20+ Lifesaving Life Insurance Statistics

Last modified: July 17, 2021

The US has the largest insurance market in the world today, followed by China and Japan. The US insurance industry accounts for nearly 40% of the total amount of premiums written globally. The kind of impact this industry makes on the country’s economy is huge. 

In this article, we will take a close look at the life insurance statistics that you need to know, life insurance policies, and their average costs. Additionally, we will discuss the impact of COVID-19 on the insurance industry and how likely it is to be shaped by emerging trends in the coming years.

Top Picks

  • The life insurance sector was worth $678.7 billion in 2019.
  • In 2020, 54% of Americans had some type of a life insurance policy.
  • Globally 4 of the 10 largest life insurance companies are American.
  • California alone purchases more life insurance than 27 states.
  • Life insurance benefits and claims amounted to $747.4 billion in 2020.
  • COVID-19 could cost life insurance companies between $15 billion to $27.8 billion.

Life Insurance Facts You Need to Know

 

1.The word “insurance” originally meant an “engagement to marry.”

Source: brownandjoseph.com

The term “insurance” is derived from the French word “ensurer,” which originally meant an engagement to marry. Over time, the word evolved to become “assurance” and later “insurance.”

2. In 2020, 54% of Americans had some type of life insurance policy.

Source: www.iii.org

As life insurance statistics show, 54% of Americans owned a life insurance policy in 2020, with many factors affecting these numbers. 

People who don’t purchase life insurance are mostly illegal immigrants or those who think that it is too expensive. Even though more than 50% of the population is covered, not everyone has sufficient coverage.

3. $867 is the average amount insurance consumers spend after an online search for a policy.

Source:www.dialogtech.com

For many insurance shoppers (69%), a search is the first step to assess their options. Many of them scan through companies’ sites and life insurance facts and statistics to find the perfect match. 

Back in the day, many shoppers preferred to talk to an agent tete-a-tete to purchase a policy. But nowadays, generations buy insurance policies by phone or through websites, emails, and live chats. This is why many insurance markets are investing in digital ads to acquire more and more new customers.

4. The US has a total value of $629 billion in life insurance premiums.

Source: Statista

The amount you pay per month to keep your life insurance policy running is called a premium. The US is number one worldwide, with $629 billion in life insurance premiums. How much is that? It’s as much as the GDP of the entire country of Argentina. Japan and China are #2 and #3 in the world, with $341 billion and $329 billion in premiums, respectively.

5. 57% of permanent policies bought in 2017 were whole life policies, compared to only 30% in 2019.

Source: BestLifeRates

There are many whole life insurance facts that attract customers to invest in this type of life insurance. For instance, it never expires, which means it will be paid in full no matter when one dies. Moreover, whole life insurance also builds cash value over time, which is tax-free. 

Despite all these advantages, only 30% of the permanent policies bought in 2019 were whole life policies. This may be due to the fact that these policies are more costly. However, regarding the advantages one gets with whole life insurance, it’s worth purchasing.

6. In 2019, 37% of people said they owned a life insurance policy to save for retirement.

Source: CompareCamp

The number one reason for owning life insurance in 2019 was income replacement (37%), followed by final/burial expenses (30%). Life insurance statistics in the US show that over the last 10 years, the number of life insurance policies issued to individuals has held steady or slightly increased. Namely, because there is a growing concern among the shoppers to pay off mortgages, meet business needs, and replace former policies.

7. According to life insurance statistics, California alone purchases more life insurance than 27 states.

Source: www.insuranceandestates.com

The US has by far the largest insurance market in the world. California, Texas, and New York purchase the most life insurance of all states, providing more coverage than the 36 states combined.

8. Life insurance benefits and claims amounted to $747.4 billion in 2020, compared to $762.0 billion in 2019.

Source: www.iii.org

This sum includes life insurance death benefits, disability benefits, annuity benefits, and other payouts. The biggest payout in 2020 was $323.4 billion. It covered surrender benefits and withdrawals from life insurance contracts made to policyholders who terminated their policies early or withdrew cash from their policies.

9. 29% of all customers said that they would buy a life insurance policy online.

Source: BestLifeRates

Apart from having a dedicated website, many insurance companies created their own social media pages. Even though customers usually don’t purchase a life insurance policy via social media, they may gather info about the company’s services, values or use it for validation purposes when finding or switching financial advisors. Customers use Facebook (26%), Instagram (11%), YouTube (17%), and Twitter (9%) to verify the validity of the insurance provider, website, or life insurance agent before getting into business with them.

Millennials prefer shopping online, and life insurance is not an exception. The older generation, however, would rather use face-to-face or telephonic communication. All in all, the pandemic has forced us all to switch to online means.

10. T.O’Bryan poisoned his son over a lousy $40,000 life insurance policy.

Source: www.chron.com

The only case of poisoning from Halloween treat was a father killing his son over a lousy $40,000 life insurance policy. Timothy O’Bryan got the nickname “The Man Who Killed Halloween.” He poisoned his son with a candy laced with cyanide. He was accused of staging a crime as part of a life insurance scheme and executed by lethal injection in 1984.

