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The Outlook for Life Insurance and Disability Benefits


Anita Potter
Assistant Vice President, Workplace Benefits

Lucian J. Lombardi
Workplace Benefits

February 2024

Forecasting is an imprecise science. This is particularly true when it comes to forecasting the post-pandemic economy. Many experts predicted the U.S. would enter a recession in 2022 or 2023, while others predicted the labor market would take years to recover from the aftermath of the pandemic. In fact, the labor force participation rate for prime-age workers has returned to its pre-pandemic levels, and unemployment remains at recent historic lows. Moreover, while the gross domestic product (GDP) struggled for most of the past two years, growth accelerated in the third quarter of 2023 by an annualized rate of 4.9 percent. According to The Economist, “The main thing we got wrong in ... 2023 was being too gloomy ... and the strength of the labor market in America.”

Life and Disability In-Force Premium Outlook

The major economic drivers behind the growth of life and disability benefits in 2021 and 2022 have been the increases in both employment and wages and salaries, as well as overall economic activity. And the impacts of these drivers continued in 2023, albeit at a slower rate.

After posting rapid job growth in 2021 and 2022, job growth slowed in 2023. Even though the labor market softened in 2023, it remained healthy. Moreover, its strength is behind LIMRA’s forecast for a strong finish in 2023. Similarly, while employers increased wages to compete for workers in the tight labor market amid ongoing inflationary pressures in 2021 and 2022, wage growth slowed in 2023. Nonetheless, it was still higher than pre-pandemic levels. It is not surprising that strong employment and wage growth translate directly into strong in-force premium growth (Figure 1).  

Figure 1. 2023-2025 In-Force Growth Forecast for Life and Disability Benefits


In-Force Growth Rate for 2022

In-Force Growth Forecast for 2023*

In-Force Growth Forecast for 2024*

In-Force Growth Forecast for 2025*

Life insurance





Long-term disability





Short-term disability





* Based on collected premium

Outlook for 2024 and 2025

The outlook for 2024 and 2025 is more tempered, however. Although inflation is decelerating, the data shows wage growth is not. While wage growth for 2024 is predicted to remain above pre-pandemic levels, the outlook is for growth to slow in both 2024 and 2025. Likewise, GDP and employment growth are also projected to slow in 2024 and 2025.

Based on those economic factors, LIMRA forecasts in-force premium growth to range from 2.5 to 3.7 percent for life and disability insurance benefits in 2024 and 2025. While life premiums are expected to exceed the average rate of growth experienced by carriers prior to the pandemic, premiums for short-term disability are expected to be below recent trends (Figure 2).

It is important to keep in mind that these forecasts are based on recent economic projections through 2025 and are subject to change. Many factors, such as how quickly wage growth slows and whether the Federal Reserve can achieve a hard or soft landing for the economy, could lead to different outcomes. Another factor that could impact life and disability benefits over the next two years is healthcare costs. Employer costs are predicted to increase significantly in 2024, and while employers have been reluctant to pass rising healthcare costs onto employees with the aim of keeping benefits affordable in a competitive labor market, many employers may have little choice. How employers and employees manage these cost increases as the economy slows is yet to be answered.

Lastly, the pandemic highlighted the need for carriers to address weaknesses in traditional benefit coverages that directly impact the various needs of employees. Introducing innovative products and services that address shifting employees’ needs as well as regulatory and legislative changes will positively impact premium growth. A favorable economy along with product innovation makes for an ideal market for workplace benefits. Without product innovation, industry growth will be entirely dependent on economic factors in the future.

Figure 2. Percent Change in Short-Term Disability Premium and the Economic Cycle

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