A year ago, I explained that the US life insurance industry survived the first phase of the pandemic despite deaths increasing from 2.85 million in 2019 to 3.39 million in 2020. Fearful Americans bought more life insurance, and most of those who died from Covid-19 were old and hence expected to die soon, in a statistical sense, anyway. Essentially, their individual life insurance policies had been “bought and paid for.”
That overall deaths ticked up slightly in 2021, to 3.42 million, would not, therefore, seem troubling. In the second half of the year, however, mortality unexpectedly spiked among working Americans covered by “group” policies through their employers. That is shocking because the idea behind group life is that the mortality rate of working adults is both low and stable. Premiums in that highly competitive segment of the industry are accordingly low, with little margin for error.
