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17 New Term Life Insurance Statistics

Term Life Insurance Industry Trends for 2024

17 New Term Life Insurance Statistics

Are you looking to make a well-informed decision about term life insurance? You've come to the right place.

Today, we're diving into "17 New Term Life Insurance Statistics" that will help you understand the key trends, market dynamics, and consumer behaviors shaping this essential financial product.

Whether you're a potential policyholder, an insurance professional, or a financial advisor, these insights are crucial for your knowledge base.


Term Life Insurance Explained

First off, let's set the scene with a bit about term life insurance. It's a type of life insurance that provides coverage at a fixed rate of payments for a limited period, or term.

If the insured person passes away during this term, the death benefit is paid to the beneficiaries.

It's a straightforward product, making it a popular choice for many looking to safeguard their financial future.


Growth of Term Life Insurance Market

One of the standout statistics from recent reports is the growth of the term life insurance market.

According to the American Council of Life Insurers (ACLI), the term life insurance market saw a 5.6% increase in new policies issued in 2022.

This rise signifies a growing awareness and need for temporary yet robust financial protection among consumers.


Demographics of Term Life Insurance

When it comes to demographics, Millennials are leading the charge.

The Life Insurance Marketing and Research Association (LIMRA) reports that 40% of new term life insurance policyholders are between the ages of 25 to 35.

This generation is increasingly recognizing the importance of life insurance in securing their young families' futures.


Gender Dynamics – Female Market Growth

Gender dynamics in term life insurance reveal some interesting trends.

Approximately 57% of term life insurance policies are purchased by men, but the percentage of women buying these policies is steadily rising.

This shift highlights an increasing financial awareness and independence among women.


Average Coverage Amount for Term Life Insurance

The average coverage amount for term life policies has also seen an uptick.

LIMRA notes that the average coverage amount increased by 3.2% in the last year, bringing the figure to an estimated $250,000.

People are looking for substantial coverage to meet future needs like mortgages, income replacement, and final expenses.


Online Buying on The Rise

Another fascinating insight is the rise of online purchases.

A survey by the Insurance Information Institute (III) indicated that 30% of new term life insurance policies were bought online in 2022, reflecting a shift towards digital convenience and accessibility.


Popularity of Level Term Life Insurance

When comparing different types of term life insurance policies, level term life insurance remains the most popular.

This type of policy maintains the same death benefit and premium throughout the term's duration, offering predictability and ease of budgeting.


Claims Payout of Term Life Insurance Policies

Policy performance in terms of claims payout is a crucial factor in evaluating life insurance providers.

According to the National Association of Insurance Commissioners (NAIC), 97% of term life claims were paid out in a timely manner in 2022, reinforcing the reliability of this insurance type.


Cost of Term Life Insurance

The cost of premiums is always a hot topic.

Over the last year, the average term life insurance premium for a healthy 30-year-old male with a 20-year, $500,000 policy was around $27 a month.

For women, it was slightly lower at $23 per month, reflecting lower risk factors typically associated with women.


Market Share

What about market share?

As of 2023, the top five insurers hold approximately 50% of the term life market, according to a market analysis by LIMRA.

The consolidation in the market signifies the dominance of established players with robust financial strength and customer trust.


Renewal Rate Trends

Trends in renewal rates are also telling.

It appears that about 60% of policyholders renew their term life insurance when the initial term expires, as per a survey by Life Office Management Association (LOMA).

This suggests a high satisfaction level among term life policyholders.


No Exam Policy Demand Rising

Another trend worth noting is the increased interest in policies without a medical exam.

Simplified issue term life insurance policies accounted for 20% of new policies in 2022, offering a quicker and more convenient option for those seeking coverage without the hassle of medical exams.


Faster Approval for Coverage

Furthermore, technological advancements are playing a significant role in the term life insurance landscape.

The use of AI and machine learning in underwriting processes has reduced policy approval times by an average of 30%, according to a report by III.

This means faster coverage for policyholders.


Transparency Key to Buyers

Consumer behavior studies show that transparency is crucial for buyers.

Around 75% of consumers cited clear product explanations as a critical factor in their purchasing decision, an insight shared by NAIC.

This underlines the importance of straightforward communication from insurers.


Changes to Term Life Policies

The frequency of policy adjustments is yet another interesting metric.

Over half of term life insurance policyholders make at least one adjustment to their coverage during their policy tenure.

Be it increasing the coverage amount or changing beneficiaries, flexibility is key.


Economic Factors

Let's talk about the impact of economic factors.

Despite inflation and economic uncertainty, term life insurance sales have remained resilient.

In fact, a LIMRA survey found a 4% increase in sales during economic downturns, underscoring the product's essential nature.


Families Choose Term Life Insurance

Term life insurance remains a favored choice for families.

Approximately 80% of policies are bought by married couples or families, highlighting its role in providing financial security against unforeseen events.


Term Life Provides Security

One sobering statistic is that only 60% of Americans have life insurance, including term policies.

Yet, those with term policies feel more secure; 90% report feeling at ease about their financial future, according to a survey by ACLI.


Minority Market Trends

What about the underserved markets?

Minorities have shown increasing engagement with term life insurance.

Reports indicate that 25% of new policies in 2022 were purchased by African Americans and Hispanics, reflecting broader outreach and inclusivity efforts by insurers.


Lapse Rates for Term Life Insurance

Understanding policy lapse rates is also crucial. Around 20% of term life insurance policies lapse before the end of their term, often due to affordability issues. This is a reminder of the importance of choosing a policy that aligns well with your long-term financial planning.

There you have it—17 new term life insurance statistics that offer a comprehensive view of the current landscape. These insights are essential whether you're considering a policy for yourself, advising clients, or conducting market research.

Ready to take the next step? Request a free quote and explore your coverage options today. Remember, informed decisions are empowered decisions!


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Additional Life Insurance Resources:

  • LIMRA – Life Insurance Marketing and Research Association
  • ACLI – American Council of Life Insurers   
  • NAIC – National Association of Insurance Commissioners  
  • III – Insurance Information Institute              
  • U.S. Census Bureau – Data, Surveys and Programs
  • JD Power – Reviews and Ratings


17 New Term Life Insurance Statistics


Disclosure: Compensated Affiliate