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COVID-19 Is Prompting Families to Rethink Their Finances

Family-at-outside-dining-table

Originally published by Life Happens, July 10, 2020, and written by Amanda Austin.

COVID-19 has led families to cancel travel plans, get (semi!) comfortable with homeschooling kids and deal with all kinds of other inconveniences.

As if that weren’t enough, it’s also making many families take a closer look at their finances and make sometimes difficult financial decisions.

Life Happens recently conducted a survey that polled more than 2,000 adult Americans about how the pandemic changed their financial views and behaviors. Our “Tough Talks During COVID-19” survey results showed that dramatic changes are taking place.

For starters, more than two-thirds (67%) of respondents said that COVID-19 has served as a wake-up call to reevaluate their finances. Many of these respondents feel more comfortable talking about financial matters around the dinner table⁠—today, only 40% feel uncomfortable having these discussions versus 45% in January 2020 before the pandemic hit.

What Families Are Talking About

Here’s what our respondents said comes up when they have these conversions:

  • Wills and inheritance (33%)
  • Current health issues and concerns (32%)
  • Life insurance coverage (30%)
  • Current financial status (29%)
  • Emergency savings (27%)
  • Future emergency plans (26%)
  • Politics (25%)

Families Also Changing Financial Habits

Besides having these discussions, families have also changed their financial behavior since COVID-19 surfaced. The changes include:

  • Cutting excess spending (49%)
  • Building up savings and emergency funds (45%)
  • Continue working and delay their planned retirement date (43%)
  • Dipping into retirement funds (37%)
  • Focusing on paying down debts (24%)

Getting Comfortable with the Uncomfortable

While families are talking more about the state of their finances, they admit that these conversions aren’t easy. Nearly seven in 10 (69%) said they want to be even more open with their partners about their finances. They also want to spare their kids, with 60% saying they avoid discussing money with children because they don’t their want kids to worry.

Today, these conversations are more important than ever: Respondents said that they don’t believe they’ll be truly comfortable with their financial status for another 8.5 months.

Now’s the Time to Consider Life Insurance

But there are some silver linings. Americans aren’t known for being savers, but the pandemic has made people sock away money by cutting out needless purchases.

What’s more, 66%of respondents believe that COVID-19 helped them better understand life insurance. Meanwhile, a quarter (25%) of respondents have bought life insurance for the first time because of it.

COVID-19 made many of us seriously consider our mortality for the first time. It’s sadly shown us that no one—not even the young and healthy—are assured a long life. And that an untimely passing all too often leaves the ones left behind on shaky financial ground.

That’s where life insurance can be a financial lifeline. It provides funds that let your family maintain their standard of living when your earnings are no longer in the picture.

Life insurance is probably a lot less expensive than you think. Many people are surprised to learn that a healthy 30-year-old can get a $250,000 20-year level term policy for just $13 a month. With this policy, your loved ones would receive $250,000 if you were to pass away between the ages of 30 and 50. (And they’d receive the full $250,000, since life insurance proceeds almost always pass on tax free.) To get an idea of how much life insurance you’d need, check out our Life Insurance Needs Calculator.

It’s important to remember that any amount of life insurance is better than none at all⁠—and that talking to an insurance advisor is always free. Today, many insurance advisors can help you explore your options and secure coverage via phone, email and/or video chat. 

These conversations may not be easy. But the peace of mind you’ll get knowing that your loved ones are protected makes them completely worth it.

 

This Information is courtesy of Life Happens. It is intended exclusively for general information only. The original version is available here.

For more information about life insurance options available through the New York State Bar Insurance Program, please click here.

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