The primary objective of life insurance is simple: you save some of your money so by the time you can’t provide for yourself or your family, you (or they) have something to fall back on. In a way, it gives you assurance during your productive years, and security once you’ve stopped earning an income. As such, life insurance statistics show that these plans have plenty of benefits to offer.
Overall, life insurance is a wise investment that equips you for the unpredictable future. However, the concerns of today often get in the way of making a sound financial decision that takes years to complete. Add the fact that inquiring an insurance quote from companies or agents often results in a complicated discussion that may not be concluded.
Ideally, life insurance is one of the things that everybody should have, but for some reason, most don’t. Technically, you’re betting against yourself, maximizing your productive years. Given the cost, and the lengthy period, is insurance really something better to have and not need? Here are some insights to help you take that next step.
Life Insurance Statistics Table of Contents
General Life Insurance Statistics
Life insurance comes in many forms nowadays. There’s whole life, group life, term life, and group term life insurance. The differences are basically if you want insurance your whole life or just a certain period, with “group” usually referring to workers within the same company and covered by group insurance.
Clearly, the industry is continually evolving to accommodate the changing needs of the market. However, statistics show that over the past few years, this move does not immediately equate to a higher percentage of people applying for life insurance.
Life insurance market statistics
- The 2018 net income after taxes for the life/annuity insurance industry was $37.9 billion, a 10% drop from the 2017 income of $42.1 billion.
- The life insurance ownership gap in the US in 2019 remained at 9%, which is the same rate as in 2018. The ownership gap is the difference between the perceived need for life insurance and what is actually owned.
- The average life insurance face value in 2018 is $168,000, which is $5,000 higher than the previous year. However, the highest value since 2000 was recorded in 2008, when the face value average reached $183,000.
Source: ACLI Life Insurers Fact Book 2019
Number of people with life insurance policies
- There were 27.8 million life insurance policies purchased in the US in 2018, a percent lower than the previous year’s total purchase of 28.04 million.
- Among these purchases in 2018, 10.3 million were individual life insurance policies. The previous year’s total was 10.48 million.
- The percentage of Americans with life insurance fell to 57% in 2019, compared to 59% in the previous two years. This means 3 out of 5 American adults have life insurance.
- Around 36% of individuals own group life insurance, and 18% own group life insurance only. 43% of individuals do not own life insurance at all.
- Of the 57% of individuals that own life insurance, 69% are male, and 31% are female.
- Among the 57% of individuals that have life insurance, 39% own individual life insurance, and 28% own individual life insurance only.
- Among the reasons for owning life insurance, the top response was income replacement (37%), followed by Final/Burial expenses at 30%.
- 35% of respondents in a National Life Insurance day poll say that life insurance is not part of their monthly budget.
Top Reasons for Purchasing Life Insurance
Death/Final Expenses: 30%
Wealth Transfer: 28%
Source: 2019 Insurance Barometer StudyCreated by CompareCamp.com
Life Insurance Policy Statistics
While getting life insurance may seem like a no-brainer, the matter is complicated by the fact that most people see a morbid aspect in preparing for death or incapacity. Add to the fact that reaping the rewards are decades from fruition, there is a slight hesitation from people to spend for the future. For those who do, however, the payoff at an opportune time, such as death or disability of the insured, can be quite rewarding.
Perceived benefits of having life insurance
- 90 million American families rely on life insurance products for financial and retirement security.
- Approximately four in 10 households that did not carry any life insurance admitted they would have difficulty paying living expenses if their breadwinner died.
- Given enough time, payouts will happen for policies. Surrender benefits and withdrawals for life contracts represented the largest category in payouts, totaling $350.2 billion in 2018. This is almost half of the total $784 billion issued by insurance companies that year.
- Meanwhile, disability, accident, and health benefits paid up $132.3 billion in the same year.
- Annuity benefits claimed totals $78.4 billion, while death benefit claims added up to $77.4 billion, almost 10% of the total payouts worth. Each contributed around 10% of payouts that year.
- 90% of active policies as of 2018 allowed for the waiver of premiums if the individual becomes disabled while the policy is in effect.
Life Insurance Payout Types
Surrender benefits, withdrawals for life contracts: 44.66
Surrender benefits, withdrawals for life contracts%
Increase in aggregate reserve: 17.06
Increase in aggregate reserve%
Disability, accident and health benefits: 16.87
Disability, accident and health benefits%
Annuity benefits: 9.99
Death benefits: 9.87
Source: 2020 Insurance FactbookCreated by CompareCamp.com
What consumers want from life insurance providers
- Of the policies bought in 2019, 71% were term life insurance, while 44% were permanent. 6% had no idea what type they have. Excess figures above 100% indicated that there were buyers who purchased more than one type of insurance.
- For those who bought permanent life insurance, 32% chose variable life, 30% opted for whole life, 25% selected universal, and 13% don’t know.
- 47% of all people shopping for life insurance put convenience, speed, and simplicity in underwriting as the top factors they consider when browsing.
Life Insurance Purchased in 2019
(Respondents can select more than one answer)
71%: Term life insurance
71%Term life insurance
44%: Permanent life insurance
44%Permanent life insurance
6%: Didn't know what they purchased
6%Didn't know what they purchased
Source: Bestliferates.orgCreated by CompareCamp.com
Challenges in applying for life insurance
- For Americans without life insurance, 52% say the reason not to purchase is that it’s too expensive, while 17% say they don’t need it.
