Last Updated: May 20, 2023
If you die, what happens to your family? If you’ve got insurance, you probably think they’re covered. After all, 52% of us have life insurance.
You might be very wrong.
Almost half of Americans will leave their families in financial distress when they die.
It’s not because they haven’t made provisions either. It’s more likely because 50% of us with life insurance are underinsured.
Are you one of them?
Find out by reading through the latest life insurance statistics.
They are an eye-opener:
Life Insurance Statistics (Editor’s Choice):
- 52% of Americans have life insurance.
- In 2019, 837 companies were selling life insurance in the United States.
- 30 million American households have sufficient coverage.
- 41% of Americans would rather discuss their insurance needs in person.
- 28% of millennials and 29% of baby boomers are happy to research and buy their policies online.
- Over half of Americans think that life insurance is more expensive than it is.
Is life insurance worth it?
We often see life insurance as a grudge purchase. You know that at one point or another, it will pay out. The problem is that you could easily pay premiums for thirty or forty years before you die. So, you might be asking yourself if it’s worth it.
The short answer is yes.
Let’s assume that you’re paying $100 per month. The average payout at this level for a healthy person in their 30s is $250,000.
Let’s say that you decide to save $100 per month instead. Assuming an interest rate of 2%, with interest reinvested, after thirty years, you’d have $49,536.78.
Life insurance facts for 2021 show that your insurer pays out a lot more than you’d earn by saving that money.
Life insurance in America is big business. That said, a large section of the population is unable to get insurance. This could be due to health reasons or immigration status. Combine that with the figures of those who are underinsured, and we have a serious problem — most Americans don’t make sufficient provision for their families when they die.
Don’t believe us? We don’t expect you to — the statistics speak for themselves. So, let’s dive right in and see what the facts have to say.
Life Insurance Facts
Life insurance can seem confusing. The concept itself is easy to understand. You pay a premium, and the insurance pays out when you die. Unfortunately, the full range of policies available today has muddied the waters a little.
Not that this has adversely affected the industry. The opposite is true — the life insurance industry in America is the largest in the world.
1. 52% of Americans have life insurance in 2021.
The most common reason for Americans to take out life insurance is for retirement purposes. Next comes paying for long-term care.
2. In 2019, 837 companies were selling life insurance in the United States.
(Source: Insurance Information Institute)
The life insurance industry in America has been in a downswing for the last 19 years. The number of companies has been steadily decreasing since 2001.
3. 30 million American households are underinsured.
While more than half of Americans have life insurance, only half of them are adequately insured. Essentially that means that three-quarters of American families will struggle after the death of the insured because there’s not enough money to settle all debts, funeral costs, and so on.
4. 41% of Americans would rather shop for insurance in person.
Insurance facts show that Americans prefer to discuss their insurance needs with a person. This is a significant drop compared to 10 years ago when almost two-thirds (64%) preferred to buy a life insurance policy in person.
5. 28% of millennials, 32% of Gen Xers, and 29% of baby boomers are happy to research and buy their policies online.
(Source: No Exam)
In a strange twist, just under a third of baby boomers, Gen Xers, and millennials agree that it’s better to buy their policies online. With comparison websites becoming a lot more accurate, analyzing life insurance statistics and comparing different policies and their benefits has become a lot easier.
6. More than half of Americans don’t have life insurance because they think it’s too expensive.
It appears that a lot of Americans overestimate the cost of life insurance. While life insurance isn’t exactly cheap, most people think it’s around three times more expensive than it really is.
The younger generations are especially egregious, as millennials estimate the costs will be six times higher.
Life Insurance Trends
Technology will change the way we determine risk and pricing for insurance. At present, insurance is about repairing damage or being reactive. It works this way because it’s based on preset risk profiles.
Risk profiles are more generic because we had to process data manually. With artificial intelligence, though, all that is changing. AI can analyze thousands of records in seconds. In the future, we’ll see a more flexible approach to insurance.
We’ll see more rewards for taking healthy steps. Companies will be able to predict potential risks accurately. This could lead to us becoming better able to avoid those risks. That, in turn, might boost insurance interest throughout the population.
7. The global health insurance market size is projected to reach 108.46 billion by 2026.
(Source: PR Newswire)
The current advances in technology, particularly digital brokerages and insurance marketplaces, have given the health insurance market an incredible boost. In 2019, we saw $22.22 billion invested in the industry, and life insurance facts from 2020 show that the expected CAGR for 2021–2026 is 25.4%.
8. Investments in the Insurtech industry have been increasing year-on-year since 2013.
Insurtech is an offshoot of the fintech industry. These companies use technology to boost efficiency and data collection. Funding dropped a little in the 2017/ 2018 period, but this nascent field could well prove to be an industry disruptor. As the traditional insurance companies are showing an interest, we could see new collaborations emerge.
