If there’s one positive thing about the pandemic, it’s the people’s renewed interest in life insurance. It’s no secret that the number of insured individuals has been on a slow downward spiral. Shortly after the pandemic hit, people’s restored interest in life insurance quickly translated to multiple Google searches and appointments to insurers.
Life insurance statistics revealed that, during the first half of 2020, life insurance applications rose by 1.5%. People desperately wanted a means of protecting their families from financial fallout in case of the worst outcomes. So, they turned to life insurance.
If you want to know what the recent studies suggest or what financial planners think about the state of life insurance, please read on.
Life Insurance Statistics (Editor’s Choice)
- The number of nonelderly uninsured people reached 28.9 million.
- The largest number of life insurance policies was sold in California.
- Online insurance purchases jumped from 17% to 29%.
- In 2018, 40% of purchased policies were term, and 60% were permanent life.
- Life insurance ownership has declined by nine percentage points.
- 73.7% of uninsured individuals blame the high cost of insurance for not getting any coverage.
- 20% of policyholders say their existing coverage isn’t enough.
- In 2021, life insurance premiums will increase by 3%.
General Life Insurance Facts
1. 773 life insurance companies operate in the US.
Most recent US life insurance market statistics reveal that the number of life insurance companies has decreased since 2001. The policy sale has also declined, with only 27.5 million policies sold in 2015.
No one knows exactly what factors make life insurance lose its appeal. Some people trace it back to the increase in life expectancy that clearly influences people’s decision to get insured. As the estimated lifespan extends and is now closer to 100 years, more people think they don’t need life insurance anymore.
2. 16% of Americans say they need insurance but don’t have it.
Several studies have been conducted to determine the accurate statistics of people with no life insurance. One of LIMRA’s studies found that 41 million US residents were uninsured, although many said they needed life insurance. The perceived cost of insurance and joblessness are the two main reasons that prevent millions of Americans from buying life insurance.
3. In 2019, the number of nonelderly uninsured people reached 28.9 million.
The number of uninsured Americans increased from 10% in 2016 to 10.9% in 2019. These people weren’t even elderly. The majority of uninsured people came from low-income families. Hence, even if they had a job, most of them were probably living from paycheck to paycheck.
Life insurance statistics from 2019 stated one more reason people didn’t buy life insurance. It’s the misconception that insurance is only for old and unhealthy people nearing their end of life. This fallacy is what prevented people from getting the needed coverage.
4. The market penetration for life insurance is 54%.
The life insurance industry remains stable, with a 54% market penetration rate, as confirmed in several US life insurance industry statistics. Although the ownership gap rate increased to 16%, it’s still relatively low compared to other lines of insurance.
Life Insurance Purchases Statistics
5. The life insurance purchases amounted to $357 billion in California.
Most recent life insurance statistics by state reveal that the greatest number of life insurance policies was sold in the Golden State. Texas came second with life insurance purchases worth close to $276 billion, followed by New York, Florida, and Illinois. Alaska was at the bottom, with purchases worth only $7.36 billion.
6. In the last decade, the percent of online life insurance purchases almost doubled, from 17% to 29%.
In 2011, 64% of Americans preferred to meet with a consultant before buying an insurance plan. Nowadays, only 41% feel that way. Insurers have automated underwriting practices to simplify the process of buying insurance. This kind of convenience has compelled more people to go online for insurance.
The latest US life insurance statistics uncover that the rate of people who purchase insurance online has doubled. During the lockdown months, the rate of online insurance applicants increased by 1.5%.
7. Out of all individual life insurance policies issued in 2018, 40% were term insurance, and 60% were permanent life insurance.
According to life insurance statistics from 2018, more people invested in permanent life insurance than in term insurance. Term insurance totaled 72% of the issued individual life face amount, while permanent life totaled only 28% of the total face amount.
What’s the difference between the two?
Term insurance provides coverage during a specific period. It’s less expensive than permanent life but doesn’t provide cash value buildup. On the contrary, permanent life offers lifelong protection and a savings component.
Deciding on the type of insurance depends on your needs and financial capacity. If you need help with navigating various insurance options, it’s best to talk with a consultant.
8. Most recent info shows that the value of policy purchases reached approximately 27.8 million in the US.
Life insurance statistics in the United States showed that homeowners, business owners, and parents were most likely to buy a life insurance policy. They purchase insurance plans for various reasons. In general, they want to cover debts or provide financial support to their families in case of their untimely death.
