More Young Adults Are Buying Life Insurance Thanks to the Pandemic—if They Can Get It

The following is a wonderful article I read in the Wall Street Journal written by Francesca Fontana:

JOURNAL REPORTS: PERSONAL INVESTING

More Young Adults Are Buying Life Insurance Thanks to the Pandemic—if They Can Get It

In the Young Money column: Seeing loved ones die left me shaken, and worried about how my husband would fare without my income

By Francesca Fontana

April 2, 2022 11:24 am ET

Before the pandemic, I didn’t think of life insurance as something I needed. Why would I? At the end of 2019, I was 25 years old and newly married. I had no children. The only time I thought about life insurance was when it came up as the killer’s hidden motive in true-crime documentaries. (I watch a lot of true-crime documentaries.)

But last year, my husband, Ryan, and I decided to apply for policies. As we completed our online applications, I was self-congratulatory, full of pride. Every so often, I sang our praises to my husband: “Look at how responsible we are!”

Beneath my flippancy was a deep relief. The gravity of the pandemic and the recent loss of loved ones had shaken me to my core, and I worried about my own mortality. I fretted over how my husband would fare without my income if I died. There were no certainties; the unimaginable was no longer so.

I wasn’t alone. More younger adults have been looking for life insurance since the pandemic began. Applications for life-insurance policies jumped 3.9% year-over-year in 2020 in the U.S., according to MIB Group’s Life Index—the biggest annual increase in records going back to 2012. Applications were up nearly 8% in 2020 among people under age 45. In 2021, applications rose 3.4%, with the most growth coming from those ages 31 to 50.

One source of the increased interest in life insurance was people whose jobs exposed them to Covid-19 before vaccines became available—service workers, first responders, teachers, healthcare workers—says Jennifer Fitzgerald, CEO and co-founder of Policygenius, an online insurance broker. But the effects of the pandemic made many people of all kinds consider their mortality and re-evaluate their finances.

Assessing the risk

For Ryan and me, one of the driving forces behind our decision to get life insurance was the death of my father-in-law at the end of 2020. As our family grappled with the sudden loss and the many loose ends Ryan and his brother were left to tie up in the wake of such a loss, I was a witness to the pile of costs that were left to the survivors: attorney’s fees, remaining bills, cremation costs. His father had some life insurance that eased the burden on the two sons.

The pandemic—especially before vaccines were available—made everything feel uncertain for us. We isolated ourselves entirely and took every precaution to avoid possible infection, but we worried that at any moment one of us could fall ill and leave the other in the lurch. Our youth gave us little comfort as we watched the death toll rise.

I thought of what Ryan would be left to cover in the event of my death. He would be responsible for the entirety of our Brooklyn rent, which neither of us could afford alone, and we were looking at buying an apartment in Manhattan, which would be just as costly. Ryan would lose my health-insurance coverage, and the costs of his chronic health condition would soar as they had before we were married. I thought, too, of my younger brother, who was nearing the end of high school. I had hoped that once he started college I could help him pay for textbooks or other incidentals. I imagined what it would be like if I wasn’t around.

Ryan did similar calculations, had similar thoughts, and we came to the same conclusion: Whatever we could do to be prepared, we would do.

Technically, I already had life insurance. Many employers offer group life insurance as a benefit, typically in a lump-sum amount such as $50,000 or as a multiple of one’s salary. Through my employer, I already had such a policy.

Still, that policy only covers me for as long as I work at this company. What’s more, John Carroll, a senior vice president at industry-funded research firm Limra, told me that for most people, insurance totaling a year or two of salary wouldn’t be enough to cover expenses in the event of their death. Not only are many younger adults not yet in their peak earning years, they also bear a heavier student-loan burden than generations before them. “When you start to add all of that up,” he says, “there’s a real impact if they were to die prematurely or unexpectedly, the burden that they may leave behind for their families, or their parents. Just because you die doesn’t mean that goes away.”

Approval is uncertain

Weeks after I applied for life insurance, I was approved. Now I pay $36 a month for a 30- year term policy worth several hundred thousand dollars. It’s enough to aid Ryan – and our children, should we choose to have any—in the event of my death. It eased the pressure I once felt to build up as much in cash savings as possible for an unlikely tragedy and freed me up to invest in our future.

That feeling of security was dulled when Ryan’s application was denied. Ryan, being in his early 30s, had his youth on his side, but his health history kept him from getting coverage. It was a disappointment: No matter how much he works to save money through other means, like his emergency fund and his 401(k), those savings can never come close to the value of a life-insurance policy.

Ryan’s experience isn’t uncommon. While it’s better to apply when you’re young, your age doesn’t mean you’re automatically a shoo-in for a life-insurance policy. Chantel Bonneau Stewart, a wealth-management adviser at Northwestern Mutual Life Insurance, says insurance companies may not take on a policyholder with certain health histories or one with what they consider a risky profession or hobby, such as a pilot, she says. A DUI conviction or poor driving record or a low credit score can also be grounds for a rejections, she adds.

Rosamund Lannin, age 36, and her husband, Sean Dove, 42, applied for life insurance in the fall of 2020, after the Chicago-based couple went to a financial planner for the first time. Ms. Lannin, who works in marketing, already had a life-insurance policy through her employer. The financial planner recommended they apply for their own policies, too.

The pair thought they might have to pay a higher premium for Mr. Dove, who was diagnosed with cancer in 2018 and entered remission in March 2019. But after applying through their financial adviser, Mr. Dove was told that given his health history he would be denied coverage for five to 10 years posttreatment. Ms. Lannin was able to get a policy, though her monthly premium ended up being $4 higher due to her having anxiety and depression.

The outcome leaves Mr. Dove largely dependent on cash savings to build a cushion. “I’m a freelance illustrator, so my income changes so much from month to month, so saving has been a huge priority,” he says.

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Ms. Fontana is a reporter for The Wall Street Journal in New York.

Email her at [email protected]