9. Automating claims could reduce costs for insurers by 30%.
The case for automation in this industry is strong — it will lower costs and reduce the time taken to process claims. It could also identify potential exploitation and fraud. Both insurers and clients will benefit.
10. 80% of customers are willing to use digital channels to conduct transactions and perform tasks.
Insurers are coming under increasing pressure from clients who want to be able to manage their policies online. With the pace of life being what it is, more consumers are looking for self-service options that save them time.
11. Spending on AI technology and software in the insurance industry is forecast to reach 571 million by the end of 2021.
It’s not a case of if AI will transform the industry, but rather when. Considering the potential benefits of automation, it makes sense for companies to invest in AI. This is in response to one of the main challenges facing the insurance industry in 2020 – fraud.
12. Robotic process automation can increase ROI by up to 200%.
Automation makes the work much easier for everyone. Since insurance is a highly regulated industry, RPA has the potential to significantly speed up compliance, as well as lower costs. The increased power in the process also improves customer service, as the staff has more time to deal with the more complex questions.
Types of Life Insurance
US life insurance industry statistics point to three broad classifications for policies in terms of the way that they pay. These policies can be further divided into three sub-categories, depending on the original type of policy.
Standard glossary of terms:
- Term: These are policies with an expiry date. They’ll cover you for a set period. When that period expires, so does the policy. These policies are less expensive, the downside being that you’re betting you’ll die before the policy expires.
- Whole: This policy pays out on death. As long as you keep paying your premiums, your cover remains in effect. The premiums are more expensive because the policy will, at some stage, pay out. These policies may accrue a cash value too.
- Universal: This policy is similar to the whole life one except that it’s more flexible. You can opt to adjust premium payments, death benefits, and so on. On the flip side, this policy is more expensive than term insurance. It’s also a complex policy.
- No-exam: This policy is for those who are not sure they can pass an insurer’s physical. With these policies, you don’t have to have a physical. Naturally, you’ll pay for that privilege.
- Individual: Individual premiums are the type you’re most likely to encounter. Here only the personal circumstances of the insured are considered.
- Group: Group policies offer benefits for a particular segment at a lower rate. Companies are essentially offering a bulk discount. They can do this because many members of the section will take up the policy.
- Credit: These policies cover the amount of your debt if you die. They are pricey because they decrease in value alongside your loan amount. Ceding a whole life insurance policy is often a more cost-effective way to cover your debt.
13. In 2019, companies issued $12,388,298 million worth of individual life insurance policies.
According to the American Council of Life Insurers, this marked a 2.3% increase over the previous year and a 1.8% annual rise over 2009’s figures. Check out our coverage of personal finance statistics for more information.
14. Group life policies in America dropped by 0.1% between 2018 and 2019.
American insurers issued a total of $7,358,413 million worth of group policies in 2019. This is a 0.4% annual decrease since 2009. It seems fewer Americans believe that group policies are the best life insurance option for them.
15. The number of credit life policies issued in 2019 totaled $87.346 billion.
The number of these policies increased by 4.6% between 2018 and 2019. This is still an annual drop of 3.6% since 2009.
16. Taiwan has the highest proportion of insurance to GDP globally.
Taiwan’s insurance policies, both life and non-life, account for 17.4% of the country’s GDP. This indicates that the Taiwanese take insurance very seriously. By contrast, America’s insurance policies account for 12% of its GDP. The average, globally, is 7.3%.
17. The average face amount of life insurance policies in the United States in 2019 was $178,150.
The average face value of policies does fluctuate year-on-year, but there’s a slow and steady growth trend. The overall amount has increased somewhat from $172,040 in 2009.
When we factor in the average home insurance cost and mortgage value estimated to be $202,284 in 2019, the situation doesn’t look great. A single average life insurance policy isn’t even enough to cover the cost of an average home.
18. Permanent life policies may allow you to claim early if you develop a critical or terminal illness.
(Source: Insurance Information Institute)
This practice is known as accelerated benefits. The idea is that the patient gets to improve their quality of life, leading up to their death. It’s a good option for someone who is single or whose family is financially secure. Early drawdowns reduce the payout received on death.
19. Life insurance can include an investment aspect.
You can either choose straight life cover or opt to add an investment benefit to your policy. If you want the latter, you’ll pay a higher premium. The additional amount, however, will be invested. This amount accrues over time, and you can usually borrow against it.
It might make sense to incorporate an investment policy here, depending on how good the insurer is at managing investments. It could work out slightly cheaper because you’re only paying one set of management fees.
