The rise in mortality rates shows the true power of life insurance

For the past several years, this blog has basically been a rerun (highlights) of whatever is going on in my email list. 

I didn't have time to do an extra blog post on top of my normal daily emails, but shit has gotten ridiculous lately. The Narrative™ has come to the life insurance industry, and so I decided it's time to come out of "retirement" and start publishing new stuff. 

Boy, did I choose a doozy of a day to start doing this. 


About those life insurance mortality rates...

Serial entrepreneur Steve Kirsch, among others, has been airing One America's dirty laundry. The news?

"Unprecedented: Deaths in Indiana for ages 18-64 are up 40%."

That sounds... unprecedented. 

The story appears to have originated on The Center Square, and has spread like wildfire across the alt-media blogosphere. It's reminiscent of the methods discussed in Ryan Holiday's book, Trust Me, I'm Lying.

I don't know how much these folks know about the life insurance business, but my guess is... not much.

To me, the narrative sounds suspect.

Here's why I say that: 

I have it on good authority (from a source that works directly with One America) that claims are up, but those claims include both group life insurance and disability. It's still high, but it's also only for group life insurance and disability, not individual life and disability.

When Kirsch writes, "Deaths among 18-64 year-olds (who don’t normally die) are up by 40% in 2021 vs. pre-pandemic levels", he makes it sound like deaths are up in the general population. 

He goes on to state that a 40% increase in mortality across the U.S. general population would mean 187,000 excess deaths over a period of Q2, Q3, and Q4.

This same, or a similar, narrative is echoed elsewhere.

But... is it true? Has the alarm been sounded? Is it a red alert? Are we witnessing the beginning of the zombie apocalypse?

No. 

First of all, this whole thing is blown out of proportion. Some aspects of what's being reported are true, but it doesn't paint an accurate picture of the truth or the severity of what's happening. So, while it's true that death rates have increased in the group life insurance market by a significant percentage (and in the general population) compared to pre-pandemic levels, the situation is not nearly as dire as some would have you believe.

And, in fact, total deaths remain relatively low when measured against the total U.S. population.

When Scott Davison, CEO of One America, mentioned deaths increasing in the 18-64 age group in the webinar, he was specifically referring to people in the group insurance plans. Here's Scott in his own words:


Group life and disability is a strange animal. It's not medically underwritten like individual policies are. Meaning, a person who is sick and otherwise uninsurable can still get group life insurance... just like they can get group health insurance. 

And, because of this, group insurance plans introduce something called adverse selection——people who are the highest risk seek out more insurance than those who are the lowest risk. If you know you can't get insurance, you immediately want lots and lots of it from anyone who will sell it to you... which is why it is well-known and uncontroversial that group plans skew towards people with co-morbidities and the otherwise uninsurable.

This is either unknown to the alt-media blogosphere or somehow irrelevant to their narrative.

And so, Kirsch, and others like him, spend considerable time extrapolating mortality rates for the general population from group life insurance mortality experience at one (rather small) life insurance company 

To me, this seems foolish.

Yes, a great many Americans are fat, lazy, and out of shape (unless you count "round", which... is technically a shape). But, the group insurance market is not necessarily a proxy for the general population. If anything, it's a proxy for unhealthy Americans, and unhealthy Americans do die at a much higher rate than healthy Americans. Kirsch speculates there is another reason why mortality rates are so high, and it has to do with the overlap of employed people who are in the group insurance pool, the vaccine mandate, and vaccine side effects. Whether or not you agree with Kirsch's viewpoint on this, he spends considerable time making you aware that this is his view and he's not budging off of it. And, this viewpoint is shared across the entire alt-media (mostly far right-wing) blogosphere... which is why the insurance piece seems to fit so nicely into their narrative.

It allows them to show people really are dying in record numbers and that it's leading to a meltdown in the life insurance industry which will turn systemic and destroy the economy (or something like that).

But... is it true?

Again, no.

First of all, mortality rates have gone up substantially in the group market. But, the group market is one part of the life insurance business. There's also an individual market.

