Facts + Statistics: Life insurance

Life insurance ownership

According to the 2023 Insurance Barometer Study, conducted by LIMRA and Life Happens, a record-high proportion of consumers (39 percent) said they intend to purchase life insurance within the next year. The proportion is higher for Gen Z adults (44 percent) and millennials (50 percent). This year’s study looked at the growing market for life insurance market for single mothers. In looking at parents in general, the study found that parent of minor children were more likely to than the general population to own life insurance (59 percent versus 52 percent). The same group were also more likely to acknowledge they do not have enough coverage (47 percent versus 41 percent).

Life/Annuity Sector

Traditional life insurance is no longer the primary business of many companies in the life insurance industry. The emphasis has shifted to underwriting annuities, which accounted for 53 percent of life/annuity direct premiums written in 2023. Annuities are contracts that accumulate funds or pay out a fixed or variable income stream. The income stream can be for a set period or over the lifetime of the contract holder or beneficiaries. Accident and health insurance, which includes distinctive products apart from traditional health insurance, account for 24 percent of direct premiums written. In addition to annuities, accident and health, and life insurance products, life insurers may offer financial services such as asset management.

Traditional health insurance, which is not included in this section and is not considered a part of the life/annuity sector, is described under Private Health Insurance. Health insurance pays for medical, surgical and hospital services received by the insured, as well as routine and preventive care, usually within a network format. Of the many types of plans available, most include a deductible paid by the insured, and benefits received are tax-free.

Accident and health insurance, a product provided by the life/annuity and property/casualty (P/C) sectors, encompasses a variety of specialty products related to health such as:

• reimbursement for the time a policyholder spent in a hospital or was disabled;
• short- and long-term disability based on employment;
• long-term care; and
• critical or catastrophic illness insurance.

Accident and health insurance is not meant to replace health insurance. 

Premiums by line

Credit life insurance

Credit life insurance, a form of decreasing term insurance, protects creditors, such as banks, but the borrower pays the premium. The policy covers the outstanding loan balance if the borrower dies before the loan is repaid. The face value of a policy decreases as the loan balance is paid down until both equal zero. When insured loans are paid off early, the insurer returns the premiums for the remaining term to the policyholder. Credit accident and health, a similar product, provides a monthly income if the borrower becomes disabled. 

Investments

Life/annuity and P/C insurers are key players in capital markets, with $9.7 trillion in cash and invested assets in 2020, according to S&P Global Market Intelligence. Life insurance and annuity cash and invested assets totaled $4.7 trillion in 2020, and separate accounts assets and other investments totaled $3.0 trillion. P/C insurer cash and invested assets were $2.0 trillion in 2020.

Because life insurance products are long-term, generally in force for 10 years or longer, payments are predictable. Therefore, life/annuity insurers invest primarily in long-term products. In 2023 life insurers, excluding separate accounts, invested 68.1 percent of their assets in bonds and 2.5 percent in corporate stocks. Life insurers invested 13.7 percent of their assets in mortgage loans on real estate that take seven years or longer to mature.

Distribution channels

Independent agents control more than half of the individual life insurance market. From 2014 to 2023, independent insurance agents’ share of the personal life insurance market grew from 46 percent to 52 percent. The direct response channel remained the same over this period, at 6 percent. As shown in the chart below, affiliated agents have lost some ground, falling from 42 percent to 37 percent.

Online sales

According to LIMRA’s 2021 Insurance Barometer Study, there has been a substantial consumer shift in favor of online life insurance shopping and purchasing because of technological advances and the COVID-19 pandemic. Consumer preference for online life insurance shopping increased 29 percent since 2016 when online purchasing was first added as an option to the study.

Other sales channels

Worksite marketing is the selling of voluntary (employee-paid) insurance and financial products at the worksite. The products may be sold individually or in groups, and policyholders usually pay premiums through periodic payroll deductions. Worksite sales of life and health insurance totaled $8.75 billion in 2022, up from $8.3 billion in 2021, according to Eastbridge Consulting Group.

Separate Accounts

Separate accounts, funds maintained separately from an insurer's general assets, contribute to the revenue of life/annuity insurers. According to the National Association of Insurance Commissioners, separate accounts were originally established in response to federal securities laws concerning investment-linked variable annuities. Variable annuities operate like mutual funds, with earnings that vary based on the annuities' investments. After evolving rapidly in the past 20 years, separate accounts now support an array of hybrid investment products. (See Life/Annuity Insurance Income Statement chart above). 

In 2021 separate accounts contributed $41 billion to the overall life/annuity insurance revenue of $945.7 billion.