Facts + Statistics: Life insurance

 
Life insurance ownership

According to the 2022 Insurance Barometer Study, conducted by LIMRA and Life Happens, 106 million adults are 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 financial secure if the primary wage earner suddenly passed away is 68 percent among life insurance owners, versus 47 percent who do not own life insurance. Seventy-eight percent of those who own worksite 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 the underwriting of annuities, which accounted for 48 percent of life/annuity direct premiums written in 2020. Annuities are contracts that accumulate funds or pay out a fixed or variable income stream. An income stream can be for a set time period or over the lifetimes of the contract holder or beneficiaries. Accident and health insurance, which includes distinctive products apart from traditional health insurance, accounts for 27 percent of direct premiums written. Traditional life insurance products such as universal life and term life for individuals, and group life, remain an important part of the business, making up the remaining 25 percent of direct premiums written. In addition to annuities, accident and health, and life insurance products, life insurers may offer other types of financial services such as asset management.

Traditional health insurance, which is not included in this section and are not considered a part of the life/annuity sector, are 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 insurance and health insurance, which is included in the life/annuity and property/casualty (P/C) sectors, encompass 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 are not meant to replace health insurance.

 
Life/Annuity Insurance Income Statement, 2016-2020

($ billions, end of year)

  2016 2017 2018 2019 2020 Percent change,
2019-2020 (1)
Revenue            
Life insurance premiums $115.0 $137.1 $145.1 $151.0 $143.1 -5.3%
Annuity premiums and deposits 318.5 287.2 269.7 339.8 294.6 -13.3
Accident and health premiums 162.8 169.3 183.1 185.0 184.7 -0.2
Credit life and credit accident and health premiums 1.3 1.3 1.3 1.4 1.2 -16.3
Other premiums and considerations 2.2 2.1 4.0 (2) (2) (2)
Total premiums, consideration and deposits $599.9 $597.1 $603.2 $679.4 $625.7 -7.9%
Net investment income 173.0 182.3 187.4 186.7 186.0 -0.4
Reinsurance allowance -17.0 -25.1 32.0 -29.7 -22.8 -23.2
Separate accounts revenue 34.7 36.6 37.3 36.8 37.4 1.6
Other income 61.3 49.2 44.0 48.7 55.0 12.8
Total revenue $851.9 $839.9 $903.9 $921.9 $881.2 -4.4%
Expense            
Benefits 271.4 281.4 289.5 301.8 314.2 4.1
Surrenders 265.1 308.9 350.3 339.6 323.4 -4.8
Increase in reserves 133.1 106.4 143.3 120.6 109.8 -8.9
Transfers to separate accounts -38.0 -65.8 -89.6 -72.0 -69.2 -3.9
Commissions 64.6 58.0 58.3 61.2 60.1 -1.8
General and administrative expenses 62.4 65.9 65.9 67.8 67.0 -1.2
Insurance taxes, licenses and fees 10.8 8.8 10.7 9.3 11.5 23.8
Other expenses -2.7 -4.1 11.3 14.4 8.4 -41.8
Total expenses $766.6 $759.4 $839.7 $842.8 $825.2 -2.1%
Net income            
Policyholder dividends 18.2 17.5 18.2 18.1 18.0 -0.5
Net gain from operations before federal income tax 67.1 63.0 46.0 61.0 38.0 -37.7
Federal income tax 16.3 12.4 3.4 9.4 5.1 -45.6
Net income before capital gains $50.8 $50.6 $42.6 $51.6 $32.9 -36.2%
Net realized capital gains (losses) -11.4 -8.6 -4.7 -6.9 -10.7 56.6
Net income $39.4 $42.1 $37.9 $44.7 $22.1 -50.5%
Pre-tax operating income 67.1 63.0 46.0 61.0 38.0 -37.7
Capital and surplus, end of year 380.7 395.0 399.9 421.7 440.0 4.3

(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

Annuities are the largest life product line as measured by direct premiums written and accounted for 48 percent of direct premiums written by life insurers in 2020. Accident and health insurance accounted for 27 percent of direct premiums written. Accident and health insurance, not to be confused with traditional health insurance, includes reimbursement for certain medical expenses. These include: short- and long-term disability; critical or catastrophic illness insurance; and long-term care. Life insurance accounted for the remaining 25 percent of direct premiums written. Life insurance policies can be sold on an individual, or ordinary, basis or to groups such as employees and associations. Other lines include credit life, which pays the balance of a loan if the borrower dies or becomes disabled; and industrial life, small policies whose premiums are generally collected by an agent on a weekly basis.

 
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. The borrower pays the premium, generally as part of the credit transaction, to cover the outstanding loan in the event he or she dies. The face value of a policy decreases as the loan is paid off until both equal zero. When loans are paid off early, premiums for the remaining term are returned to the policyholder. Credit accident and health, a similar product, provides a monthly income in the event 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, 2018-2020 (1)

($ billions, end of year)

  Amount Percent of total investments
Investment type 2018 2019 2020 2018 2019 2020
Bonds $2,989.1 $3,087.8 $3,272.1 72.48% 71.11% 70.24%
Stocks 94.1 105.3 117.1 2.28 2.43 2.51
     Preferred stock  12.3 12.9 14.6 0.30 0.30 0.31
     Common stock  81.8 92.4 102.5 1.98 2.13 2.20
Mortgage loans on real estate 521.5 565.5 587.2 12.65 13.02 12.60
     First lien real estate mortgage loans  512.6 557.3 579.2 12.43 12.83 12.43
     Real estate loans less first liens  8.9 8.3 8.0 0.22 0.19 0.17
Real estate 20.4 23.0 22.6 0.50 0.53 0.49
     Occupied properties  5.8 5.9 6.1 0.14 0.14 0.13
     Income generating properties  14.1 16.0 16.0 0.34 0.37 0.34
     Properties for sale  0.5 1.1 0.6 0.01 0.03 0.01
Cash, cash equivalent and short term investments 104.7 118.7 151.0 2.54 2.73 3.24
Contract loans including premium notes  129.2 131.0 130.4 3.13 3.02 2.80
Derivatives 56.4 79.5 121.5 1.37 1.83 2.61
Other invested assets  187.1 206.0 227.4 4.54 4.74 4.88
Receivables for securities  4.5 5.0 7.0 0.11 0.11 0.15
Securities lending reinvested collateral assets 12.6 15.5 16.2 0.30 0.36 0.35
Write-ins for invested assets  4.5 5.3 6.1 0.11 0.12 0.13
Total cash and invested assets  $4,124.1 $4,342.5 $4,658.6 100.00% 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 Life Insurance Sales By Line Of Business, 2020

 

(1) Short-term and long-term disability.

Source: Eastbridge Consulting Group, Inc.

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  • Worksite marketing is the selling of voluntary (employee-paid) insurance and financial products at the worksite. The products may be on either an individual or group platform and are usually paid through periodic payroll deductions.
  • Worksite sales of life and health insurance totaled $7.46 billion in 2020, down 15.5 percent from 2019.

 
Separate Accounts

Separate accounts are funds held by life insurance companies that are maintained separately from the insurer’s general assets. They were originally established in response to federal securities laws concerning investment-linked variable annuities, according to the National Association of Insurance Commissioners. Variable annuities operate like mutual funds because their earnings vary as they invest in many different vehicles. Separate accounts have evolved rapidly in the past 20 years and now support an array of hybrid investment products.

Separate accounts contribute to the revenue of life/annuity insurers. (See Life/Annuity Insurance Income Statement, 2016-2020.) In 2020 separate accounts contributed $37.4 billion to the total amount of life/annuity insurance revenue of $881.2 billion.

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