If there’s one silver lining to take away from the current coronavirus pandemic, it could be the fact that more people than ever are asking important questions about their health, mortality, and financial security. And as new data from PolicyMe shows, that’s translated into an increased interest in life insurance — but not necessarily an increased need.
After polling members of the Angus Reid Forum, the insurtech platform found that Canadians are thinking more about life insurance.
Nearly one quarter of respondents who didn’t have coverage prior to the pandemic reported either purchasing it, or considering purchasing it, since the COVID-19 crisis began. Among those who said they just recently started thinking about getting life insurance coverage, two thirds (67%) said they were driven by COVID-19-related concerns.
The top considerations relating to the pandemic were:
- An increased awareness of threats to life (36%);
- Reevaluating their financial situation amid the current economic climate (29%);
- Experience or threat of losing employment and, by extension, employer-provided life insurance (12%);
- Risk of getting sick with COVID-19 (8%); and
- Concerns about becoming ineligible for life insurance after getting COVID-19 (4%)
According to Andrew Ostro, co-founder and CEO of PolicyMe, those concerns are driving real action. He said that in the past few months, the number of applications submitted through their platform has doubled.
“As a start-up, we were always seeing great growth in the number of applications submitted,” Ostro told Life and Health Professional. “We were looking at 15%-20% month-over-month growth on average prior to March. But over March, April, and May, we’ve seen figures somewhere in the 60% to 80% range.”
Today, PolicyMe’s Canadian footprint covers BC, Alberta, Manitoba, Ontario, New Brunswick, and Nova Scotia. Counting all those jurisdictions, PolicyMe is on pace to see an average of 525 applications per month submitted for April and May.
But people’s need for life insurance hasn’t necessarily changed. According to Ostro, around 26% out of the thousands of applicants his company has given advice to turned out not to need life insurance; 5% of the applicants get coverage even after learning they don’t need it. Despite the rise in applications, he said those statistics have remained in line with where they’ve been historically.
“I don’t believe that the need for life insurance has changed at all,” Ostro said. “People who needed it before the pandemic hit still need it now, and those who didn’t need it before don’t need it after.”
While there can be many reasons why someone might not need life insurance, he identified two high-level considerations: those who have no financial dependents, and those individuals who can “self-insure” because they have enough savings in place to provide for their loved ones even after they pass away.
“What you really need to be looking at when you buy life insurance isn’t the probability of your passing away. That’s almost irrelevant,” Ostro said. “The important thing to ask is: if you were to pass away tomorrow, what would happen? And that’s where a lot of people get confused, because they look at the odds and not the potential impact.”