Prices for just about everything are up over the last six months. But, while consumers are experiencing sticker shock for nearly everything they purchase, one industry where prices have remained stable is life insurance.
Despite the Omicron variant of COVID-19 wreaking havoc across the country, prices of life insurance remained stable, according to the Policygenius Life Insurance Index.
Rates Remain Stable
Many people seeking new life insurance policies may be concerned that premium prices could be significantly more expensive than they were just a few years ago. That’s natural, as the global pandemic has disrupted almost every aspect of life.
But, that simply hasn’t been the case, according to the Policygenius Life Insurance index. The report, released in December, showed that all demographics experienced a drop in pricing that they described as “nominal.”
The demographic that saw the largest decrease was 25-year-old males. Those looking for $250,000 in life insurance coverage experienced an average drop in premium price of 1.55%.
This is welcomed news for people interested in obtaining new life insurance policies, and for insurance companies as well. The latter has experienced some rough times recently.
As the Omicron variant first emerged around Thanksgiving last year, stocks for most prominent insurance companies dropped anywhere between 3.5% and 5%. At least one major insurance company saw a drop of 9.58% in stock value.
What Affects Life Insurance Rates?
Life insurance rates are not affected by the same market activities as consumer goods. So, while things such as inflation, supply chain shortages, and the war between Russia and Ukraine can all cause huge and sudden spikes in consumer good prices, these things don’t necessarily affect life insurance rates as directly.
That’s not to say that life insurance rates aren’t in some ways tied to the overall market and fluctuations it experiences. Instead, life insurance rates tend to vary based on the personal profile of applicants, as well as overall life expectancy.
In general, life insurance rates are based on three major factors: an applicant’s overall health profile, the length and type of insurance policy, and the amount of coverage the policy will provide.
Generally, the healthier a person is, and the younger they are, the better rates they are able to obtain for most like insurance policies. As a person’s health profile changes, and as they age, rates for insurance policies could be subject to increase in prices.
The same goes for the length of the policy and the amount of coverage sought. Typically, the longer the policy term and the more coverage sought, the higher the premium rates will be.
Life Expectancy Dropping
For the second year in a row, the overall life expectancy in the United States dropped in 2021. The COVID-19 pandemic was a major drop in that life expectancy, which now sits at 76.6 years. That’s the lowest mark in at least 25 years, according to a recent analysis.
In 2021, life expectancy dropped a half-a-year. That followed a steep drop of two full years of life expectancy in 2020, due to the onset of the COVID-19 pandemic.
Many experts were hoping that the increased availability of vaccines last year would result in a rise in life expectancy again, but that didn’t happen. It did, however, level off a bit from the dramatic decrease experienced in 2020.
Despite this drop in life expectancy, though–and despite the emergence of multiple COVID-19 variants that proved much more contagious than variants of the past–life insurance rates still remained stable.
This is certainly welcome news for people considering new life insurance policies. While they may have been worried about exorbitant price increases due to these factors, the data is showing that they have nothing to fear in this case.
What the Data is Based On?
The Policygenius Life Insurance Index is based around the average rates for life insurance policies from the leading insurance carries in the country. The index is published every month, showing trends in pricing for consumers in the U.S.
The 10 life insurance companies that offer life insurance policies through the marketplace on Policygenius are included in the data. Policygenius pulls data from the internal actuarial rate tables for these companies to create the average monthly life insurance policy rate.
The index breaks down average rates for life insurance policies for various customer profiles (their gender and age) as well as the type of policy (the amount of coverage and the term).
Work with an Insurance Marketing Organization
As a leading Insurance Marketing Organization (IMO), Good Life Insurance Associates (GLIA) provides a full range of insurance products, back-office services, and tools to support your individual clients’ wants and needs. We provide financial advisors and insurance agents in our network across the country with access to a full range of premium carriers, expert support services, and an industry-leading compensation plan.
Contact us today to learn how we can help you establish and grow your insurance business!