11. In 2013, Sony gained a profit of $9.07 billion from selling… life insurance.

Source: www.newser.com

Despite the fact that Sony is known globally for mostly selling electronics, its insurance sector is the company’s major source of profit. In Japan, 63% of its total operating profit comes from life, auto, and medical insurance. As their electronics are their Achilles’ heel, only from life insurance, they’ve got $9.07 billion over the past decade.

The Future and Trends in Life Insurance

12. Global spending on AI technology and software in the insurance industry is forecast to reach $110 billion in 2024.

Source: https://artificialintelligence-news.com

At present, insurance is about repairing the damage because it’s based on preset risk profiles. 68% of young insurance agents believe that this industry is too slow for this new world as it processes life insurance data manually. Therefore, many companies invest in AI technology and software to be able to analyze thousands of records in seconds. Moreover, AI can benefit such insurance applications as pricing, fraud detection, and claims handling. 

13. 80% of customers are eager to use digital channels to conduct transactions and perform tasks.

Source: EY

With the current pace of life, more consumers (80%) are looking for self-service options that save them time. Customers would prefer to manage their policies online. 

14. Robotic Process Automation (RPA) can help effectively reduce the amount of repetitive work for the agents by 80%.

Source: comparecamp.com, Statista

To streamline their operations, insurance companies are finally implementing automation. We’ll soon witness a significant increase in the use of technology aimed at automating repetitive tasks, such as marketing automation software, RPA, AI, etc. 

For example, in 2018, only 5% of insurers in the US used robotic automation for some of their claims procedures.

15. Millennials (16%) are more likely to report being uninsured compared to 12% of Generation X and 8% of Baby Boomers.

Source: IBM

Insurance and demographics go hand in hand. For long-term business growth, it is crucial that the insurance companies take into account the demographic factors.

Millennials are tech-savvy, and this industry is a step back when talking about introducing new technologies. In contrast, the baby boomers are near retirement and have numerous needs that should be satisfied. 

46% of those interviewed cited confusion around policy specifics, and even their general need for life insurance, as the biggest impediment to obtaining it. Cost was a concern for just 35%.

16. 88% of insurance customers look for an insurance company that can personalize their experience.

Source: Accenture

There is a direct link between enhancing the customer experience and increasing profitability. The clients look for personalized offers, messages, pricing, and recommendations from their auto, home, or life insurance providers. Consequently, insurance providers must adapt their strategies to satisfy their clients and offer high-quality service as other industries do.

Impact of COVID-19 on Life Insurance

17. Digital transformations in the insurance industry grew 20% globally in the past year due to COVID-19.

Source: www.bain.com

The changes are taking place across the insurance policy lifecycle, from marketing to claims submissions and digital policy servicing. The need for digital solutions in the insurance industry has been driven by the COVID-19 social-distancing guidelines and stay-at-home mandates. 

18. The GDP growth in 2020 has been negative for the first time since 2019, which has affected the recovery of the insurance industry.

Source: Statista

Due to the novel coronavirus outbreak, the United States GDP growth in 2020 has been -3.1%. With the reopening of the economy in 2021, the projected GDP growth is currently sitting at 6.39%. With these figures in mind, insurance industry growth in 2021 is possible, but it will surely require the end of lockdowns and other impacts on the local economy. Yet, these improvements are in progress and, for now, without necessarily increasing the premiums for life insurance coverage.

19. COVID-19 could cost life insurance companies between $15 billion to $27.8 billion.

Source: money.com

Back in 1918-1919, life insurers paid out $125 million for the Spanish Flu outbreak. This payout is still considered among the biggest payouts in history. 

The current COVID-19 outbreak may cost insurance companies between $15–$27.8 billion. Although that would be a significant blow, most insurers can handle the additional claims, as they already pay out over $77 billion per year. Moreover, many insurance companies have been on the market for nearly 100 years now.

20. Insurance applications for individuals aged 60 and above were temporarily suspended at certain insurance companies during the peak of the COVID-19 pandemic.

Source: www.foxbusiness.com

Insuring older Americans during the pandemic can be a big risk for insurance providers. The cost of the $250,000 15-year term life policy for a healthy 40-year-old woman reaches $180 annually. In contrast, a 70-year-old healthy woman pays over $2,244 or 1,146% more per year. If the policyholder has health problems or is a smoker, the price can go up three times. 2021 was supposed to be a rebound year for the insurance industry, but it turns out to be unpredictable and risky. 

21. US insurers and their foundations donated about $280 million in the fight against COVID-19.

Source: www.iii.org

Insurers have responded quickly to the pandemic. It is estimated that by June 2020, insurers and their foundations had donated about $280 million in the fight against COVID-19. Besides, worldwide donations reached more than $150 million. Also, many auto insurers returned over $14 billion to their customers nationwide in response to reduced driving during the pandemic.

