Facts + Statistics: Life insurance

 
The life/annuity insurance industry

Whether measured by premium income or by assets, 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, a sector of the life business that accounts for 46 percent of direct premiums written. Annuities are contracts that accumulate funds and/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 his or her beneficiaries. Accident and health insurance, which include distinctive products that should not be confused with traditional health insurance, account for 28 percent of direct premiums written. Traditional life insurance products such as universal life and term life for individuals as well as group life remain an important part of the business, accounting for the remaining 27 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, whose premiums and other activities are 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. There are many types of plans available and most include a deductible paid for by the insured, and benefits received are tax-free. Accident and health insurance, which is included in the life sector, encompasses a variety of specialty products related to health, such as those that reimburse insureds for the time they spend in a hospital or are disabled, long-term care, short- and long-term disability, and critical or catastrophic illness insurance. Accident and health insurance are not meant to replace health insurance.

 
Life insurance ownership

About sixty percent of all people in the United States were covered by some type of life insurance in 2018, according to LIMRA’s 2018 Insurance Barometer Study. Other findings from the study include:

  • Among those with life insurance, about 1 in 5 say that they do not have enough.
  • Half of all adults visited a life company website and/or sought life insurance information online in 2018. Almost 1 in 3 purchased or attempted to purchase life insurance online — about the same as in 2017.
  • Consumers overestimate the cost of life insurance, especially younger generations; 44 percent of Millennials overestimate the cost at five times the actual amount.
  • Half of all consumers say they are more likely to purchase life insurance if priced without a physical examination.

 
Investments, Life/Annuity Insurers, 2016-2018 (1)

($ billions, end of year)

  Amount  Percent of total investments
Investment type 2016 2017 2018 2016 2017 2018
Bonds $2,860.6 $2,973.5 $2,989.1 73.50% 72.97% 72.48%
Stocks $96.0 $104.9 $94.1 2.47% 2.57% 2.28%
     Preferred stock  9.6 10.5 12.3 0.25 0.26 0.30
     Common stock  86.4 94.5 81.8 2.22 2.32 1.98
Mortgage loans on real estate $437.7 $477.0 $521.5 11.25% 11.71% 12.65%
     First lien real estate mortgage loans 430.1 468.5 512.6 11.05 11.50 12.43
     Real estate loans less first liens  7.6 8.6 8.9 0.20 0.21 0.22
Real estate $24.5 $23.5 $20.4 0.63% 0.58% 0.50%
     Occupied properties  6.0 6.0 5.8 0.15 0.15 0.14
     Income generating properties  17.6 17.0 14.1 0.45 0.42 0.34
     Properties for sale  0.9 0.5 0.5 0.02 0.01 0.01
Cash, cash equivalent and short term investments 101.4 104.7 104.7 2.61 2.57 2.54
Contract loans including premium notes  126.9 128.9 129.2 3.26 3.16 3.13
Derivatives 62.0 58.7 56.4 1.59 1.44 1.37
Other invested assets  158.3 175.1 187.1 4.07 4.30 4.54
Receivables for securities  3.9 5.3 4.5 0.10 0.13 0.11
Securities lending reinvested collateral assets 12.6 16.9 12.6 0.32 0.41 0.30
Write-ins for invested assets  8.0 6.4 4.5 0.20 0.16 0.11
Total cash and invested assets  $3,891.9 $4,074.8 $4,124.1 100.00% 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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2018 financial results

According to S&P Global Market Intelligence, in 2018 net income after taxes for the life/annuity insurance industry fell 10.0 percent to $37.9 billion, from $42.1 billion in 2017. Net income before capital gains fell 15.8 percent in 2018, and a net realized capital gains loss of $4.7 billion contributed to lower net income. Premiums and annuity considerations rose slightly in 2018, up 1.3 percent from 2017, as annuity premiums and deposits fell 6.1 percent. Expenses grew by 10.8 percent in 2018 following a drop in 2017. Capital and surplus rose to $400.0 billion in 2018 from $394.9 billion in 2017, according to S&P Global Market Intelligence.