9. Life insurance market statistics reveal that the total share of direct written premiums reached more than $174 billion.
If you want to get insured, one of the most important decisions you have to make is to choose an insurance company. By researching the market data share, you’ll know how well a company has been doing over the years.
The recent life insurance industry statistics showed that the total market penetration rate is 54%. The top five insurance companies that displayed the best marketability were Northwestern Mutual, New York Life, Metropolitan, Lincoln National, and Prudential Life. The sum of these five companies’ market shares took up almost 30% of the entire written premiums.
Life Insurance Facts on Ownership and Cost
10. In just ten years, life insurance ownership has dropped by nine percentage points to 54%.
LIMRA life insurance statistics 2020 briefly illustrate the decline in insurance ownership over the past decade. According to researchers, the nine points dip is caused by the large decrease in employer-paid group life insurance benefits.
11. The latest life insurance data recorded only 54% of insured Americans.
People with risky jobs need life insurance for two primary reasons — as a replacement income and to cover burial and final expenses in case of their death.
Again, the most usual reason for not getting any coverage is the high cost. However, some insurance companies nowadays offer flexible and affordable term insurance policies so that everyone can get insured.
12. In 2018, about one in five policyholders didn’t have enough coverage.
LIMRA life insurance statistics 2018 found out that one in five policyholders felt they were underinsured. People start with enough insurance coverage but fail to upgrade their plans as their family grows or financial obligations pile up. However, they should take time to review their financial plan every year and check if they need to increase their existing coverage.
13. In 2020, 36% of Americans said they intended to invest in life insurance in the next 12 months.
The declining rate of employer-sponsored life insurance didn’t stop Americans from getting coverage. Interesting life insurance facts 2020 show that 36% of them intended to buy life insurance coverage in the next 12 months.
Researchers believe that COVID-19 has shown there is a need for life insurance. While the purchase intent is at an all-time high, researchers say that only a fraction of Americans actually follows through with buying life insurance.
14. 29% of baby boomers, 32% of Gen Xers, and 28% of millennials prefer researching and buying insurance policies online.
An interesting fact about life insurance ownership by age is that many baby boomers currently between 56–74 years old buy insurance policies online. Previously, boomers would prefer a face-to-face meeting with an agent, but now, their buying preferences have changed.
One of the emerging life insurance trends is purchasing insurance plans over the web, regardless of age. During the quarantine months, the number of people sending online applications for life insurance has increased.
15. 41% of Americans prefer to meet with an advisor and buy insurance in person.
According to life insurance sales statistics, Americans have different preferences for purchasing insurance policies. The majority (41%) like to meet an advisor in person, and 29% buy a policy over the phone. About 11% of consumers get insured through their employers, and 8% are open to purchasing insurance plans via email.
16. Besides the breadwinner, 80% of Americans believe that other family members should get insured as well.
If a primary earner in a family passes away under some unfortunate circumstances, the family will go through a financial tragedy. That’s why it’s essential to have more than one insurance policy.
Life insurance stats confirm that people often feel they don’t have enough insurance. The solution to this is to add more policies. Financial planners advise policyholders to review existing plans and upgrade them when needed.
17. 73.7% of uninsured individuals blame high costs for not having any insurance.
Several statistics about life insurance mention that the cost stops people from buying a policy. Many people think that insurance is costly, but it doesn’t necessarily have to be. Apart from expensive ones, you can also find various affordable insurance plans that fit your budget.
18. More than 50% of Americans overestimate the cost of a term life insurance plan at more than three times its actual price.
Individual life insurance statistics show that the perceived cost of insurance plans stops people from getting the coverage they need. More than half of Americans assume that term insurance policies are expensive, but they couldn’t be more wrong.
In fact, the actual price of insurance is only a third of what most Americans estimate it to be. This is why asking an agent for assistance is helpful. You can get advice on which plan works well for your budget.
19. 92% of Americans don’t realize the full range of benefits permanent life insurance can provide them.
The AIG study shows that only 25% of the respondents understand that permanent life insurance is another option to save for the future. Meanwhile, 21% know that they can withdraw from the cash value. A mere 17% understand that they can use permanent life insurance as tax-deferred supplemental retirement income.
Most policyholders don’t care about understanding the array of benefits that their plans bring. What’s more important to them is that they have insurance, and they’re covered with a specific sum in case of death. As a policyholder, it’s your responsibility to know the benefits of your insurance policies.