And... mortality rates in the group market don't jive with what's playing out in the individual market. Although it's tempting to believe that only self-employed rich folks buy individual policies, the truth is... lots of people, from all walks of life (many of them employed by large employers) do in fact buy individual life insurance policies. The key person, corporate-owned life insurance, buy-sell, and executive bonus market is huge. And, lots of "middle class" folks still buy whole life and indexed universal life insurance as a long-term savings plan to hedge against investment risks in their 401(k) or elsewhere.

The catch is... you have to be healthy enough to qualify for individual life insurance to get these policies. So, while the group market skews toward unhealthy Americans, the individual market skews towards healthier Americans——not necessarily health nuts, but healthier. You don't need to be an Olympic track and field star to get an individual policy. You can still be 5'9", 250 pounds, and have moderately-high blood pressure and still get a standard rating on an individual policy. What you can't be is 100lbs overweight, with a heart condition, and some uncontrolled (or poorly controlled) health problem.

Point?

Forming a comprehensive theory about mortality by looking at group life and disability plans is a fool's errand.

I know that's thoroughly unsatisfying to the conspiracy-minded folks, but the alt-media narrative being spread about a catastrophe in the life insurance business (and catastrophe everywhere else) is as phony as a football bat.

The mainstream theory that "everything is caused by COVID" is also phony (and was phony from the very beginning), and that's what's driving people into the arms of the other side. 

But, as the old saying goes, the enemy of your enemy is not your friend.

The truth is that the situation is not nearly as dire as they want it to be. Deaths in America still represent a tiny fraction of the total U.S. population. And, there are still more births than deaths in the U.S.

Which is good for everyone, including the life insurance industry. While not a perfect representation of the general population, life insurance companies do tell us important information about mortality rates. And, what they're telling us is people are dying at unusually high rates, but not enough to collapse an industry or go into panic mode. 

We know this because life insurance companies are not imploding from a spike in deaths, nor are they raising the pure cost of insurance on fully underwritten life insurance policies, nor are they changing their underwriting procedures in response to COVID.

Not only that, they are profiting like never before in the face of increased death claims. The "big 4" mutual life insurers (MassMutualNorthwestern MutualNew York Life, and The Guardian) all declared record dividend payments this year. Life insurance dividends are evidence of an insurer's profitability and performance. Even a smaller "old mutual", like Penn Mutual, announced it would pay record dividends for 2022.


On life insurance company solvency

Another tangent to this alt-media narrative that is starting to bubble up from the cracks and crevices is the idea that the life insurance industry is in dire straights and will have to beg to be bailed out by the federal government.

In reality, most life insurance companies today are well-capitalized and have more than enough surplus to cover a dramatic rise in mortality or unexpected expenses. Life insurers continue to increase policy reserves and surplus funds, and pay billions of dollars every year in life insurance claims—and those numbers steadily increase every year. 

This money is paid out entirely by life insurers, with zero taxpayer dollars.

Yet another tangent to the main narrative is that life insurers either have already stopped paying death claims or will stop paying death claims because of the rise in death rates.

This is ridiculous. Life insurance companies are paying all valid death claims. I guess this rumor was so widespread back in March of 2021, the ACLI felt it necessary to make a public comment about it on its website:

“A social media post appears to be behind the spread of entirely false information, suggesting a COVID-19 vaccine could be a factor a life insurer considers in the claims-paying process. The fact is that life insurers do not consider whether or not a policyholder has received a COVID vaccine when deciding whether to pay a claim. Life insurance policy contracts are very clear on how policies work, and what cause, if any, might lead to the denial of a benefit. A vaccine for COVID-19 is not one of them. Policyholders should rest assured that nothing has changed in the claims-paying process as a result of COVID-19 vaccinations.

While it’s true that——from time to time——some life insurance death claims are contested by life insurers, those contested claims amount to just 0.6% of total claims filed

Most common reason for an insurance company to contest a claim?

Non-payment of premiums by the policyholder or the insured making false statements on an application. And, even then, most contested claims ultimately end up being paid anyway.

How does this affect insurance company balance sheets?

The 2021 Life Insurers Fact Book says it hasn't hurt balance sheets at all.

In 1960, total death benefits paid to beneficiaries was $3.3 billion. Death benefit payouts kept rising throughout the decades. In 2000, total death benefit payouts were $44.1 billion. In 2019, life insurers paid out $78.3 billion and in 2020, they paid $90.4 billion in death claims.

