Last updated: March 20th, 2023
Reviewed by
Paige Geisler
Licensed Insurance Agent
Table of Contents
The Life Insurance Consumer Report Study 2023
Factors such as generation, household income, and race/ethnicity play a role in how consumers perceive life insurance. Let’s take a look at some life insurance stats and facts. They help to tell the story of life insurance and how various consumers perceive, research, and purchase it.
The following article is based on extensive research from various studies and surveys conducted by Insurist between 2018 and 2023 regarding life insurance.
Here Are Some Quick Facts:
- The most common reason people don’t have life insurance is that they think they cannot afford it. Among American adults, 32% to 47% believe life insurance is financially out of reach.
- Around 65% of adults that don’t have life insurance say they don’t know how to buy a policy or aren’t sure what life insurance is right for them.
- More than half of consumers buy life insurance from independent agents.
- 52% of American adults have at least some life insurance, while 48% don’t have any at all. Young people and those with lower incomes are less likely to have life insurance.
- Almost two-thirds of adults overestimate the cost of life insurance.
- The most common reason for purchasing life insurance is to cover end-of-life expenses, though people also buy policies to pass on wealth, cover debt, invest, or supplement retirement incomes.
- For most age groups, the preferred channels for learning more about life insurance are online media and financial advisors.
Life Insurance Market Research
Top Financial Concerns of Consumers
Every individual has financial concerns. These could include retirement, inheritance, or even monthly bills. The following poll conducted in 2023 examined the main financial concerns of Americans.
Top Financial Concerns of 2022
While the list above doesn’t include life insurance directly as a top concern, having coverage can help reduce the burden of some of these issues. For example, life insurance can provide the peace of mind that your children have money for college no matter what happens to you. In some cases, whole life and other types of life insurance can even create cash savings, which help with retirement and financial needs later in life.
Life Insurance Market Penetration
Market penetration refers to the percentage of people who have a product or use a service. In the case of life insurance, as of 2020, around 52% of adult Americans had life insurance. That’s a decrease from the previous year, though life insurance market penetration has varied by 10% positively and negatively over the past decade.
Life Insurance Ownership Among American Adults, 2011 to 2020
- 2011 – 63%
- 2012 – 59%
- 2013 – 62%
- 2014 – 57%
- 2015 – 63%
- 2016 – 60%
- 2017 – 59%
- 2018 – 59%
- 2019 – 57%
- 2020 – 54%
- 2021 – 52%
Group or Individual Life Insurance Policies
People can choose to purchase individual life insurance online or through an insurance agent. If they’re employed or part of another qualifying group, they may be eligible for group life insurance benefits. While close to 48% of adults don’t have life insurance, the 52% that do have individual life, group life, or a combination of the two.
Who Isn’t Covered Well by Life Insurance?
Breaking down life insurance penetration by demographics brings to light certain coverage gaps. Age, ethnicity or race, and other defining factors help determine those who are more likely to be uninsured or underinsured for life insurance. Younger generations, Hispanics, Blacks, and those making less than $50,000 a year are most likely to have no life insurance or not have enough life insurance.
Percent of Uninsured/Underinsured People by Age
- Gen Z – 45%
- Millennials – 44%
- Gen X – 44%
- Baby boomers – 31%
Percent of Uninsured/Underinsured People by Race/Ethnicity
- Hispanic – 47%
- Black – 46%
- White – 38%
- Asian – 27%
Percent of Uninsured/Underinsured People by Annual Household Income
- Under $50,000 – 54%
- $50,000 to $99,900 – 40%
- $100,000 to $149,900 – 33%
- More than $150,000 – 26%
Life Insurance Knowledge Gaps
A lack of knowledge about life insurance can lead many people to be uninsured or underinsured, even when they’re financially able to afford life insurance. Here are just a few examples of life insurance knowledge gaps that might impact policy ownership for someone.
- Around 65% of American adults who don’t currently have life insurance say the main reason is they’re not aware of how to buy a policy.
- Around 1 in 10 people who have life insurance don’t know what type of plan they have. Single people without children and working adults are the groups most likely to not understand their life insurance coverage.
- 13% of adults think they don’t need life insurance if they’re in good health.
- More than half of adults don’t understand the specifics of their policies. For example, 55% don’t know what a life settlement is or that they can potentially sell their policy.
