Is the Life Insurance Industry Recession Proof?

It’s not uncommon for the average American to expect to live through at least one recession in their lifetime. Whether you’re planning for worst-case scenarios while life is good or you’re in a pinch and scrambling to find solutions that can work in the short and long term, something to consider is life insurance. If you’re looking for a recession-proof investment that provides the stability you crave, the life insurance industry might be essential.

Understanding the Life Insurance Industry

Life insurance works much like any other type in that you’ll pay a premium to maintain a policy until your death or the policy expires. At the end of the day, life insurance is a business. Because of this, it’s understandable why the question of whether life insurance is recession-proof comes up.

Why the Insurance Industry Is Largely Recession-proof

No industry is 100% recession-proof, but some will experience less negative impact than others. Within this, life insurance companies also work to adjust their business models to continue thriving regardless of economic conditions. We’ve rounded up just a few characteristics of the life insurance industry that help to contribute to a certain level of stability, even if not perfect.

Locked in Rates and Benefits

Once you’ve secured a life insurance plan, you’re pretty much locked in. Unlike other investments whose benefits vary significantly, life insurance benefits are set in stone. Both term and whole life insurance policies offer the benefit of making set premium payments for a set death benefit payout, as long as the policy is still active. That means you won’t need to worry about highly variable payments but instead can rely on the stability of pre-determined payments to maintain the policy. To find the best option for you, it may be worthwhile to look up the best term life insurance or whole life insurance to sift through your options.

Continued Insurance Demands

People will always need insurance, and that remains true for life insurance. While other industries may see dips in demand during or leading up to a recession, life insurance commonly experiences the opposite. This happens because people crave stability in times of uncertainty. If there are threats of a declining economy on the rise, it’s a given that some will desire to set themselves and their family up for success while they still have the chance. Though life insurance is often purchased when there are positive life changes, such as a new job or family member, the opposite can be true.

A Thriving Industry

Another reason to believe that life insurance is a recession-proof industry is the fact that the life insurance industry continues to thrive through all economic shifts. That’s mainly because insurance is required across the board, regardless of what is happening with the economy. While other job industries may see high rates of layoffs and struggle to keep up profit, the industry sector will feel the effects lightly. While demand may vary throughout uncertain times, the customer base for life insurance policies will simply shift to fit current needs.

The Bottom Line

Unfortunately, a recession means no one is “safe.” But that doesn’t mean that all businesses and industries are impacted equally. Instead, economic uncertainty impacts in different ways in varying degrees. Luckily, life insurance is one of the more stable industries when it comes to a recession. That is attributed mainly to the fact that demand will almost always be there, and the industry is founded on set policies and conditions.