The Effects of COVID-19 Pandemic on (New) Life Insurances

This paper studies the life insurance demand responses to Covid-19 pandemic. It employs the unique individual-level daily data on new term life insurances together with both geographical and timely variation in the severity of the pandemic in Finland. These data are merged with the high-quality register data on the background characteristics of the customers and other Finnish population. First, we observe that the take-out of new life insurances increased by 20 % in the first half of 2020 among individuals of ages 21–60, compared to the corresponding time periods in years 2018 and 2019. The average sum insured increased at the same time by 16 %. Second, we find that the life insurance demand responds heavily to all Covid-measures, each of which may be considered as reflecting the change in the perceived death risk. We also find that the responses are larger to the country-level measures compared to the hospital district level measures. An increase in each country-level Covid-measure by 10 % implies on average an increase in the number of new life insurances by roughly 1 % (elasticity e=0.1). We also find that highly educated people and people with high life insurance deficit levels responded to Covid-pandemic more often than other people.