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Apr 15, 20225 min

Permanent Life Insurance Trends

It’s safe to say that we’re all looking ahead to post-COVID life in the US after nearly 18 months of local and national quarantines, travel restrictions, and a tumultuous presidential election cycle upending the way most Americans lived their day-to-day lives. How we interact with each other, how we consume, and what we value most as a society have been put into perspective in the midst of tragedy and loss. Before we get to why you should get permanent life insurance now, let’s talk about a few major trends that will have an impact on us all.

E-Commerce is THE commerce

According to the U.S. Census Bureau, Americans spent $791.7 billion in 2020, which was up more than 32% from 2019, with some studies showing that COVID accelerated e-commerce growth by 5-6 years. What does this mean for life insurance? Well officially, you can now buy a house, car, home and auto insurance, and just about anything else you want from the comfort of your keyboard. But life insurance is one of the few insurance sectors that still has a large in-person, speak-with-an-agent, multi-step selling process.

As we move towards a less is more approach whether it’s fewer clicks or fewer conversations, it’s never been easier to sign up for a life insurance policy that suits your needs. And like all other products you’re buying online, it’s easier to do research, compare prices and value, and move at a pace that’s wholly up to you.

However, unlike electronics or any online goods, your life insurance only gets more expensive over time. Your cost of insurance rises every year as we get older and our health conditions change. That means the best time to maximize savings in your policy is now!

The Biden presidency and the new era of taxation

In an effort to shore up government programs, President Biden has set forth a new era of taxation that affects just about everyone. The initial hikes are aimed at individuals who earn more than $400K a year and corporate income tax rates. According to the Tax Foundation, Biden’s new tax plans would raise government revenue by $3.3 Trillion over the next decade and would lead to about 7.7 percent less after-tax income for the top 1 percent of taxpayers and about a 1.9 percent decline in after-tax income for all taxpayers on average. Some of the highlights of the plans include:

  • Repeal the Tax Cuts & Jobs Act components specific to high-income filers
  • Impose a 12.4% social security payroll tax for wages over $400K
  • Increase corporate income tax to 28%
  • Reestablishes the First-Time Homebuyers’ Tax Credit
  • Temporarily increase the generosity of the Child Tax Credit and Dependent Credit

Long story short, more taxes are in store for all of us and the ripple effects will ultimately mean less spending cash in our pockets.

Economic conditions & globally decreasing financial health

For the past few years, the financial health of global markets has been declining with COVID rapidly pushing us into dreary economic forecasts. In 2020 alone we saw a shrinking of the global economy by 4.3% - worse than the 2008 recession and the largest contraction since The Great Depression. While forecasts for this year show a rise in economic activity, ultimately the effects of COVID, specifically in the US, are longstanding and will need to be addressed for years to come. We’ve seen tremendous positive growth just in Q1 of 2021 and that recovery is likely to follow throughout the remainder of the year but when the government safety net that’s been built just for the pandemic gets pulled back, it will take some time to adjust the national balance sheet and for people to gain economic confidence.

Not to mention that the large federal deficit, longer-term healthcare crisis, and the uncertainty of Social Security and Medicare have placed a lot of pressure on the US government and it's probably going to stay that way within our lifetime. In times like these, people will spend less and income levels will take a hit at every tier.

So why should you get permanent life insurance now?

There are definitely some doom and gloom parts to this article but we promise we’re ending on a positive note. Three words - tax-free savings. Most people are aware of term life insurance but permanent life insurance is an investment vehicle that the wealthy have been using for generations to save, invest, and transfer assets tax-free. Permanent life insurance has a death benefit so that your loved ones receive a payout in your passing but also has the benefit of a savings account that can be accessed while you’re still alive. The cash value savings portion earns interest at either a fixed rate (indexed universal life insurance or IUL) or a variable rate (variable universal life insurance or VUL). In either plan, the interest you earn based on how your premiums are invested is completely tax-free.

Given the economic conditions and new tax plans, getting a permanent life insurance plan is a great way to set yourself and your family up to be both protected and earn and transfer wealth, tax-free. With the advent of e-commerce, you can sign up for a life insurance plan online and avoid the uncomfortable selling process that insurance as a whole is generally known for.

We’re a bit biased but Amplify Life Insurance is a great first step in your permanent life insurance journey - start by getting a quote today!

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