New data from the American Council of Life Insurers (ACLI) shows that life insurance companies paid $100 billion to beneficiaries of life insurance policies and $97.7 billion to annuity holders in 2021, both record highs for a single year.
Life insurance payments increased 10.8% over 2020. In that year, payments increased 15.4% over 2019, the largest year-to-year increase since the Influenza Epidemic of 1918. This data is included in the 2022 ACLI Life Insurers Fact Book released Nov. 28.
“For the second year in a row, life insurance benefit payments increased by double-digit percentages. And for the second year in a row life insurance companies stepped up to the challenge while also paying record-high annuity benefits, which typically go to retirees,” said Andrew Melnyk, ACLI Vice President, Research & Chief Economist. “It is a testament to life insurers’ ability to prepare for any eventuality and deliver on their promises to consumers at all times.”
The Fact Book also showed that life insurers remained financially strong in 2021. A common measure of industry strength—state regulators’ risk-based capital (RBC) ratio—remained above 400% in 2021, indicating life insurers overall maintain more than twice the amount of capital required.
With the threat of Covid-19 still on consumers’ minds, people continued to seek life insurance coverage, Melnyk said. Nearly 46 million life insurance policies were purchased in 2021, a 6.1% increase over 2020, and total life insurance coverage reached a record $21.2 trillion.
“In uncertain times, people look for sources of stability and peace of mind,” Melnyk added. “Conservative investments and underwriting, and strict state laws governing solvency and capitalization, ensure that the financial security life insurers offer will always be there when needed. That is why millions of Americans turned to life insurers in 2021 to protect their families and secure their financial futures.”