Life Insurance Industry Overview
The life insurance industry is a substantial and evolving sector that provides financial security for numerous American families. According to recent statistics, the total premiums paid for individual life insurance reached a record $16.2 billion in 2024, marking the fourth consecutive year of record-breaking premiums.
Key Life Insurance Statistics
- Total individual life insurance policies in force: 134,193,000 (2023)
- People with group life insurance: over 118,000,000
- Distribution of life insurance types based on premiums (2024):
- Whole life: 36%
- Indexed universal life: 23%
- Variable universal life: 15%
- Term life: 19%
- Fixed universal life: 7%
Life Insurance Coverage and Demographics
52% of consumers reported having life insurance, whether individual or group policies. However, there’s a significant disparity in coverage among different demographics:
- Hispanic Americans: 45% have life insurance
- Parents: 59% have life insurance
- Private industry employees with access to life insurance through employers: 57%
Uninsured Americans
An estimated 102 million uninsured or underinsured adults in the U.S. say they need life insurance or more coverage. Households earning under $50,000 annually were most likely (56%) to report needing life insurance.
Reasons for Not Having Life Insurance
A 2024 study by Corebridge Financial identified the top reasons people don’t purchase life insurance:
- Other financial obligations (22%)
- No dependents or discomfort thinking about death (20%)
- Intention to buy later (15%)
- Perceived complexity or health concerns (11%)
Buying Life Insurance
The primary reasons for purchasing life insurance include:
- Covering burial and final expenses
- Wealth transfer or leaving an inheritance
- Employer-provided coverage
Changing Consumer Preferences
There’s a shift towards online purchases: 32% of consumers prefer buying life insurance online, compared to 29% who prefer in-person transactions. However, most sales still involve at least one in-person meeting.
Average Life Insurance Costs
The cost of life insurance varies significantly based on age, gender, and coverage amount. For example, average annual costs for a 20-year term life policy for a male aged 30 range from $162 for $250,000 coverage to $261 for $1 million coverage.
Term vs. Whole Life Insurance
Understanding the differences between term and whole life insurance is crucial for consumers. Term life insurance is generally cheaper but provides coverage for a specified period, while whole life insurance builds cash value over time.
Consumer Confusion
Despite its importance, many people are confused about life insurance basics. For instance:
- Only 25% correctly identified term life insurance as the cheapest option
- 20% understood that term life policies typically end with no payout if outlived
- Just 6% correctly defined a life insurance rider as an add-on for extra coverage
Life Expectancy and Insurance Rates
Life insurance rates are based on life expectancy, which varies by age and gender. For example, a newborn male’s life expectancy is 73.5 years, while a female’s is 79.3 years.
Types of Deaths Covered
Most life insurance policies cover death from any cause, excluding suicide within the first two years.
Policy Lapses and Claims
In 2023, 7.3% of individual life insurance policies lapsed, and 1.2% were surrendered. Life insurance payouts totaled $133,221,536,000 in 2023.
Conclusion
The life insurance industry is complex and evolving, with varying consumer needs and perceptions. Understanding key statistics, product differences, and consumer trends is essential for both industry professionals and potential policyholders.