- 50% of people admitted they would buy life insurance if the medical exam was waived.
- The voluntary termination rate of individual life insurance policies reached 5.7% by 2018.
- Of the individual life policies that have been voluntarily terminated, 19% were surrendered based on the face value amount.
- $1.219 billion in total claims were in dispute as of 2018, including $600 million in new claims. Of this amount, $110 million was paid out, and $363 million were still in dispute by year’s end.
Why Americans Won't Buy Life Insurance
(Respondents can select more than one answer)
It's too expensive: 52%
It's too expensive52%
I don't think I need it: 17%
I don't think I need it17%
I don’t know what kind of policy to get: 15%
I don’t know what kind of policy to get15%
I don’t know how much coverage to get: 12%
I don’t know how much coverage to get12%
I haven’t had the time to figure it out : 11%
I haven’t had the time to figure it out11%
The process is too confusing : 11%
The process is too confusing11%
Source: National Life Insurance Day Poll May 2019Created by CompareCamp.com
Statistics on Life Insurance Providers
Insurance companies have been around a long time, with some even dating before the Civil War. However, the actual number of companies in operation depends on a multitude of factors, including the economic health of the country, and, as we recently discovered, the presence of pandemics.
No matter the number, however, there will be insurance companies that are better than others, as evidenced by the fact that almost half of the life insurance business is handled by a handful of companies.
- There is a total of 773 life insurance companies in the US in 2-08, which is eight lower than the previous year (781). The highest number of companies in a year was in 1990, when there were 2,195 life insurance companies.
- The top three insurance companies with their corresponding market share are Northwestern Mutual (8.20%); Lincoln National (5.80%); and New York Life (5.70%).
- A total of $128,579,660 worth of life insurance policies was written in 2018, with the top 10 life insurance companies writing nearly 50% of all premiums, while approximately 1/3 coming from just the top 5 insurers.
- For group life insurance in particular, which issued premiums worth $33,921,456, nearly 70% came from the top 10 life insurance companies, with almost 50% coming from just the top five insurers.
Data on Emerging Life Insurance Trends
2019 showed a slowdown in insurance, although the difference between that year and the previous one was minimal. However, the need for disruptors to conventional thinking about life insurance is key to convincing more people to consider getting one. Removing the morbidity factor, making insurance quotes easier to understand, and reaching out to millennials are good starts.
- Insurance is slowly taking a back seat to other expenses in 2019. Households starting to look for life insurance decreased from 19 million households in 2017 to 17 million.
- Consequently, only 8 million households who searched for life insurance information ended up with an actual, down by a million from 2017. This may mean lesser patience for convoluted quotes and terms and conditions.
- 51% of all life insurance policies placed were written by independent agents. 38% were written by affiliated agents, and just 6% came from direct response marketing efforts.
- 13% of interested life insurance buyers use Facebook to validate an insurance agent before committing to doing business with them. Meanwhile, 6% use LinkedIn and 8% use YouTube.
- Despite the actual benefits of having life insurance, only 20% of people are very likely to recommend it to friends or family. The morbidity factor plays a role here, and most people are not comfortable affirming their mortality to others.
- The millennial market is still trying to come to grips with life insurance. 58% pass on life insurance because they have little or no knowledge of the type of policy or coverage to get. 38% of millennials don’t buy because they know they won’t qualify, and 43% say they haven’t been approached about it by anyone.
Statistics on the Impact of the COVID-19 Pandemic
At this rate, all trends from 2019 and below have been disrupted by the ongoing COVID-19 pandemic. While everybody expected 2020 to be a rebound year, the opposite happened with the onslaught of a global pandemic. While most information is still up in the air to know the full extent of the outbreak, we do accept that things have definitely changed in the life insurance market.
- During the coronavirus outbreak, prominent life insurance companies Prudential, Lincoln National, and Protective Life have temporarily suspended life insurance policy applications for people 80 years old and above.
- Securian has stopped receiving applications from consumers aged 71 and above until at least June 15 of this year.
- Mutual of Omaha has suspended applications for medical exam-required life policies for those aged 70 and up.
- In 1918, life insurance companies paid out a total of $125 million in influenza death claims. A total of 550,000 people in the US died from the Spanish flu. Adjusted, that amount is worth around $30 billion in today’s dollars.
- In comparison, life insurance companies paid out $77 billion in death benefits in 2018, pre-COVID. With the US currently at 93,000 deaths due to the coronavirus with no signs of slowing down yet, the pandemic will definitely be making an impact on life insurance companies.
Life Insurance Pays
Life insurance may seem more complicated than it should be, and can definitely be beyond the comprehension of people who like to spend in the now. However, the stats show that life insurance is both a viable business for companies and a source of security for individuals in the coming years ahead. The benefits are there, but it would take more effort from companies to show urgency. Hopefully, the lessons from the ongoing pandemic will also come into play when the market rebounds.
- ACLI Life Insurers Factbook 2019
- Aggregate US Life Insurance Premiums Grew by 4.5% in 2019
- 2019 Insurance Barometer Study
- 2019 Life Insurance Barometer 2019
- National Life Insurance Day Poll May 2020
- 2020 Insurance Factbook
- 5 Reasons Why Insurance is Good For You
- Your Insurance Coverage and the Coronavirus
- The Spanish Flu Centennial —1918 Flu Pandemic Hit Insurers Hard