Facts + Statistics: Life insurance

 
Life insurance ownership

According to the 2022 Insurance Barometer Study, conducted by LIMRA and Life Happens, 106 million adults lack life insurance, or adequate coverage. The need gap, what people have versus what they said they need, is at an all-time high and more than double what it was 12 years ago. The percent of households that say they would be financially secure if the primary wage earner suddenly passed away is 68 percent among life insurance owners, versus 47 percent among those who do not own life insurance. Seventy-eight percent of those who own employer based and individual life insurance said they feel secure.

 
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 48 percent of life/annuity direct premiums written in 2021. 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 26 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. 

 
Life/Annuity Insurance Income Statement, 2017-2021

($ billions, end of year)

  2017 2018 2019 2020 2021 Percent change,
2020-2021 (1)
Revenue            
Life insurance premiums $137.1 $145.1 $151.0 $143.1 $159.5 11.5%
Annuity premiums and deposits 287.2 269.7 339.8 294.6 285.8 -3.0
Accident and health premiums 169.3 183.1 185.0 184.7 189.2 2.4
Credit life and credit accident and health premiums 1.3 1.3 1.4 1.2 1.2 0.0
Other premiums and considerations 2.1 4.0 (2) (2) (2) 0.0
Total premiums, consideration and deposits $597.1 $603.2 $679.4 $625.7 $637.8 1.9%
Net investment income 182.3 187.4 186.7 186.0 200.8 8.0
Reinsurance allowance -25.1 32.0 -29.7 -22.8 8.5 NA
Separate accounts revenue 36.6 37.3 36.8 37.4 41.0 9.8
Other income 49.2 44.0 48.7 55.0 57.5 4.6
Total revenue $839.9 $903.9 $921.9 $881.2 $945.7 7.3%
Expense            
Benefits 281.4 289.5 301.8 314.2 338.4 7.7
Surrenders 308.9 350.3 339.6 323.4 362.7 12.2
Increase in reserves 106.4 143.3 120.6 109.8 89.8 -18.2
Transfers to separate accounts -65.8 -89.6 -72.0 -69.2 -75.6 9.2
Commissions 58.0 58.3 61.2 60.1 64.5 7.3
General and administrative expenses 65.9 65.9 67.8 67.0 69.4 3.5
Insurance taxes, licenses and fees 8.8 10.7 9.3 11.5 10.1 -12.3
Other expenses -4.1 11.3 14.4 8.4 14.8 76.5
Total expenses $759.4 $839.7 $842.8 $825.2 $873.9 5.9%
Policyholder dividends 17.5 18.2 18.1 18.0 17.8 -1.3
Net gain from operations before federal income tax 63.0 46.0 61.0 38.0 53.9 41.8
Federal income tax 12.4 3.4 9.4 5.1 8.2 59.7
Net income before capital gains $50.6 $42.6 $51.6 $32.9 $45.7 39.0%
Net realized capital gains (losses) -8.6 -4.7 -6.9 -10.7 -8.3 -22.8
Net income $42.1 $37.9 $44.7 $22.1 $37.4 68.9%
Pre-tax operating income 63.0 46.0 61.0 38.0 53.9 41.8
Capital and surplus, end of year 395.0 399.9 421.7 440.5 475.9 8.0

(1) Calculated from unrounded data.
(2) Data not available.

NA=Not applicable.

Source: NAIC data, sourced from S&P Global Market Intelligence, Insurance Information Institute.