Life Insurance Companies Statistics

22. Net premiums written for the life insurance sector amounted to $678.7 billion in 2019.

Source: www.iii.org

The life/annuity insurance sector consists of annuities, accident and health, and life insurance. Net premiums for this sector totaled $678.7 billion in 2019. According to S&P Global Market Intelligence, total private health insurance direct written premiums were $968.3 billion, including $757.4 billion from the health insurance segment, $204.1 billion from the life/annuity segment, and $6.7 billion from P/C annual statements.

23. Globally 4 of the 10 largest life insurance companies, by market capitalization, are American.

Source: statista.com

According to the rank of the biggest insurance companies by market capitalization as of May 2020, 4 out of 10 leading life insurance companies are American. It thereby shows that the insurance industry’s leading global player is Berkshire Hathaway, with a market cap amounting to $455.4 billion.

24. The top 25 life insurers wrote close to 2/3 of all premiums in 2020. 

Source: bestliferates.org

The life insurance data published in March 2020 shows that the total of direct written premiums equals over $174 billion. 2/3 of all premiums are written by the top 25 life insurers, while more than 50% of the total comes from just the top 12 providers. This speaks largely to these companies’ marketability and how long some of them have been in the market. Many of them are very well-known brands.

25. The top three best insurance companies in 2021 have existed on the market for more than 100 years!

Source: NerdWallet

According to the NerdWallet review, the four best life insurance companies that scored five out of five stars are Northwestern Mutual, Guardian, Mass Mutual, and Haven Life. The first three of them have existed on the market for more than 100 years. Having gained years of immense experience, each of these companies provides multiple insurance plans, suiting many customer profiles. 

Life Insurance Cost Statistics

26. The average cost of life insurance is $26 a month.

Source: www.nerdwallet.com

Based on data provided by Quotacy, the average life insurance payments reach $26 a month for a 40-year-old buying a 20-year term policy, which is the common term length sold. However, many factors influence the life insurance quotes, such as your age,  gender, health condition, etc. So, you can’t really answer the question regarding life insurance costs right away, as there are many aspects of the policy to consider.

27. A 30-year-old smoker may pay three times the amount of a non-smoker for a life insurance policy. 

Source: Forbes

Life insurance companies base their rates mostly on your age and health status, but they also factor in your job, weight, bad habits, and even your family health history. Here are some average costs of insurance according to gender and age.

  • Gender

Since men tend to have a shorter life expectancy than women, life insurers take this into account and thus charge a man higher rates than a woman of the same age. 

Average prices for a policy face value of $250,000:

The insured Premium
30-year-old man $21
30-year-old woman $18
40-year-old man $30
40-year-old woman $25
50-year-old man $67
50-year-old woman $52
  • Age

The average life insurance price only increases by 4% between ages 25 and 30. However, it jumps much higher between ages 60 and 65 — an average increase of 86% or $275. Differences in premiums are even more significant if you smoke.

Average prices for a 20-year term life policy with a death benefit of $500,000:

Age Price for a non-smoker Price for a smoker
25 $31 $86
30 $33 $92
35 $38 $117
40 $50 $179
45 $78 $277
50 $118 $426
55 $190 $663
60 $318 $1,007
65 $593 $1,528

28. The average life insurance payout rates are around 98.3%.

Source: thewealthcircle.com

Life insurance payout rates refer to the percentage of total claims received by the insurer that result in a successful payout. The 98.3% figure proves that most of the policies result in a successful claim. However, there is variation in the life insurance payout rates, which depends on the insurer. 

Final Verdict 

During unpredictable times like these, we need to carefully rethink every aspect of our life. We all have different preferences and factors, which affect our life insurance purchase decisions. 

This life insurance statistics article highlighted numerous key points regarding the life insurance industry and the impact of an ongoing pandemic. If you consider buying a life insurance policy, do it while you’re young, as it will cost you less. Moreover, if your job is the only source of income, life insurance may protect your family if something happens to you. 

FAQs

Why do people buy life insurance?

One of the primary reasons for life insurance purchase is providing financial security for your family in the event you pass away. Additionally, life insurance can even help with estate planning or saving for retirement.

What percentage of the population has life insurance?

According to life insurance statistics, 54% of Americans were insured in 2020, which is 3% less than in 2019. People who don’t own life insurance are illegal immigrants, individuals who cannot afford it, or those who think that the policies are too expensive.

How many life insurance companies are there in the US?

As of 2020, there are 837 life/annuity insurers across the US (https://www.iii.org). The peak was in the 1990s when there were over 2,000 companies. 

When it comes to the insurance industry, people prefer verified companies that have been in the market for a long period. Maybe this is why half of the premiums are written by the top 12 US insurance companies in the US.

How many life insurance companies have failed in the US?

The word “bankruptcy” scares everyone except the US, where it is not perceived as a failure but rather a hiccup. Debts are written off, and new chances are granted to the companies to start anew. 

Fortunately, in recent years, no insurance companies have filed for bankruptcy. 

How many different types of basic life insurance are there?

There are two main types: term and permanent. The other policies fit into these two groups. 

Term insurance covers policyholders for a certain period of time and usually does not have any cash value. On the other hand, permanent insurance provides coverage for the rest of your life, and it comes with cash value.