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Life Insurance Statistics

Last updated 27th Jun 2022
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Getting life insurance is an important decision that can help set up your loved ones financially if you were to pass away. There are many policies out there and the specifics of each one cater to different needs. Shopping around enables you to get a good deal and terms that meet the needs of your loved ones.

In this article, you will learn about the interesting and revealing life insurance statistics.

General Life Insurance Statistics

These statistics might reveal something interesting and new you did not know about life insurance.

Over 50% of Americans skipped on life insurance because they feel the cost is too high

Many life insurance seekers overestimate the amount of money it will cost to get life insurance. In fact, they assume that it will cost 3x more than it actually does. Millennials are even worse since on average they feel life insurance will cost 6x more than what is offered by the market. Doing the research and seeing the figures is the best approach instead of relying on assumptions to make decisions.

Source: LIMRA

29% of baby boomers, 32% of Generation X’s and 5.28% of millennials buy and research their life insurance policies online

Large segments of the young population are content to look for life insurance policies while surfing the internet. That might be because you can use a price comparison website to quickly find the company offering the best deals. Also, the number of providers available online is larger than what you can find in your local area.

The accuracy of price comparison websites is also improving, which helps users have confidence in using them to get the best deals.

Source: No Exam

Up to 41% of Americans prefer to look for life insurance in person

This figure has dropped significantly from a decade ago, which was 64%. That might be because as technology is advancing so is the adoption rate of users. The aging population is more likely to get life insurance and that is also the group that has more difficulty keeping up with technology. Therefore, getting insurance in person might seem easier and safer doing it online.

Source: LIMRA

The number of American household underinsured is over 30 million

Underinsured Americans refer to households that have difficulty making ends meet - even if they received the insurance payout. There must be enough money to settle debts, funeral costs and the cost of living. The biggest problems are in households where the breadwinner has passed on.

Source: Nerdwallet

Over 800 companies were offering life insurance in the US in 2019

Since 2001 the state of the life insurance industry has been decreasing in size. Every year the number of companies providing life insurance has been steadily on the decline. This might be because the younger population is more skeptical about getting life insurance and there are more investment opportunities than ever before.

Source: Insurance Information Institute

Based on 2021 data, 52% of Americans have invested in life insurance

Just over half of Americans have life insurance, which is a large portion of the population. In most cases, the decision to get life insurance is made during the retirement years. This means they can get limited-term deals that offer the best risk to reward ratio. However, the younger population is overestimating the cost of life insurance, so this figure might go down in the near future.

Source: LIMRA

Life Insurance Trend Statistics

This section dives into the statistics that allow you to better understand the trends in the life insurance industry. Currently, most insurance rate prices are based on risk profiles, which are generic for the most part.

However, as technology advances, artificial intelligence can be used to create highly informative risk profiles that change the way rates are set. It will decrease the risk for insurers and potentially transform the industry.

For example, when the insurer takes healthy steps, then the rates can go down because they will be expected to live longer.

ROI of insurance companies can be increased by 200% with robotic process automation

Automated processes allow companies to significantly reduce their overheads. For example, adding automation to customer service departments, risk profile assessments and speeding up compliance reduces the operating cost. These savings could potentially be passed down to the customer and provide a better deal. The insurance industry is highly contested so some companies will seek to offer the lowest rates with these savings.

Source: McKinsey

The insurance industry will increase spending to $71 million by the end of 2021 in the areas of software and AI technology

The question is not “if” AI will change the industry, but when. The huge upside of AI means that investing in AI advancements is a no-brainer. It is a race between life insurance companies to see who will make the breakthroughs the fastest. The winners of this race can also get the biggest share of the market.

Source: Statista

80% of life insurance buyers are willing to use online channels for research and finalizing a transaction

Traditionally, life insurance pricing is offered face-to-face once the insurer has a better idea of the risk profile. However, nowadays consumers want to access prices online and use self-service platforms to complete checkout. This means they can get life insurance from the comfort of their home or mobile device. The fast paced nature of modern life means the insurance industry needs to adopt and provide the service customers are seeking.

Source: EY

The cost of processing claims can be reduced by 30% with automation

It takes a significant amount of work hours to check the validity of claims and pay out the appropriate sums of money. Also, when there is a backlog of claims, then it can take a long time for them to be processed.

That is because care is taken to reduce the chances of fraud and exploitation. However, automation can speed up the process and reduce the number of work hours needed to complete each claim.

Source: McKinsey

Since 2013, the number of investments has been growing in the Insurtech industry

Insurtech is simply the insurance industry’s version of fintech. The primary aim of this technology is to improve data collection and efficiency. Bigger investment in the industry means that breakthroughs will allow life insurance companies to improve their processes. Also, the strides made in other industries can be harnessed by insurance companies.

Source: Statista

By 2026 it is estimated that the world’s health insurance market size will reach $108.4 billion

This statistic is not directly about the life insurance industry, but it shows the overall interest in health insurance products. That is because people are actively trying to improve their health now more than ever before. The size of investments in the sector improves the quality of the products, which means customers are more likely to spend money.

Source: PR Newswire

Senior Insurance Statistics

Here we will look at the statistics for senior life insurance policies. This can help you figure out the most popular ones and arguably where the best deals are to be found. It also shines a light on what seniors should think about when getting a policy.

The life insurance industry needs to rethink how to assess profiles because life expectancy is constantly going up. People in the US and worldwide live longer than ever before. The age people get life insurance determines the amount they will need to pay. However, getting insurance deals at a younger age could provide a better overall deal.

The average cost for life insurance for a 20 year old male is $10,692 ($17.02 per month) to receiver $250,000 cover

The figures suggest that you can get more value when opting for life insurance early on in life compared to later. That is because at 60 you will pay an average of $141.36 per month. Therefore, they will need to pay $18,078 for the same amount of coverage and assuming both live to 70 years of age. The opposite tends to be true for car insurance costs, where older drivers with a clean license get better deals.

Source: Policy Genius

The percentage of seniors that have a wage below the poverty line is 8.9%

This statistic suggests that many seniors simply cannot afford to pay for life insurance. When living costs have to take priority over insurance, then these seniors are not in the market for such products. However, if more seniors were to earn above the poverty line, then the size of the life insurance market might also increase.

Source: Congressional Research Service

From 1950 to 2020 the number of senior citizens in the United States doubled

Back in 1950 the population of the US senior citizens was 8%, and since 2020 that figure has been at least 16.9%. Experts predict that by 2050, the percentage will rise to 22%. This might drastically increase the life insurance market during this period. The rise in senior citizens can be explained by healthcare, science, and technology improvements.

Source: Statista

Today the average American will live to 77.3 years of age

You were lucky to make it to 40 years of age only 160 years ago. However, life expectancy has almost doubled since then. The life insurance market has evolved along with the increased life expectancy over the years and will continue to adapt. The life expectancy increase has somewhat dipped because of the 2020 pandemic, but this is expected to be a short-term effect.

Source: Statista

Frequently Asked Questions

Do I need life insurance?
What does my life insurance policy cover?
What happens if a payment date is missed?
What are accelerated benefits?
What is included in determining the cost of life insurance?

References

Our content quality team consulted the following expert sources to maximise the value and accuracy of this page:

  1. LIMRA
  2. Nerdwallet
  3. Insurance Information Institute
  4. McKinsey
  5. Statista
  6. PR Newswire
  7. EY
Keith Hodges

Keith Hodges