Pandemic & Planning

Did COVID Alter Our Approach To Planning?

Measuring our ’thoughts and actions’ on early death, disability and long-term care

A recent poll from MDRT identifies how Americans made significant changes to their approach to insurance. Note: The poll was conducted prior to the announcement of updated guidelines on mask-wearing for vaccinated individuals by the Centers for Disease Control and Prevention (CDC). Visit www.mdrt.org

Almost one-and-a-half years into the COVID-19 pandemic, American consumers have made significant changes in their approach to insurance and preparing for the worst. A recent MDRT study found that 54% of Americans say the COVID-19 pandemic has made them more anxious about dying early, becoming disabled or needing long-term care.

The study examines how different experiences of the pandemic, including having at-home dependents and growing concerns about “Long COVID” have or have not altered Americans’ insurance mindsets:

  • 69% of Americans underestimate the chances of long-term disability before retirement, and 67% underestimate the chances of needing long-term care after retirement.
  • 52% of Americans with at-home dependents say they have acquired a new life, health, long-term disability or long-term care insurance policy since March 2020.
  • 42% of Americans who have acquired new insurance policies since March 2020 say the COVID-19 pandemic was a factor in their decision.

How COVID Influenced Our ‘Thoughts & Actions’

This survey investigated how the COVID-19 pandemic has influenced American consumers’ thoughts and actions related to early death, disability and long-term care needs. Specifically, the survey attempted to discover if the pandemic had motivated Americans to acquire or maintain life, health, long-term disability or long-term care insurance.

A majority of Americans are more anxious about early death, becoming disabled or needing long-term care:

  • 54% of Americans say that COVID-19 has made them more anxious about dying early, becoming disabled or needing long-term care, including 21% who says COVID-19 has made them much more anxious.
  • 61% of Americans with at-home dependents say COVID-19 has made them more anxious about dying early, becoming disabled or needing long-term care, compared with 50% of Americans without at-home dependents.
  • 38% of Americans say the pandemic has not changed their thoughts on dying early, becoming disabled or needing long-term care. 8% of Americans say COVID-19 has made them less anxious.

As concerns about “Long COVID” grow, large majorities of Americans underestimate the chances of long-term disability or needing long-term care:

69% of Americans underestimate the chances of a 20-year-old acquiring a long-term disability before retirement.

  • Only 20% of survey respondents correctly guessed that 1 in 4 of today’s 20-year-olds will acquire a long-term disability before retirement (according to the Council for Disability Awareness).
  • 37% of respondents guessed 1 in 10, and 32% guessed 1 in 5.
  • 11% of respondents overestimated and guessed 1 in 3.

67% of Americans underestimate the chances of a 65-year-old needing long-term care before death.

  • Only 21% of survey respondents correctly guessed that 7 in 10 of today’s 65-year-olds will need long-term care before death (according to the U.S. Department of Health and Human Services).
  • 27% of respondents guessed 1 in 2, and 40% guessed 6 in 10.
  • 12% of respondents overestimated and guessed 8 in 10.

Americans with financial advisors are not more informed than Americans without advisors.

  • 75% of respondents with financial advisors, 69% of respondents without an advisor and 60% of respondents who formerly had a financial advisor underestimated the chances of a 20-year-old becoming disabled. None of these differences are statistically significant.
  • 68% of respondents with advisors, 67% of respondents without advisors and 64% of respondents who formerly had a financial advisor underestimated the chances of a 65-year-old needing long-term care. None of these differences are statistically significant.

Many Americans say the pandemic has motivated them to acquire or maintain insurance policies when they can afford them:

  • 31% of Americans say the COVID-19 pandemic has made them feel more driven to acquire or maintain life, disability and long-term care insurance. This includes 41% of Americans with at-home dependents and 26% of Americans without them.
  • Similar shares of Americans with advisors (31%), Americans without advisors (31%) and Americans who formerly had advisors (32%) say the pandemic has made them feel more driven to acquire or maintain coverage.
  • 14% say the pandemic has made them feel less driven to acquire or maintain coverage, while 55% say the pandemic has not changed their outlook.
  • 24% of Americans who formerly had advisors say the pandemic has made them feel less driven to acquire or maintain coverage, vs. 10% of Americans with advisors and 12% of Americans without advisors.

Americans with at-home dependents are more likely to have acquired life, LTC, disability and health insurance since March 2020:

  • 36% of respondents who have insurance said they acquired at least one new policy since March 2020, including 52% of Americans with dependents at home and 23% of Americans without dependents at home.
  • 26% of Americans with at-home dependents say they acquired a new life insurance policy since March 2020, compared with 10% of Americans without at-home dependents.
  • 12% of Americans with at-home dependents say they acquired a new long-term disability policy since March 2020, compared with 5% of Americans without at-home dependents.
  • 11% of Americans with at-home dependents say they acquired a new long-term care insurance policy since March 2020, compared with 3% of Americans without at-home dependents.
  • 35% of Americans with at-home dependents say they acquired a new health insurance policy since March 2020, compared with 20% of Americans without at-home dependents. 
Note: This may be more of a reflection of the chaotic employment situation in 2020 than proactive financial planning.

The COVID-19 pandemic was one of the biggest – if not the biggest – drivers of the insurance market in the last 1.5 years:

Among Americans who acquired new insurance policies since March 2020, 42% said the COVID-19 pandemic was a factor in their decision, higher than all other options.

  • 42% said the COVID-19 pandemic was a factor in their decision to acquire a new policy or policies.
  • Among those, over half (51%) said it was the primary factor in their decision. Another 41% said it was a major factor in their decision.
  • Other reasons for acquiring new policies included wanting to provide for family (36%), a major life event (29%) and new personal concerns about potential future disability or long-term care needs (27%).
  • Top reasons for acquiring new policies among Americans with financial advisors were COVID-19 (55%); marriage, divorce or a new child (43%); wanting to provide for their family after death (39%); and new personal disability or long-term care concerns (29%).
  • Among Americans without advisors, top reasons for new policies were COVID-19 (39%); wanting to provide for their family after death (34%); new personal disability or long-term care concerns (21%); and marriage, divorce or a new child (16%).

 

 

 

This survey was fielded by G&S Business Communications on behalf of MDRT. The online survey took place on July 23, 2021, with a representative U.S. sample of 1,051 adults, ages 18+. The sample has been balanced for age and gender using the Census Bureau’s American Community Survey to reflect the demographic composition of the United States.
About MDRT
Million Dollar Round Table (MDRT), The Premier Association of Financial Professionals®, is a global, independent association of the world’s leading life insurance and financial services professionals from more than 500 companies in 70 nations and territories. MDRT members demonstrate exceptional professional knowledge, strict ethical conduct and outstanding client service. MDRT membership is recognized internationally as the standard of excellence in the life insurance and financial services business. For more information, please visit mdrt.org and follow them on Twitter @MDRtweet.