- Close to 30% of adults either surrendered a life insurance policy or let it lapse. Many of these people lost money because they didn’t fully understand their options.
Expected Cost of Term Life Insurance
The most common reason people don’t have life insurance is that they think they cannot afford it. This reason becomes more prevalent as people age. Older adults in their retirement years may be worried about the cost of life insurance due to premiums increasing with age and fixed incomes. These statistics indicate an opportunity. Insurance companies and other businesses that cater to life insurance for seniors can educate potential customers on affordable products to fit their personal needs.
Expected Cost of Term Life Insurance
Most people overestimate how much life insurance costs. For example, around half of all adults assume a term life policy for $250,000 in coverage would cost a 30-year-old male nonsmoker $500. The actual industry average is less than $200.
How Much Do People Think Life Insurance Costs?
Close to a third of all adults think $250,000 in term life insurance for a 30-year-old would cost $1,000 or more a year. Another 30% overestimates by thinking the cost would be $300 to $999. The last third estimates close to the actual average, which is under $300.
How Much Do People Think Life Insurance Costs
Young generations, such as Millennials and GenZers, are more likely to seriously overestimate the costs of life insurance when compared to their older counterparts. This demonstrates insurance companies and other professionals in the industry have some opportunities in marketing to educate younger target audiences. They can help these groups to understand that term life coverage can be more affordable than they believe.
Life Insurance Types & Products
According to LIMRA, a third-party market research firm, life insurance sales were up by 8% in the first 6 months of 2021 compared to numbers for early 2020. That is the fastest growth in this sector since 1983.
While various market factors were in place, the most obvious driver of this increase was the COVID-19 pandemic. The pandemic created more awareness of financial and end-of-life needs among families and the general population.
LIMRA looks at insurance market shares based on premium values. Using that method, it breaks down the types of insurance products purchased. It records the numbers for whole life, term life, and subcategories of universal life.
Percent of New Life Insurance Policies by Premium Sold January to June 2021
- Whole life – 36%
- Term life – 21%
- Indexed universal life – 24%
- Fixed universal life – 8%
- Variable universal life – 11%
Simplified Underwriting
Policies that involve simplified underwriting are the most preferred. Almost half of all adults in the United States are more willing to buy a life insurance policy via simplified underwriting than traditional underwriting. The percentage is higher in certain subgroups, including Gen X and women.
Simplified underwriting is preferred due to convenience, no need for medical exams, and more transparency when it applies to premiums.
What Do People Say They Like About Simplified Underwriting?
What Do People Say They Like About Simplified Underwriting
Life Insurance Buying Behavior
Life insurance can serve a wide variety of financial needs beyond death benefits. However, the death benefit remains the most common reason people purchase these policies. Among consumers, 83% use it to cover final expenses like burials. Around two-thirds apply it to the transfer of wealth to their heirs. Still, more than half of the people polled indicated replacing income and supplementing retirement were reasons for purchasing life insurance. All of these responses suggest people realize the flexible financial benefits of life insurance.
Most Common Reasons People Buy Life Insurance
- To cover burial or final expenses – 83%
- To transfer wealth to others – 66%
- As an income replacement – 62%
- To supplement retirement income – 57%
- To pay off debt, such as a mortgage – 50%
- To pay for college for someone else – 14%
Other reasons people buy life insurance include providing funds for a business, investing with tax savings, official estate planning, and supporting future philanthropy.
Why Don’t People Buy Life Insurance?
- They think it’s too expensive – 65%
- They don’t think they need it – 56%
- They aren’t sure how much or what type to buy – 52%
- They just haven’t made time to do it yet – 45%
- They don’t trust life insurance companies or agents – 35%
People don’t think they need life insurance for a number of reasons. Many believe they’re healthy, and there’s no need to buy a life insurance policy. This way of thinking ignores the fact that accidents and other unplanned events can happen. In some cases, people don’t think they need life insurance because they’re without debts or children.
How People Educate Themselves About Life Insurance
How people find out about life insurance and educate themselves on options varies. This depends on factors such as age and race. Not surprisingly, younger people are more likely to turn to online channels when researching potential policies. Only those aged 61 and older are more likely to use a financial advisor, although individuals approaching retirement years are almost equally likely to use online channels and financial advisors. People who are younger are more likely to turn to friends or family for recommendations and advice.