 
Life/Annuity Insurance Income Statement, 2014-2018

($ billions, end of year)

  2014 2015 2016 2017 2018 Percent change,
2017-2018 (1)
Revenue            
     Life insurance premiums $133.9 $151.4 $115.0 $137.1 $145.4 6.0%
     Annuity premiums and deposits 352.8 324.0 318.5 287.2 269.7 -6.1
     Accident and health premiums 156.6 158.8 162.8 169.3 184.2 8.8
     Credit life and credit accident and health  premiums 1.4 1.4 1.3 1.3 1.3 4.1
     Other premiums and considerations 2.6 2.5 2.2 2.1 4.0 90.1
     Total premiums, consideration and deposits $647.3 $638.2 $599.9 $597.1 $604.6 1.3%
     Net investment income 171.7 170.8 173.0 182.3 187.4 2.8
     Reinsurance allowance -15.0 -86.4 -17.0 -25.1 32.0 NA
     Separate accounts revenue 34.3 35.2 34.7 36.6 37.3 2.0
     Other income 39.7 90.5 61.3 49.0 44.0 -10.2
     Total revenue $878.0 $848.2 $851.9 $839.8 $905.4 7.8%
Expense            
     Benefits 251.8 263.9 271.4 281.4 290.7 3.3
     Surrenders 281.5 273.0 265.1 308.9 350.3 13.4
     Increase in reserves 108.7 80.5 133.1 106.4 143.4 34.8
     Transfers to separate accounts -16.5 36.9 -38.0 -65.8 -89.6 NA
     Commissions 52.1 55.5 64.6 58.0 58.4 0.6
     General and administrative expenses 59.0 60.1 62.4 65.9 66.0 0.1
     Insurance taxes, licenses and fees 10.0 10.5 10.8 8.8 10.8 22.0
     Other expenses 66.0 -4.9 -2.7 -4.3 11.3 NA
     Total expenses $812.5 $775.5 $766.6 $759.3 $841.1 10.8%
Net income            
     Policyholder dividends 16.4 18.3 18.2 17.5 18.2 4.0
     Net gain from operations before federal income tax 49.0 54.4 67.1 63.0 46.0 -26.9
     Federal income tax 10.1 10.6 16.3 12.4 3.4 -72.3
     Net income before capital gains $38.9 $43.8 $50.8 $50.6 $42.6 -15.8%
     Net realized capital gains (losses) -1.3 -3.5 -11.4 -8.6 -4.7 NA
     Net income $37.6 $40.3 $39.4 $42.1 $37.9 -10.0%
     Pre-tax operating income 49.0 54.4 67.1 63.0 46.0 -26.9
     Capital and surplus, end of year 354.0 367.2 380.7 394.9 400.0 1.3

(1) Calculated from unrounded data.

NA=Not applicable.

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

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Life/Health Insurer Financial Asset Distribution, 2010-2014

($ billions)

  2010 2011 2012 2013 2014
Total financial assets $5,167.8 $5,340.1 $5,614.7 $5,977.3 $6,227.1
Checkable deposits and currency 51.7 53.7 56.4 47.2 50.8
Money market fund shares 21.0 28.8 27.5 21.6 27.7
Security repurchase agreements 10.9 10.1 8.5 8.5 8.5
Credit market instruments 3,174.2 3,299.6 3,373.9 3,451.3 3,551.0
     Open market paper 40.9 29.7 43.6 46.7 42.2
     U.S. government securities 532.6 549.8 541.8 522.7 522.0
          Treasury 156.6 175.4 180.9 168.6 182.9
          Agency- and GSE (1)-backed securities 376.0 374.4 360.9 354.1 339.1
     Municipal securities 112.3 121.8 131.5 141.6 147.8
     Corporate and foreign bonds 2,030.2 2,117.3 2,162.2 2,223.0 2,292.3
     Other loans and advances 140.7 148.6 150.4 153.9 161.9
     Mortgages 317.5 332.5 344.4 363.2 384.8
Corporate equities 1,371.6 1,355.5 1,502.7 1,743.4 1,798.4
Mutual fund shares 186.7 184.8 201.7 235.8 246.4
U.S. direct investment abroad 46.3 54.2 67.0 65.5 67.0
Miscellaneous assets 305.6 353.4 377.0 404.1 477.2

(1) Government-sponsored enterprise.

Source: Board of Governors of the Federal Reserve System, June 11, 2015.

