Pewparing for the Worst Life Insurers Say More People Are Buying Coverage Since Sept. 11

By Yuki Noguchi Washington Post Staff Writer Tuesday, October 30, 2001; Page E01

Buying life insurance had been on Gregory Neal's to-do list, along with going to the hardware store, scheduling a dental appointment and paying the bills.

The events of Sept. 11 pushed it to the top of his agenda. Two weeks after the terrorist hijackings, the 46-year-old financial planner purchased his first life insurance policy -- enough to support his wife and pay off the mortgage on their North Baltimore home.

"Definitely the increased notion of one's mortality prompted me to go ahead and apply," Neal said. "Before, I felt like I knew what was ahead, and if I knew it, I could plan for it. Now that's changed."

Insurance companies and brokers say there's been a surge in the number of people who have been buying life insurance or increasing their coverage, spurred by the terrorist attacks and the growing threat of anthrax exposure. Several brokerages say their agents are busier than ever, though the actual increase in business won't be quantified until the end of the quarter.

Some early indicators come from online insurance brokers. Insurance.com said inquiries spiked 68 percent above average levels during the first two weeks in October. During the six weeks after Sept. 11, InsWeb.com, another online broker, had a 30 percent increase in applications -- to 590 in New York alone, up from 454 during the preceding six weeks. Coverage requests at Quotesmith.com jumped 54 percent, to 1,093 requests during the first two weeks of October, compared with 708 during the first two weeks of September.

"There's no question, there is an uptick that's sudden and pronounced" in the life insurance business across the country, said Robert Bland, president of Darien, Ill.-based Quotesmith.com. "Life insurance is [usually] purchased just before, or just after one of life's events -- whether it is planned or not. These tragedies have become that for the country, and that's why we're seeing this."

For many thirtysomethings, terror has served as a kind of awakening out of the boom mentality, said Phil Hildebrand an executive vice president at New York Life Insurance Co., the country's second-largest mutual life insurance firm, which to date has paid 61 claims related to the Sept. 11 events.

"Younger people weren't interested in protection [in the last decade] because they thought they could self-insure by making lots of money in the stock market," Hildebrand said. "In one single day, what a change. People know now the question is not if, but when they're going to die."

The total value of life insurance bought by Americans has been increasing at a rate of about 4.7 percent a year -- above the rate of inflation -- over the past decade. About 69 percent of U.S. households have life insurance, averaging $196,000 in coverage, according to the American Council of Life Insurers.

Other catastrophes, including the 1989 San Francisco earthquake and hurricanes Hugo and Andrew, induced some people to increase their insurance levels, but the national spike that followed the terrorist attacks could be unprecedented, said Jack Dolan, a spokesman for the American Council of Life Insurers. "This is uncharted territory," and the effect it will have on insurance buying patterns is still unclear, he said.

Stories about the families of the victims of the attacks on the World Trade Center and the Pentagon have been a wake-up call for others to focus on their financial security.

"I'm not really a worrywart, but when you witness something like this, it makes you more aware of your mortality," said Keith Morrison, 39, a lobbyist who lives in Chevy Chase. He and his wife, Jeanette Pablo, had been talking about getting life insurance to augment the basic policies they have through their employers, especially after the birth of their twins a year and a half ago.

"Having kids makes you think about mortality issues," Morrison said.

Tom Gilovich, a Cornell University psychology professor who studies decision-making behavior, said the shocking images of the terrorist attacks are behind much of the change in attitude.

"There is a special power associated with a very vivid, singular event," and the video footage of the World Trade Center explosions made it such an event for most people, Gilovich said. "Most people think they're unlikely to experience bad things -- they're unrealistically optimistic. People are prone to positive illusions, and these kinds of things shatter that," he said.

For John Mumford, the images of grieving families haunted him with reflections of his own life. The 32-year-old Richmond lawyer and his wife, Heather, just bought a new house last month, and they had their second child in June.

"I definitely feel ill at ease," especially about the threat of biological and chemical warfare, he said. "I don't worry about airplanes running into my building, but we've done more for this than we ever did for Y2K" by purchasing life insurance equal to 13 years' salary, he said.

"Increasing life insurance wasn't on the top of my list of things to do," he said. Now it is.

Elisa Hecht, who sells life insurance in Manhattan for the largest individual insurer in the United States, Northwestern Mutual, said nine of her clients died in the World Trade Center attack; 12 more perished that were close to finalizing their policies. Like Hecht, those clients were in their mid-thirties, in the middle of their careers and starting families, she said.

Hecht increased her own coverage after the attacks. And now her voice mail is full of prospective clients in the same phase of life.

"Younger people realize it's important for everyone to have insurance," and they are now more willing than ever to discuss their own death, she said. "Insurance was the type of thing that people would procrastinate."

Scott Barishaw, 31, a vice president at an investment bank in midtown Manhattan, bought a new policy after some of his friends died in the twin towers.

"I think it really gave me a deep feeling of sadness that people with young children are going to have to raise them without a mother or a father," said Barishaw, who has an 8-month-old son.

David Wright is in the same boat.

Wright, 34, a training coordinator, and his wife didn't feel an immediate need for life insurance until recently. As the father of a six-month-old daughter, Wright is now acutely aware of "the importance of not dawdling," he said.

"Prior to September 11, I made more financial plans and things like that, and I thought things would pan out along those lines," he said. "Now, when I wake up in the morning, I know there is always a possibility that some things can happen. And if they should happen, I want to make sure that my family's taken care of."

© 2001 The Washington Post Company

-- Anonymous, October 29, 2001

Answers

Dan got policy here the last yr...BUT read the fine print..it will NOT pay if death is from an act of war. Bio-terror is an act of war!

-- Anonymous, October 29, 2001