MIB Life Activity Index Ends Year With an Increase

A line chart, with the line chart seesawing up and down, a nadir in April, at negative 3%, and a peak in July, at about 14%. The 3.7% figure for December looks as if it's about average for the year.

U.S. life insurers ended 2020 with solid growth in the number of individual life insurance applications received.

MIB Group Inc. says overall U.S. individual life application activity was 3.7% higher in December 2020 than in December 2019.

That's up from a 1.6% year-over-year increase between November 2019 and November 2020.

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Application activity for all of 2020 was 4% higher than in 2019. That compares with an increase of 0.4% between 2018 and 2019.

The 4% increase for 2020 was the largest full-year increase MIB has recorded since 2011.

The COVID-19 pandemic may have hurt sales in several ways: by cutting some people's income, interfering with financial professionals' ability to hold face-to-face meetings with clients, limiting in-person medical underwriting efforts and pushing life insurers to impose new underwriting rules for older applicants.

But the pandemic also may have helped sales by increasing consumers' awareness of the need for life insurance and by prompting life insurers to streamline applications and underwriting systems and procedures.

Life insurers formed MIB to serve as a vehicle to share data used to assess the riskiness of people who apply for life insurance and other forms of medically underwritten insurance.

The Braintree, Massachusetts-based nonprofit gets the life activity index figures by looking at the number of data requests flowing through its application-checking systems. MIB makes application activity summary data available to the public. More detailed data is made available to MIB member companies.

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MIB breaks life application activity volume down by three age groups. Here they are for December:

Ages 0-44: Up 3.8%
Ages 45-59: Up 5.6%
Ages 60 and older: Up 0.8%

In the new application activity summary report, MIB gives more information than it usually does about the application volume for different types of life insurance policies.

MIB reported, for example, that, for consumers ages 0 to 44, life application activity increased for policies in each death benefit amount category.

For consumers ages 71 and older, application activity increased only for policies with a death benefit over $5 million.

Application activity decreased for the oldest applicants for policies in the other death benefit amount categories — $0 to $250,000; $250,001 to $1 million; and $1,000,001 to $5 million.

Most life insurers give paramedical exams to consumers who are applying for life insurance policies with $5 million death benefits. For consumers ages 71 and older, application activity for high-death-benefit policies was strong in 2020 even though the pandemic interfered with access to paramedical exams.

Some older consumers may have applied for the jumbo policies because they were afraid of COVID-19, or because the wanted to use large life insurance policies as a vehicle for paying for long-term care.

Other older consumers may have been buying large life insurance policies to prepare for the possibility that the federal estate tax could snap back to the levels that were in place before the passage of the Tax Cuts and Jobs Act of 2017.

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MIB Life Activity Index Ends Year With an Increase

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