Life insurers paid out a record $100 billion to life insurance policy beneficiaries in 2021. This amount is up 10.8% from 2020, which was also a record-setting year. record as payments increased 15.4% year-on-year, the highest year-on-year. year increase in a century. The American Council of Life Insurance, a trade association for the life insurance industry, compiled the data in its annual Fact Book.
Andrew Melnyk, ACLI’s vice president of research and chief economist, said that while the increase in payments could be attributed to COVID-19, it also spurred more people to buy life insurance. Life insurers sold nearly 46 million policies in 2021, up 6.1% from 2020. In 2021, 261 million life insurance policies are in force in the United States, worth an insurance price of more than 21 trillion dollars — also a record.
“In times of uncertainty, people seek sources of stability and peace of mind,” Melnyk said in a statement.
Life expectancy declines during the pandemic. On average, a 25-year-old in 2019 can expect to live another 54.9 years. That number drops to 53 years by 2020. Will the record payouts and death tolls lead to an increase in the price of life insurance policies in the future as insurers try to make up for it? their loss? That’s unlikely, said Nancy Bennett, a senior fellow at the American Academy of Computing.
“Some insurers may increase premiums for newly issued policies and certain policy features, depending on their own experience, but most see the past few years as an increase in premiums. Temporary increases in mortality will not continue indefinitely and do not change their prices,” she said.
Despite record payouts and deaths, life insurance rates have held steady over the past year. In December 2022, life insurance prices were 0.5% cheaper than the previous year, according to Policygenius’ Life Insurance Price Index. That’s because expected mortality is “just one factor in a complex model for pricing life insurance,” says Bennett. Life insurers also consider other projections, such as costs, investments, future economic conditions, and the likelihood of life insurers lapsing in their policies.
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