Life insurance companies paid out a record $100 billion to beneficiaries of life insurance policies, as well as $97.7 billion to annuity holders in 2021, according to an annual report from a trade association representing the life insurance industry.
According to the American Council of Life Insurers’ (ACLI) 2022 report, payments last year increased 10.8 percent over 2020. That year, life insurance payments increased 15.4 percent over the year prior, representing the largest year-over-year increase since the 1918 flu epidemic.
This two-year look-back on life insurance payouts underscores the wide-ranging impact of the COVID-19 pandemic. Both Europe and the U.S. “experienced substantial excess mortality in 2020 and 2021 related to the COVID-19 pandemic,” according to findings published in a scientific journal earlier this month.
During 2020-2021, Europe experienced 110.4 excess all-cause deaths per 100,000 people, while the U.S. had 154.5 excess all-cause deaths per 100,000 people.
“For the second year in a row, life insurance benefit payments increased by double-digit percentages. And for the second year in a row life insurance companies stepped up to the challenge while also paying record-high annuity benefits, which typically go to retirees,” Andrew Melnyk, ACLI Vice President, Research & Chief Economist, said in a statement. “It is a testament to life insurers’ ability to prepare for any eventuality and deliver on their promises to consumers at all times.”
ACLI finds that as individuals still worry about potential negative outcomes associated with COVID-19, people exploring options for life insurance coverage has surged.
In the event of a person’s death, some debts are discharged. But, others must still be paid through the estate. Those costs, along with additional funeral expenses and the lack of future household income — particularly if the person who passes is the primary income-earner for the household — makes life insurance a key part of many Americans’ financial planning.
ACLI’s latest reporting shows that 46 million life insurance policies were bought in 2021 — a 6.1 percent increase from 2020 — and total life insurance coverage reached a record $21.2 trillion.