Life insurance facts and statistics 2021

Many people make the decision to purchase life insurance so their loved ones will be protected in case of their passing. It can be difficult to understand the industry and you may not be aware of certain aspects about life insurance.

How many people have life assurance?

LIMRA’s 2020 Insurance Barometer Study found that 54 percent of Americans were insured with some form of life insurance. Although the market penetration rate for life insurance is fairly stable, it has been trending downward in the last decade.

According to LIMRA, 2020 saw an industrywide gain of at minimum two percent in the first six months of the year. Although exact data are not available, there was continued growth in life insurance applications during the second half of 2020 due to the pandemic.

Statistics on life insurance claims

According to the Insurance Information Institute, (iii), insurance claims and benefits totaled $762.1 million in 2019. The number of claims and benefits has decreased by 3% compared to 2018, which was $784 billion.

This includes annuity benefits, death benefits, disability benefits, and other payouts. In 2019, the largest payout was $339.6 million for surrender benefits or withdrawals from life insurance contracts to policyholders who terminated policies before they were due or withdrew money from their policies.

Statistics on life insurance by age

Age is one of the major determinants in life insurance prices. For every year that a person is older, the premium amount goes up by eight to ten per cent. The age of a person can also impact whether they are eligible for life insurance coverage.

You might also be interested in life insurance statistics for your age:

  • 33% feel they are well-versed in children’s insurance. However, 47% of respondents agree that it is necessary to insure a minor with a permanent policy if the matter is explained to them.
  • 42% of millennials think that a $250,000 term policy for a young and healthy person would cost $1,000 more than if it were closer to $160 per annum.
  • 38% of millennials avoid purchasing coverage as they worry about not being eligible.
  • 21% of babyboomers and 36% from generation X think their partner should have more life insurance.
  • In 2020, the average life expectancy was 77.8. This is a full-year lower than 2019.

Statistics on the life insurance industry

  • In 2019, the insurance industry was responsible for $922 billion, a 22% increase over 2018’s $904 trillion.
  • Line, life and annuity insurance generated $759 billion in direct premiums in 2019.
    • About four-fifths (or more) of the life insurance premiums revenue came from normal, direct policies. One-fifth of the revenue came from group life insurance policies.
    • Life insurance companies also have other revenue streams, including net investment income and reinsurance allowance. Separate accounts revenue is another source of income. Total revenue: $242.4 billion
  • MetLife holds the largest market share in the life insurance industry. It is followed by Equitable Housings (7.9%), and Prudential (7.5%).

Average cost of life insurance by company

Premiums for life insurance are primarily determined by your life expectancy. This is determined by many factors such as gender, age and smoking. The general rule is that the higher your health, the lower your premiums.

The type of life insurance you purchase will also impact your rates.

  • Term insurance is usually the cheapest because it lasts for a set amount of years and has no cash value except for the death benefit.
  • Permanent insurance that lasts a life time and includes an investment component. This type of life insurance has a significantly higher cost because of the cash component.

These are average rates for life insurance , from a few insurers. Keep in mind that individual premiums may vary.

Facts and myths about life insurance

It can be overwhelming to decide which life insurance policy you want to buy or even to get any life insurance. This is because there is so much information out there that consumers may not be able to verify.

Although you may believe that life insurance is too costly or that only healthy people are eligible, these myths are often false or partially true. These are some myths about life insurance:

Myth 1. Life insurance is only for middle-aged, healthy people. While it is true that life insurance costs increase with age, and that certain risks factors or people with particular illnesses may be more expensive, there are policies that can be purchased for anyone.

Myth 2: If I am single or married and have no children, I don’t require life insurance.
Fact: Life insurance benefits can be used by your loved ones to repay student loans, car loans, and mortgages. It can also be used for your final expenses such as burial.

Myth #3: I will get my student loans forgiven when I die so I don’t need to have life insurance.
Fact: It depends on which type of student loan you have. Federal student loans are forgiven upon death, total disability or insolvency. Family members are not responsible. A life insurance payout may be used to pay for living expenses and funeral costs.

Private student loan debt is different. Ask your lender whether they offer student loan death forgiveness. This will help you to determine how much life insurance you require.

Myth #4: Income taxes will be imposed on my beneficiaries if I die before the proceeds of my life insurance policy is paid.
Fact: Life insurance benefits, up to a threshold, are generally exempt from income tax according to the Internal Revenue Service. Any interest paid on top of the policy could be subject to tax.

Myth 5: A term life insurance policy can’t be converted to a permanent or whole-life policy.
Fact: You can convert certain term life insurance policies depending on which policy you bought. Before you buy your policy, it is important to get the details from your agent.

Myth 6: I no longer need life insurance once my children have reached adulthood.
Fact: Life insurance can be beneficial later in life. It can help you pay off debt, relieve the burden of funeral expenses, and provide financial security for your family.

Myth 7: Life insurance is unnecessary because my savings are sufficient.
According to the National Funeral Directors Association, the national median price for a funeral with burial is $7,000. If your savings are not sufficient, your loved ones will have to cover your funeral costs. Your estate may use any savings you have to pay off debts. This could decrease the amount left for your beneficiaries.

Myth 8: Life insurance is too expensive.
Fact: Many consumers underestimate the cost of term life insurance policies. A healthy 30-year old could get a $250,000, 20-year term policy for $13 per month. Beneficiaries would be eligible to receive $250,000, as most policies are not taxed.

Life insurance is affordable depending on what type of coverage you need.

Myth 9: I don’t draw any income. I don’t require life insurance.
Fact: Even though you may not earn a paycheck as a stay-at home parent, your services could be costly to replace. These include child care, transportation and cooking. Some of these expenses can be covered by life insurance.

Myth 10 – Life insurance doesn’t cover suicide.
Fact: In many cases, Life insurance covers a policyholder’s suicide . Life insurance policies often include suicide and contestability clauses that must be canceled before benefits can be paid. The death benefit may be paid to beneficiaries after the expiration of the clauses. However, this period can typically last between two and three years.

Myth 11: Life insurance is not available to those with health problems.
Fact: Although health is often used in calculating rates and coverage amounts for determining a policy’s premium, this doesn’t necessarily mean that life insurance is impossible for someone with a pre-existing condition. There are policies that can be tailored to consumers with pre-existing conditions like diabetes.

Assume the person is between 40 and 85 years old. If they do not want their medical information to play a role in the decision, they may be eligible for guaranteed issue life insurance.