Life insurance can seem tricky at times, with various policy options and misconceptions floating around. At Bankrate, we aim to make this complex topic more down-to-earth and easier to grasp, hopefully boosting your confidence as you hunt for the best coverage to fit your needs. We’ll tackle some common life insurance myths and provide facts and stats that could help clear up any uncertainties. Let Bankrate walk you through the practical sides of life insurance to help secure financial protection for you and your loved ones.
Life insurance facts and statistics
Life insurance remains an important aspect of financial planning, but understanding consumer behavior and market trends is vital for those considering or currently holding a policy. Each year, LIMRA and Life Happens collaborate on the Insurance Barometer Study to explore the attitudes and behaviors of American adults regarding life insurance and other financial products. This comprehensive study, which surveyed adult financial decision-makers in early January 2024, aims to uncover barriers consumers face when purchasing life insurance, ways life insurers can better educate and serve potential customers and demographic differences within the life insurance marketplace.
Here are some key life insurance facts and stats from the study:
- Perceived insufficient coverage: 22 percent of life insurance owners believe they do not have adequate coverage.
- Market stability: The proportion of respondents who feel they need life insurance has remained stable since 2022, with 30 percent of non-owners expressing a need.
- Income and insurance needs: Among those earning $50,000 to $149,999 annually, 39 percent report a need for more life insurance, highlighting a significant interest from middle-income consumers.
- Gender gap: Women are less likely to have life insurance than men, with a consistent 11-point gap over the past 14 years of the study.
- Generational trends: Baby Boomers have the highest rate of life insurance ownership. Gen Z, now aging into the study’s demographic, shows growing interest despite lower ownership rates, with half indicating they need more coverage.
- Diverse needs: Black and Hispanic Americans report a higher need for life insurance protection compared to other groups.
- Financial concerns: Millennials currently express the highest level of concern over financial matters, a notable shift from Gen X in previous years.
- Cost misconceptions: Approximately 72 percent of all participants overestimated the cost of a basic term life insurance policy, a common misconception year after year.
- Knowledge gaps: Over a quarter of younger generations cite a lack of knowledge about life insurance products as a barrier to ownership.
- Community trust: One in five individuals identifying as LGBTQ+ prioritize working with insurance professionals who share their sexual orientation or are known allies.
These statistics reveal a stable yet evolving landscape in life insurance, characterized by persistent misconceptions about cost and coverage needs across diverse demographic groups. As the life insurance industry continues to adapt to changing demographics and economic conditions, understanding these trends becomes increasingly important for anyone involved in financial planning.
How many people have life insurance
Building on the insights provided by the 2024 Insurance Barometer Study, approximately 51 percent of Americans report owning at least one life insurance policy, indicating stable coverage levels over recent years. The study reveals that 42 percent of American adults either need to obtain life insurance or increase their existing coverage. This persistent need-gap includes about 102 million adults, blending those who are uninsured and those who are underinsured.
Despite the awareness of life insurance’s importance, barriers remain. About 30 percent of those without coverage recognize the need but have not purchased insurance, mainly due to perceived high costs, other financial priorities or uncertainty about the necessary coverage amount. Additionally, 10 percent of policyholders feel they need more coverage than they currently have, suggesting a substantial opportunity for the industry to better serve existing customers.
Overall, the gap between those who have life insurance and those who still need it is significant, emphasizing the ongoing challenge for the industry to address misconceptions about cost and educate consumers on the value and potential affordability of life insurance.
Life insurance claims statistics
In 2022, insurance benefits and claims totaled $797.7 billion, according to the Insurance Information Institute (Triple-I). This number has increased when comparing 2021’s benefits and claims, which totaled $790.9 billion.
This amount includes death benefits, annuity benefits, disability benefits and other payouts. The largest payout in 2022 was $348.1 billion for surrender benefits and withdrawals from life insurance contracts made to policyholders who terminated their policies early or withdrew cash from their policies.
Life insurance statistics by age
One of the most significant determining factors in life insurance costs is age. The premium amount increases on average 8-10 percent for every year of age. Age can also influence whether a person qualifies for life insurance coverage at all. Depending on the type of policy, the maximum age for approval ranges from 70-85 years old. But there are also some policies, such as guaranteed issue whole life insurance, that have a minimum age requirement — typically 50 years old).
Other interesting life insurance statistics around age include:
- According to the 2024 Insurance Barometer Study, the percentage of life insurance ownership tends to increase with age.
- Gen Z (ages 12-27) claim a 36 percent ownership of life insurance.
- 50 percent of Millennials (ages 28-43) own life insurance.
- Gen X (ages 44-59) and Baby Boomer (ages 60-78) claim the highest percentage of ownership at 55 percent and 57 percent, respectfully.
- Millennial and Gen X generations are significantly more likely to own term life insurance when compared to younger and older generations.
- 72 percent of Gen Z Americans are likely to own permanent coverage, the most likely group of the generations.
- Gen Z represents the highest number of individuals with a need for more coverage, at 48 percent. Comparatively, Baby Boomers show a 30 percent need gap, the smallest gap of the different generations.
- The average life expectancy in the U.S. in 2022 was 77.5 years, up 1.1 years from 2021.
