COVID linked to high life insurance payouts

A record $100 billion was paid out in life insurance benefits in the US in 2021, and COVID-19 deaths most likely caused the increase in death-benefits payments, an industry trade group said Monday.

Payouts jumped 11 percent in 2021 to $100.19 billion, said the American Council of Life Insurers (ACLI). The increase was on the heels of a 15 percent year-over-year rise in 2020, when death-benefit payments totaled $90.43 billion.

The increases are among the largest year-over-year increase since the 1918 influenza pandemic, when payments had surged up to 41 percent.

"For the second year in a row, life insurance benefit payments increased by double-digit percentages," Andrew Melnyk, ACLI vice-president and chief economist, said in a statement Monday, according to The Wall Street Journal. The average life insurance benefit payments increase from 2011 to 2021 is 4.9 percent, the ACLI said.

The purchase of life insurance coverage in 2021 also rose, with nearly 46 million life insurance policies purchased last year, a 6.1 percent increase over 2020.

With the threat of COVID-19 still on consumers' minds, people continued to seek life insurance coverage, Melnyk said. The total life insurance coverage reached a record $21.2 trillion in 2021.

ACLI data also showed that in 2021, annuity payments, which most typically go to retirees, hit a record high for a single year, with insurers paying out $97.7 billion to annuity holders.

The ACLI data doesn't break down the causes of death of life insurance policyholders, but it is reasonable to attribute the bulk of the increase to the COVID-19 pandemic, said Melnyk.

COVID-19-related deaths in the US rose by 20 percent in 2021 to approximately 460,000, according to US Centers for Disease Control and Prevention (CDC).

That means that coronavirus is likely to rank third as a cause of death in the US this year. By comparison, heart disease and cancer kill roughly 600,000 people each year; accidents, 170,000; stroke, 150,000; and Alzheimer's, 120,000. Influenza, in contrast, kills 12,000 to 52,000.

On average, more than 300 people are still dying each day from COVID-19, most of them age 65 or older, according to the CDC. While that's much lower than the 2,000 daily deaths at the peak of the Delta wave, it is still about two to three times the rate at which people die of the flu.

While older Americans have been hit the hardest during the pandemic, the trend has become more pronounced, according to The Washington Post. Today, nearly 9 in 10 COVID-related deaths are in people 65 or older — the highest rate ever, according to an analysis of CDC data by the Post.