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Industry Update: COVID Restrictions Lifting | 2020 Deaths Increased 16% | Principal News

COVID-19 Underwriting Update
 
Last year, many insurance companies implemented changes to their underwriting and business practices due to the COVID pandemic.  Some of those changes remain, while others continue to evolve due to the overall improvement in the Coronavirus impact.

  • Online applications and e-policy delivery are the new norm for many carriers.
  • Carriers are starting to lift temporary underwriting restrictions (older &/or rated clients are now eligible for coverage).
  • Accelerated underwriting programs still available for healthy clients, ages 18-60, up to $3M of coverage. This allows clients to avoid the “in person” exam and usually required blood and urine testing.

 
Mortality Increases in 2020
 
The COVID-19 pandemic significantly impacted the U.S. life insurance industry in 2020.  Total death benefits paid out rose $8.8 billion, an increase of 16%.  The higher death benefits led to wider operating losses incurred for individual life insurance, as this business line has faced the need for higher policy reserves as a result of the multi-decade decline in interest rates, and the aging policyholder base for the industry. 
 
Mortality for the Life Insurance Industry in 2020
 
 
Principal Financial to Discontinue Sales of Fixed Annuities & Some Life Products
 
Principal® recently announced changes to its portfolio and capital management strategy to help drive profitable growth, reduce capital intensity, sharpen its strategic focus, and generate long-term value for shareholders, following the completion of its strategic review. 
 
What does this mean?

  • All pending applications and contracts will continue to be processed and honored. This announcement does not halt anything that is currently in flight.
  • All sales will be discontinued for U.S. retail fixed annuities and consumer life insurance products by the end of the third quarter 2021 (no specific dates have been provided).
  • They are pursuing strategic alternatives for related in-force blocks.
  • They will focus exclusively on the business market—particularly small to medium-sized businesses.
  • They will still offer retail individual disability products.

Principal Announces Results of Strategic Review

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