Post pandemic changes in life insurance industry

We discuss a lot of issues related to Covid-19 pandemic impacts on the health insurance industry, as people are still grappling with ongoing related health and financial issues. Many experts argue that long – term effects for the life insurance industry are still not clear.

Life insurance companies saw payout soar during pandemic due to staggering loss of life. According to American Council of Life Insurers stats the U.S. life insurers paid more than ninety billion US dollars to beneficiaries in 2020, which is a 15.4% increase in payments compared to 2019 and the largest year-over-year jump since the 1918 influenza epidemic. (source: 2021lifeinsurersfactbook.pdf ( ACLI also reports nearly 11% increase in payouts to beneficiaries in 2021, to over $100 billion.

The demand for life insurance policies also jumped as consumers rushed to protect loved ones. However, the life insurance industry is still trying to figure out how the dropping life expectancy rates in the U.S. by 1.5 years may affect the underwriting process. According to the MIB Life Index’s 2021 annual report, individual insurance application activity increased by 3.4% in 2021.

Based on the experts’ observations, the life insurance industry is in “major data gathering stage”, collecting information on all direct and indirect ways of Covid may be affecting mortality. Life insurance companies started asking questions about applicants’ encounters with the disease, such as history of testing positive for Covid and if they have current diagnosis. There is no vaccine question, but it is more likely to appear on the applications two to three years from now. The regulatory guidance for life insurance underwriters, who may delay or deny coverage to applicants who have or have had Covid-19, is still not in place.