Healthcare inflation could be driving down employer-based life insurance growth

The news: Workplace life insurance sales could grow by 3% this year, down from the 3.3% growth in 2024, per LIMRA and Benefits Pro.

How we got here: While unemployment remains low and employers aim to retain staff, rising inflation is reducing workers’ purchasing power, and higher healthcare costs are forcing employers to cut down on benefits.

Healthcare costs have increased partly because the number of private health insurance companies has declined over the past decade, with many states now dominated by a few large insurers, per the US Government Accountability Office. This reduced competition has raised premiums and slashed affordable options for employers. 

What this means for life insurers: To speed up employer-based sales, life insurers should consider:

• Introducing voluntary and tiered coverage options to help employers manage costs while providing essential protection to employees
• Providing employers with tools and resources to highlight the value of life insurance in employee retention and financial wellness
• Embedding direct-to-consumer products into HR software platforms such as payroll systems, benefits administration tools, and employee self-service portals, making it easy for employees to access and enroll in coverage

Next steps: To learn more about offering life insurance products on partners’ platforms, read our  “Embedded Life Insurance” report next.

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