20. Group policies offer savings opportunities but come with significant risks.
The primary downside to group insurance is that if you change jobs, you lose your cover. There’s also a risk that you’re not getting the best deal possible. Insurance companies continually improve their product ranges to remain competitive.
They might not do that with existing group cover, meaning you might find a better deal elsewhere.
Senior Life Insurance
Thanks to advances in modern medicine, life expectancy rates in America have almost doubled in the last 160 years. Naturally, that’s had a knock-on effect in terms of population ratios based on age.
With seniors living longer, it’s evident that we need to rethink how insurance works. We might have to consider increasing the maximum age for seniors to apply for life insurance. Are we also going to have to reconsider how life insurance pays out?
Today it’s not uncommon for younger people to take out life insurance. The earlier they start, the better the deal they get. How viable this will remain in the future will have to be seen. Say, for example, that we’ll live 20 years longer than we would’ve before. That’s an additional 20-years-worth of premiums. If we take an average cost of $50 a month, that’s an extra $12,000 in premiums. Or, to put it another way, $12,000 that you could otherwise invest.
Insurance industry trends indicate that insurers must develop products that add extra value. In the future, we’re bound to start seeing the lines between life insurance and investment blending a little more.
21. The average American will live to a ripe old age of 77.3 today.
(Source: Statista, CDC)
Just 160 years ago, you were lucky if you made it to 40. With life expectancies in the United States doubling, we’re going to have to start seeing an evolution in the way life insurance works.
The COVID-19 pandemic did cause a significant dip in 2020, but it’s not expected to have a long-term effect on this trend.
22. The percentage of senior citizens in America more than doubled between 1950 and 2020.
In 1950, only 8% of the US population were senior citizens. That figure stands at 16.9% today. Experts predict that the number will increase to 22% by 2050.
23. 8.9% of seniors are earning below the poverty rate.
(Source: Congressional Research Service)
This points to a need for more efficient financial planning. Women are more likely to live in poverty than men. Mistakes in calculating the level of cover needed to repay debt and settle expenses have a serious knock-on effect.
Women might, for example, have to sell the family home to settle outstanding hospital bills.
The best life insurance for seniors incorporates a little extra coverage for unforeseen expenses.
24. It pays off to start your life insurance as early in life as possible.
(Source: Policy Genius)
The average cost for $250,000 cover for a 20-year old man is $17.02 per month. Put off getting life insurance until you’re 60, and your life insurance cost will be about $141.36 per month.
Assuming that both people die at 70, the 20-year old will have paid a total of $10,692 for cover. The 60-year old will have forked out a total of $18,078 over the ten years. It doesn’t pay to put off getting cover.
Interestingly enough, the same doesn’t hold true for the average car insurance cost. With car insurance, younger drivers pay higher rates.
Life Insurance Companies
Life insurance industry trends for 2020 show that the industry in the United States has had a bumpy few decades. Despite the country housing some of the largest insurers in the world, the industry has been in decline since 2001. As of 2018, the number of insurers had almost halved when compared to 2001.
Interestingly enough, though, the number of brokers has been increasing annually since 1960. Perhaps what we’re interpreting as a decline in the industry is more a case of mergers or buyouts of smaller companies.
25. The overall number of life insurers in the United States has been dropping steadily since 2001.
The number of insurers has almost halved since 2001 when there were 1,341 active insurers. In 2019, this number dropped to 761. Changes in the individual and family life insurance areas could have contributed here.
26. Insurance industry trends for 2020 show that two of the top ten insurers by market capitalization were American.
With a $32.8 billion market capitalization, Metlife is the fifth-largest insurer globally. Aflac comes in eighth place with a market capitalization of $26.9 billion.
27. Ping An Insurance Group in China is the world’s largest insurer.
With a market capitalization of $187.2 billion, the Ping An Insurance Group is the world’s largest insurer. The other top life insurance companies don’t even come close.
28. The United States had the largest value of written premiums in 2020.
(Source: Swiss Re)
In 2019, the premiums written stateside were valued at $632.687 billion. China came in a distant second with premiums valued at $347.545 billion. Japan took the third spot with premium values of $294.497 billion.
29. Prudential Financial has $915.387 billion in assets.
(Source: Adv Ratings)
When it comes to the other largest insurers in the US, Berkshire Hathaway came in a close second with $788.133 billion in assets. New York Life takes third place with $324.78 billion. Jackson National holds the tenth spot with $294 billion in assets.
30. There are 1,071,272 insurance brokers, agents, and employees in the United States in 2021.
The number has been growing year on year for the last ten years when it was 907,654.
31. Prudential is America’s largest life insurer but not one of the best life insurance companies.
(Source: J.D. Power)
Information collected by J.D. Power shows that Prudential ranks fourth in the country in terms of customer satisfaction. Still above the industry average but also well behind State Farm, who holds the top spot.
