Workplace Benefits Life and Disability Forecast

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Authors

Anita Potter
Assistant Vice President, Workplace Benefits
LIMRA and LOMA

Lucian J. Lombardi
Workplace Benefits
LIMRA and LOMA

February 2026

The task of forecasting workplace life and disability benefits grew considerably more challenging in 2025 compared to the previous two years. Throughout the post-pandemic recovery, the economy exceeded projections, generating strong employment gains and rising wages. Incremental government policy changes in 2023 and 2024 added to this momentum, fostering confidence and stability across the labor market.

By 2025, that equilibrium began to unravel as overlapping government policy shifts injected uncertainty into the economic outlook, influencing both employer decisions and consumer sentiment. Labor market data shows conflicting trends; inflation that appeared contained at midyear 2025 re-emerged as a persistent concern by December, and consumer confidence weakened notably in the second half of the year. These conditions prompted employers to become more cautious in expansion and hiring plans.

This combination of forces has made premium forecasting for life and disability coverage more difficult. The once-favorable market conditions of 2024 have given way to an environment marked by heightened volatility and tighter margins. In response, our analysis examines the sector's growth potential and identifies strategic opportunities that may emerge over the next several years.

Outlook Through 2028

The current economy can best be described as one of cooling optimism and raising uncertainty, shifting from post-pandemic resilience to a slower expansion. And while employment growth cooled significantly by midyear, resulting in a rise in unemployment, the labor market continues to remain near full employment. Moreover, wage growth cooled alongside moderating inflation and slower job creation.

The outlook through 2028 for these same economic drivers is expected to soften further. Employment growth is projected to moderate considerably, while unemployment will increase slightly. Wage and salary growth will slow and remain slightly below recent historical trends. The Federal Reserve's September 2025 projections and independent economic surveys provide strong evidence that inflation is expected to remain above the 2% target through 2027.

Based on these factors, LIMRA forecasts in-force premium growth to trend lower through 2028 for both life and disability products (Figure 1). The growth in life insurance in-force premiums through 2028 will trend to below-average historical growth rates.

Conversely, both long-term disability (LTD) and short-term disability (STD) premiums are expected to slow but stay at more recent average historical growth rates. Of course, it is important to keep in mind that these forecasts are based on recent economic projections, and any changes to economic conditions or federal policies could cause premium growth to align more closely with the lower or upper forecast ranges.

Figure 1. 2025 — 2028 In-Force Growth Forecast for Life and Disability Benefits

Benefit	In-Force Growth Rate for 2024	In-Force Growth Forecast for 2025*	In-Force Growth Forecast for 2026*	In-Force Growth Forecast for 2027*	In-Force Growth Forecast for 2028*
Life insurance	4.2%	2.9%	3.0%	3.1%	2.8%
Projected range		1% to 5%	1% to 5%	1% to 5%	1% to 4%
Long-term disability	3.3%	3.0%	3.2%	2.9%	2.4%
Projected range		1% to 5%	1% to 5%	1% to 5%	0 to 5%
Short-term disability	5.2%	3.8%	4.1%	4.3%	3.2%
Projected range		1% to 7%	1% to 7%	1% to 7%	0 to 6%

*Based on collected premium

Reasons for Optimism

Despite economic headwinds, several noneconomic factors are contributing to a more positive outlook for the workplace life and disability benefits market. First, in spite of a slowing economy and a projected increase in unemployment to 4.7%, employers still need to offer a competitive benefits package. Additionally, employees’ attitudes toward benefits have changed since the pandemic, with many expressing growing interest in benefits that provide more flexibility and improve their overall well-being. This creates opportunities for carriers to identify and design products and services that meet unmet coverage gaps as well as different generational needs.

Second, artificial intelligence (AI) adoption has accelerated rapidly, and contrary to early predictions about widespread disruption, recent research from Penn Wharton University indicates that aggregate productivity has increased as workers incorporate AI into their tasks. This trend could drive company growth and potentially support future wage gains.

Longer-Term Challenges

While noneconomic factors are reasons for optimism, the longer-term challenges for life and disability carriers remain largely macroeconomic. Among them are employment and compensation costs, both of which are projected to have a dampening effect on in-force premium growth over the next four years.

The U.S. economy currently is experiencing a significant deceleration from its post-pandemic recovery growth, and growth is expected to remain subdued through 2028. This is particularly evident when examining employment. Employment growth is projected to decline sharply, from a 9% increase between 2021 and 2025 to less than 1% from 2026 to 2028 (Figure 2). While real wage growth is projected to increase, those gains are expected to remain slightly below historical levels.

Figure 2. Employment Growth

Sources: U.S. Bureau of Labor Statistics, Moody’s Analytics.

Conclusion

Based on current projections, life and disability carriers will face growing headwinds, making growth harder to achieve through traditional means. Additionally, with inflation expected to run above 2% through 2027, coupled with rising healthcare costs and modest real wage growth, employees’ enrollment selections will be impacted. Therefore, to achieve above-average growth, carriers will need to innovate. The key question is: What will be the next breakthrough in workplace benefits?

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