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It's important to remember why people buy life insurance

Life Insurance and Annuities
by Chris Davis
Experts bullish on 2021 life insurance market
Experts bullish on 2021 life insurance market

In the past year or so, consumers finally started to reverse the long-standing trend of people eschewing life insurance in the wake of the recession. That has, obviously, been a boon to life insurers, and reinforces many of the things that have long been preached within the sector itself: People want to buy life insurance when they can afford it, and typically see the value in it even when they can't.

For this reason, it's important for life insurers to remember the reasons why people buy life insurance in the first place, and why those issues may have been clouded by the fact that economic circumstances beyond anyone's control led to the downturn in sales in the first place. The primary reason people buy this kind of coverage, of course, is to insulate their families from financial hardship if something were to happen to them, argues one experienced insurance agent in a column published in the Cincinnati Enquirer. This is particularly true when younger adults are starting families, because they are making substantial investments in their long-term financial well-being, often for the first time in their lives.

Many millennials will only buy life insurance when they start a family.Many millennials will only buy life insurance when they start a family.

What happened?
So with this in mind, and with respect to how many experts wondered why millennials weren't coming into the life insurance market in recent years, it's important to keep things in perspective. The fact of the matter is that if the industry was relying on young people to drive everything forward, the impact of the recession on those adults is clearly going to be deleterious to that goal. Indeed, the downturn hit when most of the older millennials - those born in the early and mid-1980s - were either in college or had recently graduated. As such, it became incredibly difficult for them to get a good-paying job and start building toward a clear financial stability. That is, if they could find work at all.

Consequently, many may have had to delay their plans for things like getting married, starting a family, buying a home, and so on. Those are all typically mile markers on the road to buying life insurance anyway, so if they weren't checking those off, then they weren't likely to buy coverage either. But now, after years of economic recovery, it seems that millennials are starting to achieve those goals and, as a consequence, data shows they're also by far the most active new buyers of life insurance of any age group.

Other groups still matter too
In addition, though, many senior citizens are still buying life insurance and they typically do so as a means of providing themselves a financial safety net as they work toward retirement, the report said. This is true both for those who don't want to leave a spouse with few financial options, but also for those whose life insurance needs have changed since they first bought it, as well as people who want to link a policy to long-term care benefits.

These are a few of the more common reasons to buy life insurance, and the more companies can do to reach out to prospective policyholders on these bases, the better.



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