It's unfortunate that it often takes a major crisis to remind people of their mortality – and the need for sufficient protection against life's uncertainties Yet one of the consequences of the tragic events of September 11, 2001, was a significant increase in the demand for life insurance products.
As individuals reevaluated their financial and estate plans, consumer interest in life insurance translated quickly into action. Quotesmith.com, an online broker representing more than 90 insurance companies, received over 3,600 requests for life insurance policies during October 2001 – an increase of 52% over the month of August 2001. Some insurers saw an increase in their inquiries and sales as high as 49%.
An Important Employee Benefit
At one time, before savings vehicles such as 401(k)s became popular, life insurance was a central part of financial planning for most people. Following World War II, life insurance became a staple of employee benefit plans, and millions of Americans bought policies from salesmen who came to the door. It's estimated that during the decade of the '60s, more than 80% of U.S. households owned life insurance.
Prior to September 11, however, interest seemed to be waning. Many consumers postponed purchasing life insurance or overlooked the opportunity to increase coverage amounts provided by their employers. Single people, in particular, believed they didn't need life insurance. As a result, the number of households with life insurance policies dropped to 76%.
Not only were families without life insurance, but many people with policies had inadequate coverage, especially those who believed that the need for life insurance was years away. For instance, among the Sept. 11 victims from Cantor Fitzgerald, the firm hardest hit at the World Trade Center, only 6% had purchased more than the company's standard policy. In fact, in 2000, four out of 10 Americans said their families didn't have enough life insurance.
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