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Life Insurance Statistics [Top Facts and Data]

life insurance facts

In the following article, we will discuss the current life insurance statistics and the facts and data that comprise them. The statistics are primarily focused on the U.S. market but can probably be extrapolated to many other countries around the globe.

Life Insurance Facts and Stats

On Life Insurance Rates:

80% of consumers over-estimate the actual cost of life insurance rates. Coverage, particularly term life, may be more affordable now than ever before. For example, check out the rates on:

Reasons to get life insurance:

When it comes to the reasons why we actually need life insurance, the main reasons are, in order, to cover final expenses, replacement of income, transfer wealth or leave an inheritance and covering a mortgage.

At the bottom of the list was for using life insurance for business purposes. That is probably because a smaller percentage of the population is a business owner.  However, too often business planning is overlooked. There are many instances where using life insurance for business purposes is ideal, such as:

Reasons People Don’t Get Life Insurance:

At 64%, the number #1 reason people don’t buy some or more life insurance is because it is too expensive.

Here are some sample 10 year term life insurance quotes for a preferred plus male listed by age for both exam and no exam life insurance. No exam coverage greater than $500,000 is only available for those who qualify for a preferred plus rate class (PP only).

Sample quotes are from A+ rated companies as of Feb 2017. All rates are for informational purposes only and must be qualified for.

Ages$250,000
no exam
$250,000
exam
$500,000
no exam
$500,000
exam
$1,000,000
no exam
$1,000,000
exam
2013.929.6218.2713.1324.5 (PP Only)21.29
3013.929.6218.2713.1324.5 (PP Only)21.29
4016.2511.7123.7518.2029.75 (PP Only)29.06
5023.8127.6745.7041.7678.31 (PP Only)75.51
6068.3260.13127.32112.83227.55 (PP Only)214.36
70n/a179.62n/a319.34n/a609.92
80n/a748.34n/a1490.56n/a2842

At 59%, the #2 reason is due to other current financial priorities. If your “other” financial priorities are cell phones, Netflix, Starbucks, dining out every day, or paying credit card debt, maybe you need to rethink your financial priorities.

Something we haven’t discussed yet is the time frame for the average application; according to a recent survey, 70% of people feel as though their policy should in place within two weeks of the first application. Sadly, just 40% of people are willing to wait four weeks for the application process to take hold. Considering the average policy can take 3-4 weeks and potentially more if there are issues with health, this could be yet another problem that explains why many people are not insured.

On Companies:

In total, there are a little over 800 life insurance companies in the United States. In 1995, there were close to 2,200 life insurance companies. Although the numbers do not explain why there are less companies now than 20 years ago, it is most likely do to the massive amounts of consolidation within the industry over the last 20 years from acquisitions, mergers and buyouts.

On Life Insurance Ownership:

Despite nearly 90% of consumers saying that most people need life insurance in some form, less than two-thirds of Americans actually have a policy in place.

Of the total individual policies purchased in 2015, 38% were term life vs permanent life, which came in at 62%. Although term life represented only 38% of the total policies purchased, term life face amount equaled 69% compared to the total amount of face amount issued for permanent at 31%. The obvious discrepancy being permanent insurance’s higher premiums and lower death benefit.

Presently, 60% of Americans have some life insurance coverage in force. In 2010, 44% of households had individual life insurance which was actually the lowest figure for 50 years. Back in 1960, a whopping 72% were covered. As you can see, life insurance ownership has been on a downward spiral but is now starting to pick up again as more and more people are recognizing the need for life insurance.

Of the 60% of people in the US that have life insurance in place, 40% believe that they haven’t got enough. In truth, this life insurance statistic is very worrying because it means that even when we do get insurance, we cannot afford or aren’t willing to pay the premiums for enough coverage. Perhaps we fail to see the advantages of coverage, especially the benefits of cash value life insurance.

55% of millennial adults wish a spouse would buy more coverage, followed by 35% of Gen X, 20% of Boomers and 15% of seniors want more life insurance coverage.

No Coverage vs Group or Private Coverage:

Of the 60% that have life insurance, 20% of males and 18% of females only own group life insurance. Another 26% of males and 27% of females only own private insurance. 16% of males and 14% of females own both group and private life insurance.

When we look at household income levels, not surprisingly we discover that higher income households have more life insurance. But even among $100K+ households, only 51% own individual or individual and group coverage. 25% own only group coverage, putting the percentage of $100K+ households that own some form of life insurance at 76%. Therefore, even among the top 20% income earners, roughly only half have a private life insurance policy.

If the primary wage earner was to pass away, a huge 70% of US householders (with a child under the age of 18 years) wouldn’t be able to keep up with living expenses. In fact, 40% of households with one of more children of this age have even admitted that they would have trouble immediately if the main wage earner died suddenly.

Each year, 2.5 million people die in the US from all different causes and at all different ages. If we break this down and assume all days are equal, we have an average of 6,850 people dying each and every day. Although there are various factors in play that will affect this number, rough estimates suggest that nearly 3,300 of these die WITHOUT life insurance – this is very nearly 50%. According to the same calculations, over 20% do not leave enough money which suggests that only a small percentage of people have adequate coverage.

