The COVID-19 pandemic sent life insurance payouts soaring to the highest level in a single year ever in 2020 and drove the largest year-over-year spike since the 1918 pandemic, an industry group said Thursday.
Life insurance companies paid more than $90 billion to beneficiaries in 2020, the highest ever on record, according to the American Council of Life Insurers.
That’s up from 2019 by 15.4 percent, the fastest year-over-year increase since 1918, when another pandemic ravaged the world, sending life insurance claims up a whopping 41 percent.
Despite the record increase, payouts for the year were actually lower than the industry expected early in the pandemic because so many of the deaths were older people who typically have smaller life insurance policies, the Wall Street Journal noted.
More than 385,000 people in the US died of COVID-19-related complications in 2020, according to the most recent death certificate data from the US Centers for Disease Control and Prevention. It’s unclear how many owned life insurance.
It’s possible that new deaths in 2021 could drive payouts even higher than in 2020. More people have died of COVID-19-related complications this year already than in 2020, according to the CDC, and more deaths have occurred among younger parts of the population, perhaps due to the emergence of the Delta variant.
More deaths among employed people would likely drive payouts higher, because working people are often covered under employer-sponsored life insurance policies. Once people retire, they often opt for a cheaper program.
In the 1918 flu pandemic, some 675,000 people died in the US, driven largely by people younger than 5 years old, 20 to 40 years old, and older than 64, according to data from the CDC.