I thought it would be fun to put together some of the more interesting facts and statistics about life insurance in the United States. The criteria for inclusion on this list mostly has to do with how interesting a particular fact or statistic might be. If you’re reading this from another country, these facts and statistics might not apply there.
This post was surprisingly easy to research. It turns out that multiple organizations track spending in the life insurance industry. I’m able to find all kinds of hard data on the subject.
Here are 10 facts and statistics about life insurance that will blow your mind.
1- 70% of Americans are interested in buying life insurance that doesn’t require a medical exam.
This kind of life insurance is called “simplified underwriting“. The reasons for wanting to avoid a medical exam are many. I have a friend whose mom, for example, hated going to the doctor.
In fact, for the last 30 years of her life, she never visited a doctor once. She would have lived longer, surely, had she had regular medical check-ups. But her mental illness prevented that. Luckily, my friend’s dad still had life insurance coverage and was able to afford her burial.
Other reasons for wanting to avoid a medical exam might be less interesting. Maybe you’re morbidly obese (or even “super morbidly obese”–that’s an actual condition, by the way). Maybe you have health problems you’d rather not discuss.
The big point I’d like to make here is that if you’re a life insurance customer who wants to avoid a medical exam, you’re not alone.
You can learn more about life insurance without an exam here.
2- Over 600 companies in the United States offer life insurance.
It’s a huge market. In fact, it’s so big that you couldn’t possibly compare all the policies from all the companies yourself. If you contacted 12 companies a day, it would take you 2 months just to contact all of them.
On top of that, different companies use slightly different terminology when describing their policies and benefits. The average consumer isn’t equipped to compare that many life insurance policies.
You might think that getting quotes from 3 companies and going with one of them is the best option. That’s better than trying to get information from 600 different companies.
But I think there’s still a better way.
Your best bet is to find an independent broker you can trust to do the research for you. This site offers independent broker services, and you can read more about that service here. Click on the “get quote” button, fill out the form, and we’ll get back with you about what’s available at dozens of different life insurance companies.
3- The United States has a total value of $552.51 billion in life insurance premiums. Japan and China are #2 and #3, with $343.82 billion and $210.76 billion in premiums respectively.
How much is $552 billion?
An average NFL football team would cost $1 billion to buy. Since there are 32 of them, you could buy all those teams–17 times over!
You could buy 5 Mac laptops for every child in the United States with that kind of money.
You could buy over 100 Learjets.
In other words, it’s an almost incomprehensible amount of money.
What are premiums? What do we mean when we say that the life insurance market is made up of $552 billion in premiums?
If you consult my post about life insurance jargon, you’ll see that a premium is the amount of money you pay for a life insurance policy.
Bottom line–the life insurance industry is huge.
4- 80% of consumers think life insurance is more expensive than it actually is.
Most consumers estimate that their life insurance rates will be triple what they would actually cost. This is, in fact, the #1 reason consumer don’t have life insurance. They think it’s going to be too expensive.
The truth is that from a long-term perspective for you and your family, it’s not. It’s more expensive, in countless ways, to not have insurance.
According to the 2015 Insurance Barometer Study, when asked what the annual premiums would cost to insure a healthy 30-year-old, most of the people surveyed estimated the cost to be between $400 and $1000 year.
The actual price for a policy like that is actually only $160/year.
This simple fact results in too many Americans not having enough insurance.
5- Even though most Americans have life insurance, most of them don’t have enough.
Over 61% of Americans have life insurance coverage. But almost half of those customers (47%) have $100,000 or less in coverage.
The easiest formula I’ve seen for determining how much life insurance you need is to multiply your annual salary by 10. The average person in the United States earns about $80,000 a year. Therefore, the average insurance policy should come closer to $800,000 instead of $100,000.
When you consider adding some extra coverage for families with children who need to go to college, that amount should be even higher.
This might sound excessive but think about the effect your untimely death will have on the economics of your family. Most people live in two-income families these days, but they also rely on those two incomes to make ends meet. Removing one of them results in a major change in lifestyle.
You have financial goals for your family. Please think about worst-case scenarios when you’re planning how you’re going to achieve those goals.
6- The life insurance industry has been growing steadily for the last 11 years.
Since only 60% of Americans have coverage, I expect the industry to continue growing in future decades. This means an investment in a company that offers life insurance to its customers might result in strong returns.
From a career perspective, it’s also clear that you can make a lot of money with a career in life insurance. Agents selling insurance are always going to be needed in the industry. Actuaries are well-paid, but getting that job requires a commitment to quite a bit of education.
The smartest life insurance companies are going to focus their efforts on under-served markets. For the most part, this means they need to expand their customer base to include less affluent families.
When we talk about the large number of families who have too little or no coverage, we’re usually talking about people in the lower middle class. That’s where the real growth opportunity in the industry lies now.
7- MetLife is the biggest life insurer in the industry (in the United States), and it’s twice as big as its nearest competitor, Prudential Financial.
The other 8 companies on the top 10 list are Securian Financial Group, New York Life Insurance Group, Cigna Corp., Massachusetts Mutual Life Insurance Co., Unum Group, Hartford Financial Services, Aetna Inc, and Meiji Yasuda Life Insurance Co.
Between them, these 10 companies make up well over half the life insurance industry (in terms of dollars). You can find plenty of smaller companies also in the industry, though.
8- The industry has an entire month devoted to making consumers aware of life insurance.
It’s called Life Insurance Awareness Month (LIAM), and it’s held every year in September.
Life Insurance Awareness Month is an awareness campaign organized by Life Happens and supported by over 100 different life insurance companies.
Their goal with this event is to remind Americans to include life insurance in their financial plans.
But many Americans are ignorant of some of the benefits to having appropriate life insurance coverage.
9- 18% of life insurance customers have both term and permanent insurance policies.
These customers have, on average, better coverage than customers who have just one kind of life insurance. According to ThinkProgress, familiar with both term and permanent life insurance have an average of over $400,000 in coverage. The average family with permanent life insurance only has an average of $197,000 in coverage. And the average family with term life insurance only have an average of $300,000 in coverage?
Why the discrepancies in average amounts?
I can only speculate, but I’d suggest that the rise of the “buy term and invest the difference” has led to a certain type of customer option for more coverage. Also, term insurance is less expensive.
10- An average funeral costs between $7000 and $10,000.
If you take nothing else away from this post, think about this:
Your funeral is going to be expensive. Depending on your family’s financial situation, $7000 to $10,000 is going to be a burden–an unnecessary burden.
Having enough coverage to cover the cost of your burial is simple, affordable, and prudent.
Of course, for most people, only having enough coverage to cover your funeral costs is short-sighted. Most people should consider getting at least 10 times their annual income in coverage.
That means if you make $50,000 a year, consider $500,000 a starting point for your policy. If you have children you’d like to send to college, consider getting $100,000 in additional coverage per child.
Of course, these guidelines fall apart in certain circumstances. If you’re a stay-at-home mom, you don’t have an income to replace. But the contributions you make to the household will cost your survivors money if you die early. You need to consider this when deciding how much life insurance you need.
The main thing to take away from this post is that the life insurance industry is huge, growing, and fascinating. In future posts, I’ll write about what I think we can expect from the industry in days to come.
You should also come away from this post understanding that almost everyone should have life insurance. And almost everyone can afford it, even if they think they can’t.