Life insurance investments are on the rise. In September 2021, LIMRA announced1 that the first half of the year had the highest increase in life insurance policy sales since 1983.
While life insurance might not be the most exciting product to shop for, it’s an essential form of protection, and one many consumers are beginning to take more seriously.
So, how much do people spend on life insurance, and what percentage of Americans are protected right now? Those are just some of the questions we’ll answer on this page.
This page will update regularly to reflect the latest life insurance statistics, and how the life insurance market is evolving.
Key Life Insurance Statistics:
- Around 52% of Americans had life insurance in July 2021, a slight drop of 2% since 2020.Overall, however, the demand for life insurance is growing.
- Around 91% of Americans looking for life insurance today are investing in coverage due to the pandemic.
- 81% of people without life insurance say they don’t buy it because they believe the policy will “cost too much”.
- Around 44% of Millennials believe the cost of term life insurance will exceed $1000 per year, but it’s usually closer to around $160.
- 47% of Americans believe money is the most important thing they can leave behind for their family, and 32% say life insurance is the best way to transfer wealth.
- Life insurance claims increased by approximately 7.3% during 2021, with many insurers attributing the increase to the pandemic.
How Many Americans have Life Insurance?
Approximately 52% of Americans2 had life insurance as of July 2021. This is a slight decrease overall from the number of Americans with life insurance in 2020 (54%). However, the number of policies being sold is increasing drastically.
During the first six months of 2021, the total number of policies sold in the US increased by a massive 8% compared to the previous year. LIMRA’s second quarter life insurance1 sales survey revealed around 36% of Americans without life insurance also said they planned on purchasing coverage during 2021.
Following a record increase in life insurance sales during 2021, most life insurance companies have reported significant increases in premium and policy sales, with 8 in 10 carriers reporting positive premium growth.
Whole life product sales have experienced particularly significant growth in the last two years, with whole-life sales ranking 22% higher in 2021 than in 2020. This is significant, as whole of life policies are often much more expensive, and more valuable for life insurance providers.
What are the Most Common Reasons to Get Life Insurance?
PolicyGenius revealed3 the most common reason for getting life insurance in 2021 was to cover the cost of burial or final expenses (81%). The second most common reason was to transfer wealth to another member of family (66%), followed by income replacement (62%) for surviving heirs.
Approximately 91% of Americans interested in life insurance today are investing in the coverage as a result of the pandemic. Around 46% of Americans4 have no life insurance, and the most common reason for not having life insurance was that it “costs too much” (81%).
Aside from concerns about costs, other financial priorities (75%) and uncertainty about where to get started (65%) were the main reasons not to get life insurance. Interestingly, 44% of Millennials thought the cost of a term life insurance was more than $1,000 year, when it’s usually around $160.
The 2021 Life Insurance Barometer5 study by LIMRA and Life Happens found 59% of people who don’t own life insurance believe they need it. This aligns with the fact that LIMRA’s study also notes a large number of millennials are now planning on getting life insurance within the next 12 months.
Is Life Insurance Important?
One of the reasons life insurance6 is growing increasingly important, is changing life expectancies in the US. According to reports in 2021, the average life expectancy for males decreased to 77.3 years in 2020. In 2021, life expectancy rose slightly again, but remained below pre-pandemic rates.
While most survey respondents for 2021’s LIMRA report said they believed their family would be financially secure after they died (74%), concerns are rising. Around 40% of respondents said their family wouldn’t be able to meet basic financial obligations for more than a year after their death.
The USAA Life Insurance survey7 revealed 47% of Americans believe money is the most important thing you can leave your family when you die, and life insurance is the best instrument for passing on that wealth.
LIMRAs study into he top misconceptions around life insurance in 20218 found around 29% of American workers avoid getting life insurance because they believe the coverage they get at work is enough. However, 54% of American households rely on dual incomes, and losing one income would lead 42% of households to face financial hardship within 6 months.
What Influences Life Insurance Premiums?
The 2021 USAA7 survey revealed around 30% of people say they don’t have life insurance because they believe it costs too much. Notably, a number of factors can influence the cost of life insurance during a person’s life.
Gender, age, smoking status, medical history, and various other factors will impact the rates you pay for life insurance. Some life insurance policies also exclude coverage for certain cases, such as when a person dies by suicide, or when committing a felony.
Notably, most experts agree it’s best to get life insurance when you’re still young, as applying for insurance as you get older can be very difficult. The average premium for a male rises around 258% between the age of 25 and 509. While all life insurance premiums will gradually increase as you age, buying a policy when you’re younger can help to minimize total costs.
How Much Do Life Insurance Companies Pay Out?
The average cost of a life insurance pay-out in 202110 was approximately $681,000. However, the exact amount of cash obtained from a life insurance policy will depend on the kind of coverage you get.
In 2020, life insurance pay-outs totalled $747.4 billion11 representing a slightly lower volume of pay-outs from 2021. Experts predict that policy pay-outs will once again rise during 2022. Notably, however, there are many reasons why a life insurance company may refuse to pay out, such as when a death occurs as a result of a crime.
According to the Insurance Markets reports12 for 2021, life insurance claims increased by an average of 7.3% during 2021, though insurance claims decreased in all other non-life sectors.
Many jurisdictions attributed the increase in claims payments from the life sector to the COVID-19 pandemic. Other factors also affected high increases in claims in the life sector too, such as contracts maturing over the last couple of years.
How Is the Life Insurance Industry Evolving?
According to Deloitte, despite concerns about COVID-19, most insurers expect an acceleration in demand for life insurance during 2022. The global demand for life insurance has increased by 3.3% in 2021 and is expected to increase by 3.9% again in 2022. The area with the biggest demand for life insurance today is China13.
Among the 424 respondents13 in the Deloitte study, about one-third said they expect life insurance revenues to be significantly higher in 2022. The Swiss Re Institute also expects rising requirements of insurance worldwide, with an increase of 3.3% for 2021 and expected 3.9% increase in 2022.
The COVID pandemic has been perhaps the most significant growth factor for today’s life insurance consumers. 49% of millennials now say they’re more likely to buy life insurance since the pandemic, followed by 33% of Gen X and 15% of Baby Boomers14.
Life Insurance Statistics for 2022
Life insurance demand has significantly increased in the last couple of years, particularly since the COVID-19 pandemic. This could be the most important time for families and individuals to start considering their coverage options. Hopefully, these life insurance statistics have given you a good view of the life insurance market as it stands today.