of Media Relations for American Council of Life Insurers

“We know that in times of crisis, many people look to life insurers for financial protection and peace of mind, which companies are prepared to provide and continue to provide through the pandemic,” Cornman adds.

Young adults are buying insurance the most

Life insurance isn’t limited to one age group. Though not every age group is buying policies during the pandemic at the same rate. Young adults are buying at the highest rates — 2020 has seen a 12.8% increase for people under 44. There has been a 9.2% increase for people ages 45 to 49 and only a 0.4% increase for people over 60

Such a significant increase for people under 40 isn’t a shock, especially when you think about the affordability of the average policy. For example, the average 40-year-old male would only pay around $51 per month for a $500,000, 30-year term policy. 

[Read: How to Get Cheap Life Insurance in 2020 ]

But the story changes as you get older. A 50-year-old male will pay around $128 a month for the same policy. While we can’t say for certain why the increase is significantly lower for older Americans, it’s a safe bet cost has something to do with it. 

Additionally, life insurance companies are less likely to write a new insurance policy for someone over 60. This means some people won’t be able to get one, even if they are willing to pay a higher rate. Each company will have a maximum age they write policies for, limiting the options for Americans over 60. 

Policy restrictions are tightening

“Insurers’ underwriting standards have become more stringent for selling term life and whole life policies. Some insurers have temporarily suspended sales of new policies to older adults. Depending on the insurer, this can start at age 70, 75 or 80,” says Friedlander. 

[ Read: When Do You Need Life Insurance?

Restrictions were already in place for older Americans. The pandemic has only made them more stringent. And as restrictions tighten, we also expect to see prices slightly increase for all age groups. 

While insurance companies cannot deny a claim filed because of coronavirus, new policy applications will be subject to COVID-19-specific qualifications. Friedlander adds, “If you are showing symptoms of COVID-19, or have recently tested positive for coronavirus, you will not be able to purchase coverage until after you recover.”

Image Credit: SrdjanPav/Getty Images

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    Taylor Leamey

    Personal Finance Reporter

    Taylor Leamey is a personal finance reporter at The Simple Dollar who specializes in personal loans, student loans, mortgages, renters, and financial policy. Her reporting has also been featured at CreditCards.com, Interest.com, Reviews.com, MyMove.com, and elsewhere.

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    • Andrea Perez
      Andrea Perez
      Personal Finance Editor

      Andrea Perez is an editor at The Simple Dollar who leads our news and opinion coverage. She specializes in financial policy, banking, and investing.