32. Marsh and McLennan Cos. Inc. is the insurance company with the highest revenue in the world.
(Source: Insurance Information Institute)
This Chicago-based company dates back to 1871. Since then, it’s grown to become a multinational conglomerate. It has representatives in 130 countries. Their revenue in 2020 was $17.267 billion.
33. Insurers in the United States must keep cash reserves of 8%–12%.
Insurers are required to keep cash reserves to guard against large claims. The 9/11 attacks cost the insurers $40 billion, and some didn’t have adequate cash reserves to cover the premiums.
Companies might have gone under had the government not intervened.
History of Life Insurance
The history of insurance is an interesting one. The life insurance industry has been around for a lot longer than most people realize.
The first policy was issued in 1706 by the Amicable Society for a Perpetual Assurance Office. This worked slightly differently than insurance today.
Members of the society contributed monthly premiums. At the end of the year, the family of deceased members got a payment. The amount paid out depended on the contributions of the deceased.
The industry has evolved a lot since then, and it’s booming today.
34. Women typically pay 23% less for life insurance.
Historically women are considered less of a risk for insurers. They’re less likely to engage in risky behavior that could get them killed. Also, women tend to live longer than men, and this is reflected in lower premiums.
35. Being a smoker means paying two to three times the regular rate for life insurance.
(Source: Policy Genius)
On the plus side, after you’ve quit smoking for a year, you’re rated the same as a non-smoker.
36. Californians were the ones with the most coverage in 2018.
(Source: Policy Genius)
Californians purchased $356.98 billion worth of life cover in terms of the face values of policies.
37. Wyoming comes in as the state with the least amount of coverage in 2018.
(Source: Policy Genius)
Wyoming residents purchased just $4.59 billion worth of life insurance in 2018.
You’re probably wondering why there was such a massive difference in the figures for California and Wyoming.
It’s more than likely a result of the difference in the cost of living and average property prices.
38. The number of insured adults in America has dropped from 63% in 2011 to 52% in 2021.
Life insurance facts for 2021 show that, while the US economy is going strong, the impact of the COVID-19 pandemic is definitely being felt. However, we can’t say that the decrease in insured Americans is solely the fault of the pandemic. There’s been a continuous and steady drop since 2016, which significantly predates it.
It’s clear that the strength of the economy isn’t the only indicator of the average person’s buying power.
39. The Presbyterian Ministers Fund, established in 1759, was America’s first life insurer.
This fund was founded by Benjamin Franklin and it protected the families of deceased ministers. Today the landscape is very different. The industry as a whole had an asset base of $9 trillion in 2019.
While it seems morbid to think about death when you first leave school, it’s the best time to secure the best rates on a policy. As you grow older, your risk to the insurer increases, and they adjust your premiums accordingly.
Putting off getting life insurance could be a costly mistake. The same goes for underestimating the amount of coverage that you need.
Did these life insurance statistics get you rattled?
If you don’t want to leave your family in a difficult financial situation after passing away, consider consulting an independent insurance broker. They can give you the choice of the best products for you across the industry.
There’s no set minimum age as such. You can take out life insurance on your child if you like. If you’re taking the insurance yourself, the requirement is that you must have contractual capacity. In other words, be legally able to enter into a contract. If you aren’t, your guardian will have to co-sign.
Brace yourself; it’s probably a lot more than you think. Start with ten to twelve times your annual salary. This should be sufficient to replace your income.
Want to score brownie points with your family?
Total the amount of outstanding debt that you have as a family. Then add that to the cover mentioned above.
Do see if your pension fund offers pension term assurance. This will cover your beneficiaries if you die before retirement. It’s not usually enough on its own, but every bit counts.
Also, don’t forget that you should review your cover at least once a year. It should increase as your income does. If you’ve paid down your debt, you can reduce your protection accordingly.
52% of Americans have life cover.
The average American has $178,150 in life cover.
If we look at life insurance ownership by age, the results are interesting. The answer might shock you. The most common age group for people to buy insurance is between 35 and 45. Millennials are the group least likely to consider life insurance important.
Life insurance statistics show that life insurance is, in essence, quite simple. You pay your premiums every month. As long as you continue to pay on time, your cover remains intact until you die. There are variations on this theme, but that’s the way it works in a nutshell.
If you die of natural causes, your beneficiaries receive the face value of the policy. In cases of accidental death, the companies often pay double the face value. We call this double indemnity insurance.
- Adv Ratings
- Congressional Research Service
- Insurance Information Institute
- Insurance Information Institute
- Insurance Information Institute
- J.D. Power
- No Exam
- Policy Genius
- PR Newswire
- Swiss Re