COVID-19 Leading to Lower Life Expectancy and Higher Life Settlement Values

The number of Covid deaths significantly impacted the average life expectancy in the US in 2020. The life expectancy for Americans decreased by almost two years due to the Covid death toll. These numbers will have a significant effect on the life settlement market. Researchers haven’t seen such a drastic decline in life expectancy in the US in decades. Some experts even believe that US life expectancies will stagnate or even decline for the next few years.

Other Past Events Impacting Life Expectancy

Covid deaths aren’t the only major event that has negatively impacted the average life expectancy in the US. For example, the 1918 influenza pandemic caused life expectancy to drop by 11 years, and it also decreased again during World War II. Recovering from these major life events also took many years. Typically, changes in life expectancy in the US move at a glacial pace, but large-scale events can greatly impact these numbers.

Groups Affected the Most

Death rates increased for people in all age groups in the United States 15 years or older in 2020. However, people 85 or older died much more frequently than the rest of the population, while people between 35 and 44 experienced the biggest rise in death rates. These Covid deaths also highlight long-term disparities in access to health care, as black men died at a higher rate than other ethnic groups. Death rates for Hispanic men and women also significantly increased due to the pandemic.

Third Leading Cause of Death

Heart disease and cancer remain the most common killers throughout the United States. However, Covid-19 was the third-leading cause of death, as it outpaced diabetes and Alzheimer’s disease. These figures are most likely undercounted, as physicians were still learning how to treat patients infected with Covid-19, as many people may have been misdiagnosed.

Infant Mortality Rate Decreased

One of the good news during 2020 is that the infant mortality rate decreased by 2.9% to a record low. Initially, medical experts expressed concern about pregnant women not receiving proper prenatal care due to the suspension of in-person visits in many areas of the country. However, telemedicine has made it possible for many people to receive healthcare without leaving their homes.

Insurance Actuaries and Cash Value Life Insurance Policy

Many different factors affect the worth of life insurance policies, which ultimately impacts the life settlement value. Most life insurance settlement companies are searching for $100,000 or more face value policies, as a more considerable death benefit equals a larger life settlement. The premium costs and the whole life policy cash value are other significant factors determining the life settlement value.

Of course, the average life expectancy is the most critical aspect of calculating the value of a life settlement. Many other traits need to be considered, such as age, weight, if they smoke, and if they have any underlying health conditions. All of these different factors impact life expectancy. The Covid death toll only further creates more uncertainties, as life settlement payouts will increase.

What is the Cash Value of a Life Insurance Policy?

Understanding the cash value of a life insurance policy is essential, as it’s simply the part of your policy that earns interest, and you may be able to borrow or withdraw against it during an emergency. Types of insurance that may include cash value include:

• Whole life insurance

• Universal life insurance

• Indexed universal life insurance

• Variable universal life insurance

Other Factors Impacting Life Settlement Market

The life settlement market is ever-changing, and it’s impacted by numerous factors, such as policy availability, supply/demand, and purchasing capital. All of these different factors are constantly monitored, but life expectancy remains the cornerstone of determining the policy’s value. In other words, shorter life expectancies often mean more significant offers for life insurance settlement options. Getting a life insurance policy appraisal is critical in determining the value of the life settlement in these uncertain times. Recalculating these offers is important, as even a few small changes can significantly impact the value of a life insurance settlement. Evaluating all of the data is vital for an insurance actuary, as numerous factors will continue to make a large impact on life expectancy in the US.

Closing Thoughts

Covid deaths made a substantial impact on the life expectancy in the US. The decrease in lifespan will lead to bigger payouts for life insurance settlement options. The average life expectancy may also remain stagnant for the foreseeable future, which will impact life settlement companies. Keeping up with this information is critical for insurance companies that track life expectancy, as no one knows for sure about the future pandemic.

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