In 1960, the life insurance industry held policy reserves of $98.4 billion and capital and surplus funds of $9.6 billion. By 2019, that number was $5.7 trillion, with capital and surplus funds of $441 billion. In 2020, those figures increased to $6.1 trillion and $454 billion, respectively.

Both the mainstream/legacy and alt-media narratives make it sound like the life insurance industry is on the brink of failure or suffering some sort of catastrophic loss they won’t ever recover from.

With trillions of dollars in policy reserves and hundreds of billions in surplus, and death benefits paid of just less than $100 billion, it’s not serious or honest to suggest the life insurance industry is in financial trouble.


Why report falsehoods?

Most media companies incentivize “iterative journalism” at the expense of waiting for fully developed and carefully edited stories. They dishonestly report “a-points”, like narrowly focusing on one subset of the insurance business, the specific payouts of one aspect of one life insurer's business, or they make doomsday proclamations about dramatic increases in death claims.

But, they conspicuously avoid reporting “the-points”, like absolute change in policy reserves, surplus, and death claims and total liabilities relative to total assets. They avoid talking about the big picture, overall health, of the life insurance industry and the total number of people living vs dying, total births vs. total deaths.

And, most individuals are innocently and understandably ignorant about the life insurance industry. They have no reason to study this information and are easily fooled by media personalities. 


A direct look at death rates

We know the life insurance industry is fine, but what if the general population is not fine?

What happens if you zoom out and look at this from a wider angle?

Aside from looking at insurance company mortality experience, we could also look directly at total mortality in the U.S. to get a sense of the increase.

The CDC's final report shows 3,383,729 total deaths in the U.S. in 2020, which represents an increase over 2019 of 528,891. Of those who died, 350,831 are reported as "COVID-19 deaths". 

Final numbers for 2021 are not available yet at the time of this writing. However, provisional counts are available now. Provisional counts are not final counts, but they can still give us a clue of what the final count might be. As the weeks drag on, the provisional counts will be adjusted and it will become more clear what the final death count is for the year. 

The current provisional count for 2021 is 3,385,329——an increase of 1,600 people. As of January 19, 2021, this puts the death count for 2021 very close to the death count for 2020.

If this number holds, it means that——on net——things did not get much worse in 2021. We did not experience a massive increase in deaths as was predicted by all the doom-and-gloomers. Death rates did remain high, but as we'll see, it's still a very small percentage of the total U.S. population.

Now... I rarely, if ever, take government reporting at face value. First of all, if government officials were really as good as those working in private industry, that's where they'd be working——not in government. They'd be creating net values for others and society for a profit, not appropriating (i.e. stealing) the profits of others for bureaucratic programs.

Secondly, government agencies are highly motivated to expand their own power and influence, but are also staffed by incompetent bureaucrats. And, because of this, I automatically assume any information or data generated by the government will be inflated or exaggerated or biased in some way that favors whatever narrative the government wants to promote. Or, it will be mucked up in some other way by incompetency.

That said, let's assume the government is somehow perfectly correct in its reporting and assumptions. To me, this represents the worst-case scenario.

If true, then according to the government's own data, COVID deaths represent just 0.11% of the total U.S. population. Let's also assume Kirsch's idea of a 40% increase in mortality in the general population is true. He writes that it would mean 75,000 new excess deaths per quarter. Over the course of an entire year, that's 300,000 new excess deaths. 

Add that to the 2020 death count, and it puts us at 3,683,729. Even if we add it to the provisional count for 2021, it doesn't change the number or percentage by much. Kirsch assumes the 300,000 are not from COVID and are instead from some other new cause. 

This means the hypothetical non-COVID/new cause of death represents about 0.09% of the total U.S. population. The combined COVID and hypothetical new non-COVID/some other cause of death is still only 0.20% of the total U.S. population. If we took the CDC's total number of new deaths (528,891), that is roughly 0.16% of the total U.S. population. And, even if we looked at the total number of deaths in 2020, that is still just 1.03% of the total U.S. population. 

That means a worst-case scenario is... ~99% of Americans are still alive, in spite of all the horrendous bullshit we've had to endure in 2020 and 2021.

Compared to how the news media usually reports these things, it sounds very unimpressive though. The news media wishes more Americans were dead.