Shockingly, around one-third of the people who haven’t yet bought life insurance haven’t done so because they do not think about death. Unfortunately, death is the only thing in life that we can be certain of but it remains as the only thing that many people avoid. When this happens, it leaves loved ones with no money to pay for medical bills, funeral expenses and more. Considering the average funeral can reach $10,000, this is a sad life insurance statistic to read.

If we continue on this theme, another third of people are not insured because they aren’t sure how it all works, how much insurance to buy, and even what type of life insurance to choose.

40% of insured wives and husbands only have group life insurance coverage. Overall, group life insurance is a fantastic benefit to have but it only works as long as you are still employed by that company. If you rely on group life insurance, you might be left disappointed when you get ill or lose your job.

In life, people have two main concerns with their finances – funding retirement and paying monthly bills. Unless life insurance is in place and counts as a monthly bill, it just isn’t something that gets considered. Whenever a group of people or even a nation worry about paying bills each month, you can almost guarantee a shortage of insurance because this is seen as a luxury rather than a necessity.

When going down the list of financial priorities, life insurance finally makes an appearance at number seven on the list (#1 being retirement planning). According to a recent report, just 40% admit to concerns regarding life insurance. The irony is that cash value life insurance makes a fantastic retirement vehicle, especially when coupled with an infinite banking strategy.

A little earlier, we noted that a significant proportion of people would feel the effects of missing income immediately. To continue from this, around 33% of people have no idea what would happen or whether they could cope if the primary earner was to die. Once again, it comes down to one of the main fears that we seem to have – we don’t want to talk or even think about death.

Recommend Life Insurance?

In a survey conducted in 2016, 66% of people would recommend life insurance to a friend. In 2015, this same figure was 55% so the overall opinion is changing and people are seeing how valuable life insurance can be.

If we look to the younger generations, just short of 80% would recommend life insurance to a friend – this is four in every five young people. If this continues, we should see the amount of people with life insurance increase dramatically.

Sticking with the younger demographic, 86% of all millennials questioned in this survey said that they believe most people require and should have some form of life insurance. With this, we can see that the understanding is there so it is now all about the action and seeing this through.

Total Value of Life Insurance:

According to a recent report, the total value of all life and health insurance assets is just under $5.5 trillion and this is just in the U.S. In terms of revenue, the life and health insurance industry sees over $845 billion, with life insurance making up $155 billion in annual sales.

The average face value of an individual life insurance policy is $160,000.

Currently, there are over 280 million life insurance policies in force across the U.S.

Advent of Wearable Technology:

Some innovative life insurance companies are now offering technology and various wearable activity tracker accessories in order to keep premiums low. According to the survey, 33% of all Americans would consider wearing an activity tracker if it meant that their premiums would decrease. For millennials alone, this figure is over half. For people who already wear this type of technology for exercise and training, just under 70% would consider using it to obtain better quotes and rates on life insurance.

The main drawback people mentioned regarding life insurance companies offering wearable technology is a concern over invasion of privacy.

Life Insurance Purchasing Behavior:

When we look into how people are buying life insurance policies, it seems as though we still prefer to speak to people rather than doing it over the phone or even buying life insurance online. Finishing much higher than the other options, 51% prefer to talk to real people face-to-face when buying life insurance.

In recent times, we have seen people show an interest in life insurance with long term care policy combinations and 40% of millennials would consider such a policy. However, this reduced to just one in four with all consumers in the market.

When ranking consumer concerns regarding financial issues, the top three spots belong to: (1) 66% having enough money for a comfortable retirement; (2) 58% Paying for long term care and (3) 58% paying for medical expenses. Life insurance as a consumer concern regarding financial issues comes in at #7 under the guise, 45% burdening dependents if I die prematurely.

More irony as funding a properly structured participating whole life insurance policy would (1) provide supplemental retirement income, (2) will help pay for long term care and (3) medical expenses, as well as (4) provide a tax free life insurance death benefit.

So far, we haven’t looked into too much detail regarding age but the official 2015 statistics showed that the majority of life insurance belongs to the people aged 45 years and above. Despite us earning the majority of our human capital in the early years of our career, we wait until too late before we even consider something like life insurance. As you move down the age groups, the amount of people with life insurance gets smaller and smaller.

Of the four age classes, Millenials, Gen X, Boomers and Seniors, 47% of those polled said it was not at all likely they would purchase life insurance in the coming year as opposed to 7% who said it was extremely likely they would.

Primary Causes of Death:

Of all the causes of death within the United States, heart disease is still the biggest killer with cancer not too far behind. Considering these are two health problems that have the potential to sneak up on even the healthiest people, it shows the true value of life insurance. As we saw earlier, 2.5 million people die in the US per year. Of this amount, around 1.2 million come from these two health problems alone.

Life Insurance Statistics Summary

There we have it, your guide to life insurance statistics. As you can see, there are some positive signs for the industry as well as some worrying statistics.

Overall, there are more people with life insurance in place compared to a decade ago. However, it seems as though misconceptions are one of the main reasons why more people don’t have a policy. Whether it is the over-inflated costs that people have in their mind or any other reason, we hope that our information today and prior to this will remove some of these misconceptions.

Overall, a better understanding of life insurance is needed and we also need to remove the fear of talking about and planning for death that we seem to have.

References

 

 

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