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Insurer Sees COVID-19 Hitting People With Life Insurance Harder

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What You Need to Know

  • Company pandemic-related claims peaked at $38 million in the first quarter but fell to $11 million in the second quarter.
  • Claims jumped back up to $33 million in the third quarter.
  • The company received about $3.5 million in life claim costs per 10,000 U.S. deaths, up from an earlier estimate of $2 million per 10,000 U.S. deaths.

Globe Life says it’s seeing what federal government COVID-19 trackers are seeing: The pandemic is hitting the kinds of working-age people who are likely to have life insurance harder.

Globe Life — a life insurer that focuses on serving middle-income Americans — said Wednesday that the surge caused an unexpected increase in life insurance claim costs in the third quarter.

The McKinney, Texas-based life and health insurer recorded a profit in the third quarter: It reported $189 million in net income for the quarter on $1.3 billion in revenue, compared with $189 million in net income on $1.2 billion in revenue for the year-earlier quarter.

But the flow of life insurance claims attributed to COVID-19 increased to $33 million in the latest quarter. That figure was down from $38 million in the first quarter of the year, but it was up from $11 million in the second quarter.

The delta variant version of the virus that causes COVID-19 led to higher infection rates and death totals than Globe Life had expected, the company said.

“Compared to prior periods, the COVID deaths were concentrated in geographies and younger age groups where the company has greater risk exposure,” Globe Life said.

A New Life Claim Estimation Formula

In recent quarters, Globe Life executives estimated that the company would incur about $2 million in extra life insurance claims per 10,000 U.S. COVID-19 deaths.

The actual ratio in the third quarter was about $3.5 million in life claims per 10,000 U.S. pandemic-related deaths, the company said.

More on this topic

The company is now predicting that it will face about $3.5 million in claims per 10,000 U.S. deaths this quarter, and about $3 million to $4 million in claims per 10,000 U.S. deaths throughout 2022.

“We anticipate that COVID deaths will continue at elevated levels throughout 2022,” the company said.

The Agents

Globe Life gets many of its sales from a large network of agents.

The total number of agents increased 0.5% between the third quarter of 2020 and the latest quarter, to 13,692.

The number of new agents fell 4.8%, to 9,249.

The number of agents who stuck with Globe Life for more than one year increased 14%, to 4,443.

Life vs. Health

Here’s what happened to premium revenue for the company’s main lines of business:

  • Life Insurance: $729 million (up from $674 million)
  • Health Insurance: $299 million (up from $288 million)

Here’s what happened to new net sales:

  • Life Insurance: $128 million (unchanged)
  • Health Insurance: $43 million (down from $45 million)

(Image: Adobe Stock)