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Life Insurance Facts

LIMRA Life Insurance Awareness Month September, 2022

According to the industry research group LIMRA, there are at least 106 million Americans living with a life insurance coverage gap - either they don't have life insurance, or they don't own enough life insurance to meet their needs.

The global pandemic has raised awareness of how fragile life is and the importance of preparing for the unexpected, especially concerning life insurance which can provide financial security for your family's future, no matter what the future holds.

According to LIMRA research, 31% of Americans say they are more likely to buy life insurance as a result of COVID-19.

This is even higher across many demographics, including:

  • Millennials (44%)
  • Black Americans (38%), and
  • Hispanics (37%)

Our research also shows that people who own life insurance are more likely to feel financially secure. Nearly two thirds of insured Americans say they feel financially secure, compared with less than half of those uninsured.

Overall, 41% of Americans say they don’t have sufficient life insurance coverage. Many underserved markets have even greater insurance needs, including:

  • 44% of women believe they have a life insurance coverage gap
  • 45% of Asian Americans say they need more coverage
  • 47% of Millennials live with a life insurance coverage gap
  • 48% of Black Americans acknowledge they don’t have enough life insurance
  • 50% of LGBTQ+ Americans say they need (or need more) coverage

LIMRA research shows that Families would face Financial Hardship if Primary Wage Earner Died:

  • 4 in 10 families within six months
  • 1 in 5 families within just one month

Source: LIMRA

The Life Insurance Industry Statistics from NAIC

The life insurance industry in America is one of the most financially sound over the past 100+ years compared to other industries who required bailouts during financial difficulties.

Each year life insurance companies take in billions of dollars of premiums. Here are some of the key statistics and data relating to life insurance and how it is broken down by specific demographics to give you a clearer understanding of how people are currently viewing the need for life insurance and why they choose to get insured.

Keep in mind, the death rates for life insurance owners is on the rise resulting from the effects of COVID and the use of vaccinations, as confirmed by life insurance actuaries across the U.S.A.

The life insurance industry took a total operating loss for the life insurance products line of 44.90% in 2021 according to the National Association of Insurance Commissioners Report.

Operating Gain / Loss by Line of Business for 2021

  • Credit Life: -198.40%
  • Other Group Life: -164.60%
  • Variable Universal Life: -61.90%
  • Variable Life: - 29.30%
  • Term Life: -519.80%
  • Whole Life: -7.50%
  • Total Life Insurance: -44.90%

Resource: NAIC

Review of Current 2023 Statistics in the Life Insurance Industry

  • 44% of American households would encounter significant financial difficulties within half a year if they lost the primary wage earner in the family, and 28% would reach this point in only a month according to LIMRA.
  • Eight out of 10 consumers overestimate the expense of getting a life insurance policy, according to a study by LIMRA and Life Happens.
  • The number of Americans who believe they don’t have enough life insurance has more than doubled since 2010 according to Insurance Information Institute.

Amount of People Who Have Life Insurance Coverage

Knowing what percentage of Americans have life insurance and from where can be helpful in making understanding your own need for coverage.

  • The percentage of Americans with life insurance is about 52%, including individual and workplace life insurance, according to LIMRA.
  • 106 million American adults do not believe they have adequate life insurance coverage, according to the 2022 Insurance Barometer Study conducted by LIMRA and Life Happens.
  • The percentage of Americans who have term life insurance policies has decreased to 48% in 2019 from 52% in 1998. But the median face value rose to $110,000 from $60,000 during the same period according to American Council of Life Insurers.
  • The percentage of Americans who have permanent life insurance policies dropped to 20% in 2019 from 30% in 1998. At the same time, the median face value of a life insurance policy increased from $45,000 to $50,000 according to American Council of Life Insurers.

Common Reasons People Buy or Don't Buy Life Insurance Coverage

There are many different reasons people decide whether or not to buy life insurance.

Survey data indicate large numbers of Americans are likely to share one or more of a few most-common rationales for their decision regarding life insurance.

Most Common Reasons for Not Buying Life Insurance

  • Cost (60%)
  • Not a financial priority (55%)
  • Uncertainty about life insurance; not sure how much or what type to buy (53%)

NOTE: Eight out of 10 consumers overestimate the expense of getting a life insurance policy, according to a study by LIMRA and Life Happens.

Most Common Reasons for Buying Life Insurance

  • To Pay for burial and other end of life expenses (83%)
  • To Supplement lost income from the death of the primary wage earner (68%)
  • To Transfer wealth from one generation to the next (63%)

Source: LIMRA

Covid-19 and Life Insurance

The Covid-19 pandemic has impacted how we view and understand life insurance, and our basic need for life insurance protection. 

  • The pandemic made American consumers consider life insurance more seriously, according to survey data from LIMRA. About 30% of respondents indicated the pandemic made them more likely to buy life insurance. About 60% reported a “heightened awareness” of the value a life insurance might provide.
  • Millennials (45%), Black Americans (38%), men (33%) and those making more than $150,000 per year (42%) were the demographics in which the pandemic was the biggest motivator for buying life insurance.
  • Just under half (42%) of respondents who contracted Covid-19 now say they are more likely to purchase life insurance as a result.

Source: LIMRA

American Council of Life Insurance on COVID and Life Insurance

American Council of Life Insurers (ACLI) Senior Vice President, Policy Development Paul Graham issued the following statement on social media misinformation relating to COVID-19 vaccines: 

"A social media post appears to be behind the spread of entirely false information, suggesting a COVID-19 vaccine could be a factor a life insurer considers in the claims-paying process. 

"The fact is that life insurers do not consider whether or not a policyholder has received a COVID vaccine when deciding whether to pay a claim. 

"Life insurance policy contracts are very clear on how policies work, and what cause, if any, might lead to the denial of a benefit. A vaccine for COVID-19 is not one of them. 

"Policyholders should rest assured that nothing has changed in the claims-paying process as a result of COVID-19 vaccinations. 

"Policyholders should reach out to their life insurers, agents or financial professionals for their COVID-related questions. They will be happy to help."

Source: ACLI

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