So, the way they choose to report this is by reporting the relative change between 0.11% (COVID deaths/U.S. population) and 0.20% (COVID plus new non-COVID deaths/U.S. population), which is nearly double the number of deaths. If you wanted to make this really sensational, you would add in the increased number of deaths since 2019 as a percentage and then measure the relative change between 2019 and 2020. So, then, you might read "Bombshell: Deaths Double!" or "Deaths Triple!" or something like that. Or, you might report COVID deaths as a percentage of the total number of people who died, instead of looking at how many people died vs how many people lived (in order to put the death rate into perspective). Or, you might simply tell anecdotal stories of people who died, and really amp up the fear and anxiety by implying "this could happen to you, too!"

By reporting relative increases, and omitting absolute increases as well as references to the total U.S. population, it makes things sound worse than they really are. But, at the same time, it also makes the media narrative much more "newsworthy" and compelling.

Viewed from a wide angle, these are extremely small numbers. Yes, there is a dramatic increase in the number of deaths. Each one of those deaths was a person and each one of those people mean something. Let's not minimize their loss, but let's also not use it to exaggerate our situation.

The absolute increase in the number of deaths from 2019 to 2020 is very small in absolute terms. The CDC's final number is 528,891, which is 0.16% of the total U.S. population, and represents a roughly 18.5% increase in deaths from 2019. That's how many more lives we lost in 2020.

As morbid as this sounds, it's ultimately good news for you, me, and America... and even folks who believe in the depopulation conspiracy theory——it means the overlords have failed

For the normies in the room, it means the sky isn't falling.

And, that is a very important point to keep in mind. 

Legacy media outlets, like Reuters, continue to scare the bejeezus out of people by reporting death counts for 2021 based on projected death counts or provisional death counts, without the benefit of a final death count, which takes a long time to finalize. For example, the final death count for 2020 was not published until NCHS Data Brief No. 427, dated December 2021. By then, the media had moved on.

They also continue to carefully craft an end-of-days narrative, where all roads lead back to COVID-19, and where the "new normal" is to exist in a perpetual state of fear and anxiety.

This is yet another problem with how nearly all journalism (left, right, center, alt-media) works today——its commitment to "iterative journalism" means reporting stories "as they develop" instead of waiting for all facts to settle before publishing a story. Good, accurate, honest, stories take time to develop. But, waiting to develop a good story also means you can't be first to publish. Problem is, this "first to publish" idea is something modern news rooms (and the Internet, in general) value.

Thus, don't look to have accurate information about 2021 before the end of 2022.

Something else to keep in mind is that we live in a world of "fat tails". What this means is, usually, the world is never as bad as people assume it is. But, when it is bad, it's usually much worse than people think it will be. And yet, this is an instance where it definitely is worse than assumed, and yet it's still not catastrophic.

Maybe it will be in the months and years ahead. But by that point, the cause will be oppressive government command-and-control tactics, not a low-risk novel cold virus for which most people can now safely develop natural immunity against and which is now adept at escaping multiple rounds of vaccination.

Whether you believe the conspiracy about vaccines or not, both the mainstream and alt-media narratives are nonsensical and pointless. Neither COVID-19, nor the vaccines, are destroying the economy——the government's response is.

And, the news media is helping the government by terrorizing people, spreading false information, and refusing to report honest, accurate, objective news.

Of course, none of these facts and logic will get in the way of the attention-grabbing and deliciously profitable legacy and alt-media narratives. The legacy media exists to pump fear, which they believe drives profits (i.e. "if it bleeds, it leads"). The alt-media exists to score points against legacy media corporations and to make money from their followers and True Believers.

Neither of these groups are interested in honest journalism.

For all types of media activists, it's much easier to seek fame than build genuine self-esteem through deep introspection. Also, those bills won't pay themselves. Thus, the market for hype, fear, conspiracy, and paranoia will never go away until or unless the market starts demanding something else.

So, if you let yourself be drawn into it, you will get exactly what you deserve.

David Lewis

This post brought to you by The Rogue Agent. David has been a life insurance agent, and worked with some of the oldest and most respected mutual life insurance companies in the U.S., since 2004. Want to know more? Join his email list.