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Older Baby Boomers Drive Uptick in 71-and-Up Life Application Activity

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What You Need to Know

  • The overall individual life activity level was 1.4% lower in May than in May 2021.
  • The activity level for applicants ages 71 and older was up 10%.
  • Demand from clients who needed between $1 million and $2.5 million in coverage increased.

Your clients might be more likely to be using life insurance for long-term care planning and as a defense against uncertainty about estate tax rules.

MIB Group has included data raising those possibilities in its latest monthly U.S. individual life insurance application activity report.

The overall individual life activity level was 1.4% lower in May than in May 2021.

The Index

MIB is a Braintree, Massachusetts-based group that helps life insurers exchange some of the data used to evaluate life insurance applicants. The index figures are based on MIB’s own underwriting system activity levels.

The MIB activity index has been more volatile than usual over the past two years. The COVID-19 pandemic caused a sharp slump in sales from around April 2020 until late in 2020, followed by a big spike as pandemic-related upheaval eased and pent-up demand for coverage pushed clients to fill out applications.

The year-over-year drop in May was the smallest MIB has recorded this year. In April, for example, the MIB activity index was 12% lower than in April 2021.

The Details

Here are the activity change figures, broken down by age group, for May:

  • Ages zero-30: down 2.6%
  • Ages 31-50: down 1.4%
  • Ages 51-60: down 2.8%
  • Ages 61-70: down 1.8%
  • Ages 71 and older: up 10%

Here’s what happened to activity changes, broken down by product type:

  • Universal life: down 0.1%
  • Term life: down 0.6%
  • Whole life: down 9.3%

MIB did not give percentage change figures broken down by death benefit level, but it did note that activity was up for death benefit amounts under $250,000, and for amounts ranging from $1 million to $2.5 million.

Price Stability Continues to Plague Policygenius Price Index

Policygenius, a life insurance web broker, began using its term life pricing information — for 20-year, level-premium term life — to create a stream of monthly term life price index data.

The cheapest coverage included is for a 25-year-old female nonsmoker who needs $250,000 in death benefits, and the most expensive is for a 55-year-old male smoker who needs $1 million in death benefits.

Policygenius introduced the index when the COVID-19 pandemic was under way. Since it introduced the index, inflation has roared back into public consciousness.

In spite of all of that drama happening in the economy as a whole, the insurers that feed Policygenius data have stuck with stable, undramatic pricing. This month, the lowest price in the Policygenius price tables held steady, at $14.21. The highest price, for the 55-year-old male smoker, held steady at $1,016.10.

What It Means

Strong growth in application activity for life insurance shoppers ages 71 and older could simply be a result of an increase in the number of older consumers, due to the aging of the baby boomers.

The youngest boomers are turning 58 this year, and the oldest are turning 76.

The strong performance of application activity for the oldest consumers could also reflect life insurers’ ongoing moves to eliminate pandemic-related underwriting restrictions they had been imposing on older applicants.

Another possibility is that at least some of the increase may reflect changes in how older consumers are using life insurance.

Older consumers could be making more use of life insurance-based arrangements to protect themselves against future long-term care bills, to protect large estates from any future expansion in the scope of estate tax obligations, or to serve as an alternative to income annuities.

The relative strength of universal life applications could also be a clue about what clients are thinking.

Consumers typically use term life insurance, or policies designed to stay in place for specific periods of time, to maximize the amount of death benefits they get per premium dollar.

Some consumers use permanent life products, such as whole life and indexed universal life, in retirement income planning and other forms of income planning. Those products cost more than term life but are designed to stay in place until the insured reaches age 120 and build up cash value over time.

Stability in use of universal life insurance could reflect increased client use of permanent life products in income planning arrangements and long-term care planning arrangements.

(Image: sirtravelalot/Shutterstock)


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