Percent of People That Prefer to Learn About Life Insurance in Various Ways, by Age
Percent of People That Prefer to Learn About Life Insurance in Various Ways, by Age
Percent of People That Prefer to Learn About Life Insurance in Various Ways, by Race and Ethnicity
Percent of People That Prefer to Learn About Life Insurance in Various Ways, by Race and Ethnicity
When it comes to online channels, consumers use everything. Company websites and social media are popular places to find information. Almost half of all consumers interested in life insurance check both company sites (those belonging to life insurance companies directly) and aggregator sites. Aggregator sites are networks of independent agencies that come together to provide a scope of service and premium options that are competitive with larger organizations.
Other online channels consumers use to learn about life insurance include:
- Agency or broker sites
- Online calculators
- Blogs from experts and advisors
- Social media pages
How Do People Buy Life Insurance?
- Via independent agents, online or in person – 51%
- Via affiliated/captive agents, online or in person – 38%
- Via direct marketing efforts – 6%
- Via other channels – 5%
Consumers can purchase life insurance via several channels. Even so, independent and affiliated agents are the most common. Independent agents aren’t affiliated with a specific insurance company and can sell products from many companies. This is the most common option. Among people who buy life insurance, 51% buy from independent agents. These agents are often seen as less biased than affiliated agents. People may believe that being able to quote from many companies means independent agents can get them the best deal.
How Much Life Insurance Coverage Are People Buying?
On average, adults in America have around $168,000 in life insurance coverage. Many people buy much more than that, with younger generations tending to buy more life insurance than older generations.
Percent of People Buying Over $250,000 in Life Insurance Coverage in 2021 by Age
Percent of People Buying Over $250,000 in Life Insurance Coverage in 2021 by Age
Percent of People Buying Life Insurance With Less Than $250,000 in Coverage in 2021 by Age
Percent of People Buying Life Insurance With Less Than $250,000 in Coverage in 2021 by Age
Seniors aged 65 and older make up a very small percentage of people buying policies valued at more than $250,000. For policy values above that amount, people aged 18 to 44 make up the bulk of policyholders.
Percent of People Buying Life Insurance With More Than $250,000 in Coverage in 2021 by Age
Percent of People Buying Life Insurance With More Than $250,000 in Coverage in 2021 by Age
As coverage amounts increase, the percentage of plans purchased by younger people also increases. This correlation is not coincidental. One factor to consider when buying life insurance is how many years you need the policy to cover. Someone who is buying life insurance to replace their income and support their family may need 10 to 20 years of coverage. People aged 18 to 44 are most likely to be dealing with such considerations.
Life Insurance Company Statistics
Top 10 Life Insurance Companies in the United States by Assets
The top 10 life insurance companies in the United States have more than $3.5 trillion in assets. Consumers may look to life insurance companies with plenty of assets when they’re ready to make a purchase because they believe these companies are most likely to be in a position to pay out a claim when the time comes.
Top 10 Life Insurance Companies in the United States by Assets
Top 10 Writers Of Individual Life Insurance By Direct Premiums Written, 2021
The top 10 writers of individual life insurance in 2021 had more than 47% of the market share and collected more than $57 million in premiums.
Top 10 Writers Of Individual Life Insurance By Direct Premiums Written, 2021
Top 10 Writers Of Group Life Insurance By Direct Premiums Written, 2021
The top 10 writers of group life insurance in 2021 had almost 50% of the market share.
Top 10 Writers Of Group Life Insurance By Direct Premiums Written, 2021
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Brian is the founder and CEO of Insurist and carries Life, Health, and Property & Casualty licenses in all 50 U.S. states. Since 2013, Brian has been a member of Million Dollar Round Table, a designation for the top 1% of financial advisors worldwide. Brian has been featured in Yahoo! Finance, Money.com, Entrepreneur.com, Life Happens, Forbes, MSN, and Good Financial Cents. Brian’s goal is to show customers the best products, the quickest answers to their questions, and provide expert advice.
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Paige is an assistant agent for State Farm and is licensed to sell property and casualty, health, and life insurance in Virginia. She handles all different types of insurance and financial services and is currently working on a securities and bonds license. Paige has a degree from Radford University in English and is a certified notary.
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