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Premiums by line

 
Direct Premiums Written By Line, Life/Annuity Insurance, 2019-2021

($000)

  2019 2020 2021
Lines of insurance Direct premiums
written (1)
Percent
of total 
Direct premiums
written (1)
Percent
of total 
Direct premiums
written (1)
Percent
of total 
Annuities            
Ordinary individual annuities $217,475,954 28.6% $206,548,091 26.9% $237,429,226 28.9%
Group annuities 148,066,084 19.5 163,115,551 21.3 160,156,376 19.5
Total $365,542,038 48.1% $369,663,642 48.2% $397,585,602 48.4%
Accident and health (3)            
Group 139,371,108 18.4 140,591,891 18.3 144,355,085 17.6
Other 63,764,322 8.4 68,034,862 8.9 71,246,227 8.7
Credit 889,583 0.1 725,330 0.1 761,493 0.1
Total $204,025,013 26.9% $209,352,084 27.3% $216,362,804 26.4%
Life            
Ordinary life 149,042,367 19.6 148,026,526 19.3 163,998,690 20.0
Group life 39,744,272 5.2 39,205,456 5.1 41,984,740 5.1
Credit life (group and individual) 810,896 0.1 687,128 0.1 744,296 0.1
Industrial life 74,820 (3) 85,053 (3) 76,881 (3)
Total $189,672,356 25.0% $188,004,163 24.5% $206,804,608 25.2%
All other lines 39 (2) 72 (2) 283 (2)
Total, all lines (4) $759,239,446 100.0% $767,019,961 100.0% $820,753,297 100.0%

(1) Before reinsurance transactions.
(2) Less than 0.1 percent.
(3) Excludes accident and health premiums reported on the property/casualty and health annual statements.
(4) Excludes deposit-type funds.

Source: NAIC data, sourced from S&P Global Market Intelligence, Insurance Information Institute.

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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. 

 
Credit Life, And Credit Accident And Health Insurance Direct Premiums Written, 2010-2019

($000)

Year Credit life Credit accident and health
2010 $1,247,192 $929,774
2011 1,226,910 930,094
2012 1,159,524 957,294
2013 977,557 968,691
2014 961,247 955,261
2015 915,437 910,645
2016 831,283 829,033
2017 807,136 838,004
2018 815,280 857,886
2019 830,040 889,327

Source: NAIC data, sourced from S&P Global Market Intelligence, Insurance Information Institute.

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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 2020 life insurers, excluding separate accounts, invested 70 percent of their assets in bonds and 3 percent in corporate stocks. Life insurers invested 13 percent of their assets in mortgage loans on real estate that take seven years or longer to mature. 

 
Investments, Life/Annuity Insurers, 2019-2021 (1)

($ billions, end of year)

  Amount Percent of total investments
Investment type 2019 2020 2021 2019 2020 2021
Bonds  $3,087.8 $3,272.1 $3,415.5 71.11% 70.24% 69.88%
Stocks 105.3 117.1 133.5 2.43 2.51 2.73
     Preferred stock 12.9 14.6 19.2 0.30 0.31 0.39
     Common stock 92.4 102.5 114.3 2.13 2.20 2.34
Mortgage loans on real estate 565.5 587.2 625.9 13.02 12.60 12.81
     First lien real estate mortgage loans 557.3 579.2 617.9 12.83 12.43 12.64
     Real estate loans less first liens 8.3 8.0 8.0 0.19 0.17 0.16
Real estate 23.0 22.6 22.5 0.53 0.49 0.46
     Occupied properties 5.9 6.1 5.8 0.14 0.13 0.12
     Income generating properties 16.0 16.0 16.3 0.37 0.34 0.33
     Properties for sale 1.1 0.6 0.4 0.03 0.01 0.01
Cash, cash equivalent and short term investments 118.7 151.0 143.6 2.73 3.24 2.94
Contract loans including premium notes 131.0 130.4 128.7 3.02 2.80 2.63
Derivatives 79.5 121.5 96.6 1.83 2.61 1.98
Other invested assets 206.0 227.4 281.6 4.74 4.88 5.76
Receivables for securities 5.0 7.0 9.0 0.11 0.15 0.18
Securities lending reinvested collateral assets 15.5 16.2 18.8 0.36 0.35 0.38
Write-ins for invested assets 5.3 6.1 11.9 0.12 0.13 0.24
Total cash and invested assets $4,342.5 $4,658.6 $4,887.7 100.00% 100.00% 100.00%

(1) Data are net admitted assets of life/annuity insurers.