20. In 2019, 47% of Americans favored simplified underwriting over traditional underwriting.
LIMRA life insurance statistics from 2019 cited that nearly half of American consumers found simplified underwriting more convenient than traditional underwriting that included a very elaborate process. When people buy something, they want a comfortable and easy buying experience and not the opposite. This applies to buying insurance as well.
Worldwide Life Insurance Statistics
21. Global life insurance premiums are projected to grow by 3% in 2021.
In the US, the insurance industry’s net premiums reach $1 trillion every year. Globally, the life insurance premiums sale dropped by 6% in 2020 due to the pandemic. However, this fall appears to be temporary.
Life insurance statistics around the world have projected that the total life insurance written premiums will not only recover to pre-pandemic levels in 2021 but will also have a 3% growth.
22. Most recent info suggests that Momentum recorded an increase of 30% in claims.
Life insurance claims statistics reported a 30% increase in claims from Momentum, one of the leading insurance companies in South Africa by brand. It was also found that the top three causes of death claims in South Africa were cardiovascular diseases, cancer, and unnatural deaths, like accidents and suicides.
What’s more disturbing is the 65% increase in suicide claims, where 88% of victims were male. The escalating number of critical illnesses and murders is considered the primary driver of the rise in paid benefits within the country.
23. Most recent life insurance claim statistics reveal that the average time for a claim to be accepted in Australia is 1.7 months.
The time needed to process a claim differs depending on the insurance company and country. In Australia, the industry average acceptance rate for insurance claims is 1.7 months. Insurers need to review the papers before the company releases the payout.
24. The last accessible data shows that the average payout on a life insurance policy in the UK is $105,129.
The Association of British Insurers (ABI) publishes the figures for life insurance claims every year. According to their latest data, 97.4% of all filed claims have been paid, amounting to more than $3.93 billion. On average, insurers pay $105,129 for each filed claim.
25. Life insurance premiums in China are projected to increase by 9.3% per year until 2028.
The life insurance industry in China is steadily growing. An increase in demand leads to a continuous need for coverage. Furthermore, insurance sales agents also expand to online channels to attract more people and sell more insurance policies.
Life insurance statistics reveal a problem regarding purchasing life insurance during the pandemic. According to financial planners, the fear of COVID-19 shouldn’t be the determining factor for buying life insurance. Nevertheless, the pandemic has taught us a lot of valuable lessons, and one of those is the importance of investing in a life insurance policy.
Paying less than a hundred dollars to have a financial fallback plan won’t hurt your budget. Something similar or worse than the pandemic may happen in the future. Thus, saving for an inevitable rainy day is a smart move. Hopefully, these life insurance facts and statistics will motivate you to include an insurance policy in your long-term financial plan.
Frequently Asked Questions
Which is better, term or whole life insurance?
Term and whole life insurance are different types of insurance, and each offers unique benefits. Term insurance is more affordable than whole life. However, whole life insurance provides cash value, while term insurance doesn’t. Simply put, what term insurance has, whole life insurance lacks, and vice versa. Therefore, it’s hard to say that one is better than the other.
If we look at the life insurance statistics for the US on the policies purchased in 2018, we can see that 40% were term insurance, and 60% were permanent life insurance. Whole life insurance is one type of permanent life insurance, together with indexed universal life, universal life, and variable universal life.
What are the statistics of men’s life insurance rates by age compared to women’s?
Gender is a major factor in determining insurance rates due to several reasons. Some are life expectancy, jobs, and lifestyle. Women have a life expectancy of 81.2 years, while men have an expectancy of only 76.2 years.
When it comes to employment, men have riskier jobs compared to women. They also tend to drink and smoke more. All these risks contribute to higher insurance rates for men by several percentage points.
Regarding a 20-year term life insurance, the average annual rate for men is $229, while for women is $193. As people age, this difference further broadens. At the age of 50, men pay $842 for annual premiums, while women pay only $654.
Can you have two different life insurance policies?
It’s completely acceptable and legal to have multiple life insurance policies. For example, some people have both life insurance coverage through their employer and their own term life or permanent life insurance policy.
Moreover, about one in five policyholders say they don’t have enough coverage. Adding more insurance plans is not necessary, but it’s encouraged. They can be your fallback in times of uncertainty.
Should a 20-year-old get life insurance?
Absolutely. The best time to get insurance coverage is in your 20s because premium rates are low. Besides, it’s great to make an investment like an insurance plan as soon as you start working. According to life insurance statistics, there’s no minimum age for getting insurance. But you’ll need to be at least 18 to file for an insurance policy.