What You Need to Know
- The pandemic could start to affect how policies see life expectancy.
- People who suffer from long COVID may need to cash in policies to cope with that.
- Life settlement providers might have to continue to compete with new and improved life insurer cash value offers.
As we close out 2021, agents and advisors should be looking at several key areas concerning the life insurance settlement market in the coming year.
The impact of COVID-19 on the marketplace will become clearer, more boomers will enter the market, more insurance companies will be offering a new twist on surrendering policies, and graysheeting practices will be called out.
1. Will there be a COVID-19 “effect” on life settlements?
We expect that within the next 12 months, we will have a better idea of the long-term impact of the COVID 19 pandemic upon the life settlement marketplace.
We learned in 2020 that the average American’s life expectancy plunged by a full year due to the pandemic. The average person lived to be about 78.8 in 2019 but it dropped to 77.8 in 2020.
What Your Peers Are Reading
With COVID-19 impacting seniors more than young people, it will be interesting to see if medical evaluations involving the pandemic will impact life settlement offers.
At the same time, we expect that more seniors who have tested positive and are dealing with “long haul” COVID symptoms may choose to look at life insurance life settlements as a way to help pay for medical costs
We don’t yet know the impact that chronic conditions arising from COVID-19 will have on the market. Research firm Conning said in its annual research report that its experts believe more COVID long haulers will settle policies this year.
2. The boom is on.
Baby boomers will continue to have a major impact on the market. For the past several years and the foreseeable future, many prime life settlement candidates will be the baby boom generation. They represent a well-educated deep-pocketed audience that is currently navigating the retirement landscape in ways never before seen.
The sheer number of baby boomers and their penchant to buy life insurance means that they will have an impact on the market for a long time.