US life insurers are set to pay a record $100 billion in death benefits in 2021, an industry trade group said, on another year of high Covid-19 deaths.
According to the American Council of Life Insurance, payouts due to the pandemic are set to rise 11% to $100.19 billion in 2021. The increase followed a 15% year-over-year increase in 2020, when death-benefit payments totaled $90.43 billion.
ACLI compiles data from annual filings by insurers to state insurance departments. Given the limitations in the filing, the group couldn’t break down the causes of death, but Andrew Melnyk, ACLI’s vice president for research and chief economist, said it’s reasonable to expect an increase in the pandemic.
The year-over-year increase is the largest since the 1918 flu pandemic, when payments soared 41%. The ACLI said they are well above the 4.9% average from 2011 to 2021.
According to data from the US Centers for Disease Control and Prevention, deaths from COVID-19 in the US are projected to increase by 20% to nearly 460,000 in 2021. Deaths trended down as the Delta variant spread across the country, although older Americans were still largely afflicted.
According to ACLI data, delta deaths have substantially increased payments under employers’ benefit programs, although most of the $100 billion came from individually owned policies.
Myrna Guerrero, national sales director for Primerica Inc., one of the nation’s largest sellers of term-life policies, said it was sad to see young families affected by COVID-19 deaths last year. In two instances of term-life policies sold by its Phoenix-area office, the policyholders left behind three or more children.
Ms Guerrero said of the families, “Obviously, we won’t take away the pain of losing someone, but financially they will be fine.” ,
Primerica said the company’s death claims are set to rise nearly 34% to $2.25 billion in 2021, up from $1.69 billion.
Life insurers are also looking at deaths that appear to be indirectly linked to Covid-19. In the quarterly earnings, some claim an alleged jump in deaths that they believe is linked to delays in medical care as a result of the 2020 lockdowns, and then, later, people’s fear of seeking treatment, as well Difficulty keeping up with appointments.
In the early days of the rapid spread of Covid-19, the industry faced a severe financial burden. But the cost has proved manageable partly because so many victims were in their 80s and 90s and typically had little policy, if any insurance at all.
In a recent webinar, Carmi Margalit, who leads the life-insurance sector at S&P Global Ratings, said most insurers entered the pandemic with strong capital buffers. Ratings firm AM Best maintained a stable outlook on the industry in its November analysis, saying strong sales across various product lines and diverse income streams also helped. But this year there has been an unusually large increase in the sale of life insurance policies.
In Tulsa, Okla., agent Vicki Ford of New York Life Insurance Company said that in 2020 and 2021, she helped about five families with claim paperwork for deaths linked to COVID-19. This was almost half of the total number of deaths for his office. Payments to beneficiaries ranged from $92,000 to $206,000.