Pandemic leads to highest life insurance payouts on record

[Insurance Forums Staff]

Insurance Forums Staff submitted a new article

Pandemic leads to highest life insurance payouts on record

ACLI reports that $90 billion paid to beneficiaries in 2020 represents a 15.4% increase over 2019.

Continue reading the Original Article.

 

[marindependent]

“The data tells a compelling story about the resiliency of life insurers and their ability to protect Americans’ financial futures at all times” said Andrew Melnyk, ACLI Vice President, Research & Chief Economist.
How So?

 

[DHK]

“The data tells a compelling story about the resiliency of life insurers and their ability to protect Americans’ financial futures at all times” said Andrew Melnyk, ACLI Vice President, Research & Chief Economist.
How So?

By the ability to pay claims that are above average or more than accounted for in the actuarial tables.

 

[Allen Trent]

I would love to see a breakdown of the types of policies & how long in force.

My primary carrier was only up 8% in 2020 in death claims compared to the industry average of 15% even though we were in one of the worst hit initial states in spring 2020. Now, this year we are up 27% at 11/30/2021 compared to same 11/30/2020. Will be interesting to see industry numbers as I have heard Industry wide is worse in 2021 than 2020

I would like to see if the bulk of it is in the final expense marketplace. Obviously, guessing most is in the permanent policies based on the age bracket most impacted. But then again, term could be up dramatic as term usually has so few claims but large face, so it wouldn't take too many deaths in the age 25-60 age bracket to cause a large % spike. Have seen some multi-million dollar term death claims only in force 4 or 5 years on 30 & 40 year olds that died from covid

 

[marindependent]

By the ability to pay claims that are above average or more than accounted for in the actuarial tables.

My comment was more meant for the authors to expand on such a point - but yes, I half agree with you. Not sure about the word "compelling" though...

 

[Patriot1]

Kind of makes you wonder what the total payouts were for 2021 with the virus & vaccines in full force. It wouldn't surprise me that the percentage could be even larger than last year’s 15.4% increase in payments compared to 2019's payments. We may also read later this year or next year that several life insurers take a rating hit or get really stretched and that some of those insurers weren’t as resilient as this article is implying them to be.

 

[Allen Trent]

Kind of makes you wonder what the total payouts were for 2021 with the virus & vaccines in full force. It wouldn't surprise me that the percentage could be even larger than last year’s 15.4% increase in payments compared to 2019's payments. We may also read later this year or next year that several life insurers take a rating hit or get really stretched and that some of those insurers weren’t as resilient as this article is implying them to be.

I am hearing 2021 was up 30% over 2020 which was up 15% over 2019.

India is even worse being up over 40% this year compared to 2020:. Life insurance death claims shoot 41%, up 3.5x in 2021

Through 3rd Qtr before it got even worse, globally there was $5.5B so far in 2021 compared to $3.5B in 2020 the entire year. That is 57% jump before even paying all the 4th Qtr claims on top of the $5.5B amount. I believe DI carriers were hit hard also. Life insurers adapt pandemic risk models after claims jump

 

[toolbelt]

Between 2019 and 2020, the US death rate increased by 1/10th of a person per 1000, rising from 8.782 to 8.880 per 1000. That is no worse than it was in the early 90's. The YOY increase was less than the preceding 5 year pre-pandemic period.

If pay-outs increased by 15%, this might suggest a lot of new policies were sold in relation to the pandemic.

 

[Allen Trent]

Between 2019 and 2020, the US death rate increased by 1/10th of a person per 1000, rising from 8.782 to 8.880 per 1000. That is no worse than it was in the early 90's. The YOY increase was less than the preceding 5 year pre-pandemic period.

If pay-outs increased by 15%, this might suggest a lot of new policies were sold in relation to the pandemic.

Must be all those extra 1/10th of people owned a ton of life insurance.

I think early in covid it hit all the elderly especially in nursing homes who had little or no life insurance & were near life expectancy already. The more recent death claims covid or non covid have moved to somewhat younger ages when term life might still be active, resulting in larger claim payments

 

[toolbelt]

I would think the people who suddenly decide on becoming insured because of a pandemic are most likely to be Term buyers, therefore Term payouts likely increased more than other forms, because mortality rates were not really out of line with previous years/decades.