COVID-19 raised consumers’ awareness about the importance of life insurance. According to LIMRA research, half of U.S. workers believe their life insurance benefit is more important due to COVID-19. To ensure every worker who has access to life insurance at their workplace opts in, our industry needs to expand efforts to educate employers about the value their workers place on life insurance and encourage them to highlight this important benefit during their next open enrollment.
A Growing Opportunity
LIMRA is forecasting in-force workplace benefits life insurance to grow 5.4% in 2021, a significant jump from the 3% annual growth experienced over the past several years. Many factors play a role in the forecast, including U.S. employment levels, wages, salary growth, and overall U.S. economic activity. All of these reflect a changing, dynamic marketplace. LIMRA’s proprietary model incorporates these data along with its carrier-provided workplace benefits life insurance sales and in-force database.
Unlike the 2007-2009 Great Recession, when it took over five years for jobs to fully recover, current estimates are for a full economic recovery by late 2022. A quick recovery, resulting in new hiring and rising wages, should bolster the number of people eligible for workplace life insurance as employers are able to expand their benefits offerings.
The growth of economic activity, however, will be uneven across industries. Unfortunately, some lagging industries have a higher tendency to offer benefits, which will hamper employee access in industries that are slower to recover.
Longer-term, LIMRA expects the growth of workplace life insurance in force to range between 3.5% and 3.9% per annum as the growth of economic activity slows. As the economy recovers, average wages will continue to grow, albeit at a much slower pace than what is expected for 2021. Rising inflation is an added concern. Changing employer-employee relationships, the evolution of a hybrid workforce, and shifting demographic trends all contribute to a dynamic marketplace that presents challenges. Two macro-trends, in particular, will have an effect on connecting employees with the coverages they need through the workplace: the impact of the pandemic on working women and the aging workforce.
Related: Voluntary products and processes
The pandemic is having a disproportionate effect on working women with young children. According to the U.S. Census, of the 25% of parents aged 25-44 not working due to COVID-19-related issues, 32% are women. Over the past 40 years, women have been the engine of employment growth, and that growth is now under strain. To address this vulnerability, employers need to be proactive and have support models in place that provide for flexibility as working parents look to return to and be part of the workforce, both today and in the future.
Second, the long-discussed effects of an aging workforce will become more acute in the next five years. According to the U.S. Census, by 2029, 25.2% of workers will be age 55 or older. On one hand, this will drive premium growth, in that life insurance rates increase with age. On the other hand, claims also increase with age. Employers need to be vigilant about monitoring the impact that an aging workforce has on their ability to provide comprehensive benefits to their entire employee base.
A Call to Action
During tumultuous times like the pandemic, consumers look to our industry and the products and services it provides. Are we going to be there to deliver? The workplace is a trusted avenue that many consumers take to obtain the insurance coverage they need. Are we going to help employers understand the value of life insurance, and make it easy for their employees to learn about and enroll in the benefits they say they want? In this time of need, the workplace benefits industry is uniquely positioned to deliver on the industry’s promise to protect our families. Let’s not let this time go by without a full-court press to get every eligible worker the life insurance coverage they need.
Anita Potter is Assistant Vice President of Workplace Benefits Research at LIMRA.