COVID-19 didn’t have quite the impact on the life insurance industry that some were fearing, but it still has resulted in the highest-ever number of payments to beneficiaries.
Life insurance policies paid out over $90 billion in 2020, a 15.4% increase over 2019. That’s the largest year-over-year increase since the 1918 influenza pandemic.
While insurers paid out more than ever before, they were also busy with new business. Spurred by fears of the pandemic, people bought a record $3.3 trillion in life insurance coverage last year—some 43.1 million policies. That brought total life insurance coverage last year to $20.4 trillion in the U.S.
Things could have been considerably worse for life insurance companies. Many of the victims of COVID-19 have been older people who generally have smaller policies.
The COVID-19 pandemic caused approximately 377,883 deaths in the United States during 2020, according to the Centers for Disease Control and Prevention. Some 81% of those deaths were of people age 65 and older. It’s unknown, though, how many of those seniors had life insurance policies.
The Delta variant changed the demographics. The Wall Street Journalnotes that since the arrival of that mutation, the number of deaths of those above age 65 has declined to 69% of the total, with a big increase in fatalities among people ages 45 to 64. And we’re still determining the impact of Omicron, which is four times as transmissible in its early stage as Delta.
COVID deaths in 2021, meanwhile, have topped 2020 as of last month, which could put the insurance industry on track for another record year of payouts.
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