10 Life Insurance Statistics from 2021
To understand the current state of life insurance, take a look at these 10 trends that shed light on how and why people are purchasing policies now.
1. Over half of Americans have life insurance
What percentage of Americans have life insurance? The latest data is from 2020, which revealed that 54% of people in the U.S. have an active policy in place. This could either be a policy purchased individually or a benefit received through work.
2. More people bought life insurance policies than in 2020
2021 saw a jump in new life insurance policies. During the first half of the year, there was an 8% increase compared to the same period in 2020. According to LIMRA, that's the biggest jump in new policies since 1983. That means more people recognize the importance of having life insurance coverage as part of their financial planning process.
3. COVID-19 made more people think about the need for life insurance
The global pandemic has brought life insurance to the forefront of many people's minds. One study found that over 30% of people were more likely to purchase a policy due to COVID-19.
Life insurance providers continued to offer new policies, even during the early days of the pandemic. And luckily, premiums have not been impacted due to COVID.
4. Many Americans lost employer-sponsored life insurance coverage due to layoffs
In March 2020, unemployment rose by more than 1.5 million individuals. This resulted in a loss of income, and it also caused many people to lose their employer-sponsored benefits — including group life insurance policies.
5. Whole life insurance policies experienced a major jump
One of the most interesting life insurance statistics for 2021 is a 25% year-over-year increase in new whole life policies for the second quarter. This was the largest increase in all types of life insurance. At Ethos, we offer whole life policies to people ages 66 to 85.
6. New variable universal life policies skyrocketed
Variable universal life (VUL) policies grew 69% in the first half of 2021 compared to the previous year. There are a few reasons for this. Low-interest rates and a strong stock market likely encouraged new policy holders. VUL policies have a cash value component that can be applied to investment options rather than a fixed interest rate, and many people likely wanted to take advantage of that growth.
7. More people are getting life insurance online
Nearly 30% of new policies were opened online in 2020, compared to 17% in 2011. Pandemic lockdowns contributed to this growth since people couldn't meet with insurance agents in person. Platforms like Ethos have made it easier for people of all ages to quickly get life insurance coverage, with no medical exam needed - you only need to answer a few health questions.
8. Covering final expenses is the top reason people purchase life insurance
Around 83% of policyholders say they purchase life insurance to cover their final and burial expenses. Average funeral costs in the U.S. range between $7,000 and $10,000. Instead of leaving loved ones to pay that out of pocket after you pass away, a life insurance policy gives a financial buffer to help cover those hefty final expenses.
9. Women are less likely than men to get life insurance coverage
Only 47% of women own a life insurance policy, compared to 58% of their male counterparts. And unfortunately, this life insurance stat has not improved for the last five years. Women's premiums are usually less expensive than men's because women have a longer life expectancy. Even women who don't earn an income for their families should consider life insurance because their household contributions may need to be outsourced should they pass away, causing a financial strain on the family.
10. Over half of people who don't buy a policy don't understand the different types
53% of people who put off purchasing a life insurance policy don't know what kind of policy is right for them. Don't be intimidated by the ins and outs of policy-speak. Understanding life insurance basics is essential, so you know exactly how you're protecting your family.
A term life insurance policy offers you a certain amount of coverage in exchange for a premium payment. If you pass away while the policy is effective, your designated beneficiary will receive a death benefit after filing a claim with the insurance company.
Life insurance is becoming an increasingly important part of financial planning in America. And with 100% online policies like the ones offered by Ethos, getting coverage now is easier than ever.