COVID-19 Kept U.S. Q1 Group Life Death Claims High

The COVID-19 pandemic and other factors pushed U.S. workers’ death rate far over normal levels in the first quarter of the year, according to a new survey data report from the Society of Actuaries Research Institute.

The number of group life insurance death claims at participating life insurers was 20% above the normal level during the quarter, institute analysts found.

The total amount of group life death benefits paid was 32% above the normal level.

The percentage gap between the actual number of death claims and the expected number was down from 25% in the fourth quarter of 2021.

The gap is also the narrowest it’s been since the second quarter of 2021, when the gap was just 6.8%, and life insurers were hoping the United States had defeated the COVID-19 menace.

But the latest gap between the actual group life claim count and the expected count was far wider than the gaps group life issuers had recorded before the pandemic started.

When the SOA conducted a pre-pandemic U.S. group life mortality analysis, based on life insurer data for the period from 2010 through 2013, the actual number of group life claims was always within about 2% of the expected number.

What It Means

Dale Hall, managing director of research at the Society of Actuaries, said in an email interview that, from an actuarial perspective, the COVID-19 pandemic has and will continue to be an unprecedented event.

Hall predicted that understanding how the fluctuations in mortality will affect clients’ finances will take years to become clear.

“While all advisors should be paying attention to these mortality trends, and be aware [of] how the trends relate to their clients’ financial planning, they should be cautious about overreacting, as published changes in population life expectancy presume that COVID will dramatically impact mortality for every year in the future,” he said.

The impact of COVID-19 on clients’ life expectancy might be different from the impact on the general population, he added.

The Survey

An actuary is someone who understands the math needed to manage insurance, pension plans, and other arrangements that involve risk and uncertainty.

The SOA’s Group Life Experience Committee sponsored the group life mortality survey project.

The survey team received data from 20 of the top 21 U.S. group term life insurers, and those insurers account for about 90% of the employer-sponsored group term life plans in place.

Group Life Insureds vs. the General Population

When the COVID-19 pandemic began, the impact on U.S. workers with employer-sponsored group life coverage was smaller than the impact on the U.S. general population.

In the second quarter of 2020, for example, the excess mortality level was 20% for the general population and just 16% for group life insureds.

But the excess mortality percentage has been higher for group life insureds than for the general population for every quarter since the fourth quarter of 2020.

In the latest quarter, the 20% excess mortality percentage for group life insureds was 2 percentage points higher than the 18% excess mortality percentage for the general population.

Location

The survey team has provided excess mortality tables with data broken out based on factors such as geographic region and age.

In the first quarter of this year, for example, group life mortality was just 6% higher than the normal level in the West but 34% higher than normal in the Midwest.

Age

Group life mortality was 9% lower than normal for workers ages 0 through 24, and just 3% higher than normal for workers ages 85 and older.

But mortality was 36% higher than normal for the 35-44 age group, 37% higher than normal for the 55-64 age group and 43% higher than normal for the 45-54 age group.

(Image: BGStock72/Shutterstock)