Sales of life insurance in the United States increased due to fears of Covid-19
Sales of life insurance in the United States increased due to fears of Covid-19

Sales of life insurance in the United States increased due to fears of Covid-19

Americans went on a shopping trip for life insurance in 2021, driven by worries about deaths from the continuing coronavirus pandemic.

Premium volume for new individual life insurance policies increased by 20% compared to 2020, while the number of policies issued increased by 5%, the largest percentage increase from year to year since the 1980s, according to industry-funded research firm Limra.

“When we zero in on the one million Americans who tragically lost their lives, it’s not surprising that people think about their own mortality and the impact on their loved ones if something should happen to them,” said David Levenson, Limra’s chief executive. Manager.

The exact number of policies sold is still being calculated, but it is expected to peak at 10 million, Limra said. That milestone was last crossed in 2016. In 2020, an estimated 9.83 million policies were sold, an increase of 1.7% from 2019.

The growth in 2021 in annual premiums charged from new sales exceeded the growth in the number of policies sold, in part because the average size of policies increased. Limra said inflation was not a factor in the higher income figures.

Sales increases in 2021 follow decades of declining and sluggish activity across the U.S. life insurance industry. For many years, Americans have been more concerned about surviving their savings than dying prematurely, according to studies and industry executives. Purchasing individual life insurance policies fell into priority as they contributed to 401 (k) s and other savings, and many insurance companies increased sales of annuities and mutual funds as a result.

Many people in recent decades have relied on life insurance from their employers, which became a more common workplace benefit from the 1980s. When the pandemic damaged the economy, sale of individual policies got a boost, in part because people either lost their employer-sponsored life insurance or feared losing it, insurance companies and agents said.

In 2020, insurance companies and agents were still struggling with how to sell and draw up policies amid Covid-19 directives on home stays and other disruptions. And some insurance companies suspended or completed sale of certain types of policiesmovements associated with declining US interest rates and the consequent pressure on the profitability of these products.

Last year’s sales growth reflected the expansion of online and other opportunities directly to consumers gave insurance companies the opportunity to better reach people of inferior means. Sales of policies below $ 100,000 grew fastest in 2021, a 7% increase, including many modest insurances aimed at covering people’s funeral expenses and other bills, Limra said.

“As a result of the pandemic, there is greater consumer demand for life insurance to cover funeral and final expenses,” said Mr. Levenson.

At the same time, the industry added some of the higher incomes, more complicated and larger sales that were lost, as shutdowns and fears of Covid limited insurers’ ability to collect blood and urine samples, amid other challenges.

Whole life insurance was a popular choice in 2021. This type of policy combines a death benefit with a savings component and is designed to be in place until the insured dies. It does this by allowing tax-deferred savings to build up to be used to help offset the rising cost of insurance as the person gets older. The average face value of a life insurance policy rose 12% to $ 76,211, Limra said.

The face value of the average lifetime policy increased by 2% to $ 498,871. Term life is a basic type of coverage that is paid out if death occurs in a certain number of years. The policies are popular with young families who want to be able to pay the mortgage and tuition bills if a breadwinner dies.

“People saw healthy individuals who were on their feet one day within a few days that required hospitalization and ventilators,” said Steven Crabbe, an agent for New York Life Insurance Co. in White Plains, NY. 2020 as a measure, he said.

“We got them covered so they had peace of mind,” he said, adding that the improved economy made customers more comfortable committing to longer-term products by 2021.

Since the early days of the pandemic, many insurance companies have relaxed the requirements for blood and urine tests to accommodate applicants’ health. Some stepped up the use of increasingly digitized journals. An increasing number automated their drawing programs and now have online platforms.

Write to Leslie Scism at [email protected]

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