Source: NAIC data, sourced from S&P Global Market Intelligence, Insurance Information Institute.

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Top 10 Writers Of Life/Annuity Insurance By Direct Premiums Written, 2021

($000)

Rank Group/company Direct premiums written (1) Market share (2)
1 MetLife Inc.  $97,860,893 11.3%
2 Equitable Holdings 83,179,735 9.6 
3 Prudential Financial Inc.  59,387,003 6.9 
4 Massachusetts Mutual Life Insurance Co.  41,683,012 4.8 
5 New York Life Insurance Group  38,855,736 4.5 
6 Athene Holding Ltd. 34,742,313 4.0 
7 Principal Financial Group Inc.  26,535,819 3.1 
8 Western & Southern Financial  26,469,977 3.1 
9 Nationwide 25,745,724 3.0 
10 American International Group (AIG) 25,205,415 2.9 

(1) Includes life insurance, annuity considerations, deposit-type contract funds and other considerations, and accident and health insurance. Before reinsurance transactions.
(2) Based on U.S. total, includes territories.

Source: NAIC data, sourced from S&P Global Market Intelligence, Insurance Information Institute.

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Top 10 Writers Of Individual Life Insurance By Direct Premiums Written, 2021

($000)

Rank Group/company Direct premiums written (1) Market share
1 Northwestern Mutual Life Insurance Co. $14,260,711  9.5%
2 Massachusetts Mutual Life Insurance Co. 9,936,212 6.7 
3 New York Life Insurance Group 9,621,008 6.4 
4 Prudential Financial Inc. 6,988,848 4.7 
5 Lincoln National Corp. 6,864,630 4.6 
6 State Farm 5,205,467 3.5 
7 John Hancock Life Insurance Co. 5,034,556 3.4 
8 Transamerica 4,678,536 3.1 
9 Pacific Life 4,533,684 3.0 
10 Sammons Enterprises Inc. 4,313,349 2.9 

(1) Before reinsurance transactions. Based on U.S. total, includes territories. Excludes annuities, accident/health, deposit-type contract funds and other considerations.

Source: NAIC data, sourced from S&P Global Market Intelligence, Insurance Information Institute.

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Top 10 Writers Of Group Life Insurance By Direct Premiums Written, 2021

($000)

Rank Group/company Direct premiums written (1) Market share 
1 MetLife Inc. $8,125,998  22.6%
2 Prudential Financial Inc. 3,655,498 10.2 
3 New York Life Insurance Group 3,643,221 10.2 
4 Securian Financial Group 2,702,746 7.5 
5 Hartford Life & Accident Insurance Co. 2,105,346 5.9 
6 Unum Group 1,729,367 4.8 
7 Lincoln National Corp. 1,436,714 4.0 
8 Standard Life & Casualty Insurance Co. 1,069,763 3.0 
9 Nationwide Mutual Group 939,149 2.6 
10 Sun Life Financial 703,969 2.0 

(1) Before reinsurance transactions. Based on U.S. total, includes territories. Excludes annuities, accident and health, deposit-type contract funds and other considerations.

Source: NAIC data, sourced from S&P Global Market Intelligence, Insurance Information Institute.

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Distribution channels

Independent agents control about half of the individual life insurance market.  From 2012 to 2021 independent insurance agents’ share of the personal life insurance market grew from 44 percent to 50 percent. The direct response channel increased slightly over the same ten years, from 5 percent to 6 percent.  Affiliated agents have lost some ground, falling from 43 percent to 39 percent, as shown in the chart below.

 

 

 

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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 $8.3 billion in 2021, up from $7.46 billion in 2020, according to Eastbridge Consulting Group.

 

 

 

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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.

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