Rumor Has It Life Insurance Claims Are Up.
What Does That Mean For You?
Rumor Has It Life Insurance Claims Are Up. What Does That Mean For You?
It’s no secret that the world is a more dangerous place than it used to be. And U.S. death rates are significantly higher—especially since COVID crashed onto our shores.
We’ve all suffered losses recently. Inflation, fires, floods, rising home insurance payments, loss of loved ones. One can assume these losses translate to higher life insurers’ claims.
Two insurance companies claim they have. according to a recent Crossroads Report, Lincoln National death benefit payouts increased an eye-popping 162% in 2021, almost one billion more than it paid in 2020.
A state insurance department annual statement from One America reflects a 40% increase in claims payouts in the third quarter of 2021. Prudential and Northwestern Mutual suffered higher payout percentages in 2021 as well.
Yet all has been quiet on the news front.
“I’m shocked that this is not a bigger story,” says Will Kibler, Managing Agent at PolicyWand. “If more people are dying you would think this would be a headline somewhere.”
Kibler says that the partners they do business with aren’t reporting the same losses. “They usually don’t lose money. But I will say that in general, most insurance companies are very protective of their mortality statistics. It’s just not something you see them divulging publicly. These companies—Lincoln especially—are in the rare position of having to explain their losses.”
A Lincoln press release states that the claims the company paid out were related to “non-pandemic related morbidity” and “unusual claims adjustments.” The release does not share the number of actual claims filed.
“I think these companies’ higher morbidity numbers are the results of a culmination of things,” says Kibler. “Drug and alcohol abuse rose exponentially during the pandemic. And there was a massive decline in health care throughout the pandemic.
“The economic dislocation associated with efforts to quell the spread of the disease may have had some negative health costs,” Kibler continues. “It looks like there was a drastic rise in the number of minorities who were affected.”
Whatever the reasons for the rise in payouts, Lincoln increased its sales by 42% and raised its premiums by 4%.
Does this mean those of us who want to buy life insurance face higher premiums? “It’s hard to say,” Kibler says. “There’s a lot of competition in the life insurance market. I think inflation will take a toll on premiums more than morbidity will.”
So, what can consumers do to keep from spending a fortune on life insurance in light of rising costs? Kibler advises against wasting time trying to find the right company with the right policy on your own. “Find a place that does the shopping for you. One that has access to a large chunk of the market and helps you find the best price.
“Rates for insurance do not vary based on where you receive your quote from,” continues Kibler. “But there are a few agencies that make it easier for the consumer to compare life insurance rates online and don’t require any contact information to compare quotes. There are also other options from agencies that gather information up front but also provide the ability to compare the same quotes online.”