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Premiums by line

Measured by premiums written, annuities are the largest life/health product line, followed by accident and health, and life insurance. Life insurance policies can be sold on an individual, or ordinary, basis or to groups such as employees and associations. Accident and health insurance includes medical expense, disability income and long-term care. 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, 2016-2018

($000)

  2016 2017 2018
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 $197,026,489 28.8% $181,849,769 26.3% $207,806,482 28.3%
Group annuities 129,332,100 18.9 134,348,059 19.4 146,170,467 19.9
Total $326,358,589 47.8% $316,197,828 45.7% $353,976,949 48.3%
Life            
Ordinary life 139,782,420 20.5 143,537,902 20.8 142,275,947 19.4
Group life 36,427,380 5.3 39,856,057 5.8 38,489,232 5.2
Credit life (group and individual) 828,632 0.1 808,621 0.1 814,935 0.1
Industrial life 129,303 (2) 123,394 (2) 107,475 (2)
Total $177,167,735 25.9% $184,325,974 26.7% $181,687,589 24.8%
Accident and health (3)            
Group 115,363,684 16.9 126,290,331 18.3 134,735,315 18.4
Other 63,637,078 9.3 63,725,795 9.2 61,941,132 8.4
Credit 822,146 0.1 830,946 0.1 852,520 0.1
Total $179,822,908 26.3% $190,847,071 27.6% $197,528,967 26.9%
All other lines 3,315 (2) 3,839 (2) 4,723 (2)
Total, all lines (4) $683,352,546 100.0% $691,374,713 100.0% $733,198,228 100.0%

(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, 2008-2017

($000)

Year Credit life Credit accident and health
2008 $1,562,010 $1,250,069
2009 1,248,117 964,004
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

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

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Top 10 Writers Of Life/Annuities Insurance By Direct Premiums Written, 2018

($000)

Rank Group/company Direct premiums written (1) Market share (2)
1 MetLife Inc.  $96,451,607 14.1%
2 Prudential Financial Inc.  53,148,550 7.8
3 New York Life Insurance Group  35,452,211 5.2
4 Massachusetts Mutual Life Insurance Co.  27,154,611 4.0
5 American International Group (AIG) 26,446,934 3.9
6 Lincoln National Corp.  25,804,565 3.8
7 Principal Financial Group Inc.  25,322,774 3.7
8 AXA  22,579,431 3.3
9 Transamerica 22,352,418 3.3
10 Jackson National Life Group  21,511,557 3.2

(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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Distribution channels

Life insurance was once sold primarily by career life agents, captive agents that represent a single insurance company, and by independent agents, who represent several insurers. Now, life insurance is also sold directly to the public by mail, telephone and through the Internet. In addition, in the 1980s insurers began to market annuities and term life insurance through banks and financial advisors, professional groups and the workplace. A large portion of variable annuities, and a small portion of fixed annuities, are sold by stockbrokers.

Independent insurance agents have held over half of the individual life insurance market over the 10 years from 2009 to 2018, but have lost some ground to affiliated agents and direct response companies, as shown in the charts below.

 
Life Individual Market Share by Distribution Channel, 2009 and 2018

 

(1) Includes brokers, broker-dealers, personal producing general agents and registered investment advisers.
(2) Includes agency building, multiline exclusive and home service agents.
(3) No producers are involved. Excludes direct marketing efforts involving agents. Includes internet sales where consumers submit online applications.
(4) Includes financial institutions, worksite and other channels.

Source: U.S. Individual Life Insurance Sales Trends, Industry Estimates, 1975-2018, LIMRA, 2019.

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Online sales

Almost half of consumers of all ages (45 percent) would go online to find more information on life insurance, but would complete the purchase with an agent or financial advisor, according to the 2018 Insurance Barometer Study survey by the Life and Health Insurance Foundation for Education (LIFE) and LIMRA. Over half of Millennials would research life insurance online, but they would purchase life insurance from a financial professional.  Gen-Xers are the group most likely (32 percent) to research and complete the purchase entirely online.

 
WORKSITE LIFE INSURANCE SALES BY LINE OF BUSINESS, 2014

(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 $6.89 billion in 2014, up about 3.7 percent from 2013.

 
Top 10 Writers Of Individual Life Insurance By Direct Premiums Written, 2018

($000)

Rank Group/company Direct premiums written (1) Market share
1 Northwestern Mutual Life Insurance Co. $10,547,469 8.2%
2 Lincoln National Corp. 7,467,869 5.8
3 New York Life Insurance Group 7,331,015 5.7
4 Massachusetts Mutual Life Insurance Co. 6,171,213 4.8
5 Prudential Financial Inc. 5,806,118 4.5
6 John Hancock Life Insurance Co. 4,651,894 3.6
7 State Farm Mutual Automobile Insurance 4,593,999 3.6
8 Transamerica 4,567,999 3.6
9 Pacific Life 3,770,584 2.9
10 MetLife Inc. 3,724,165 2.9

(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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Top 10 Writers Of Group Life Insurance By Direct Premiums Written, 2018

($000)

Rank Group/company Direct premiums written (1) Market share 
1 MetLife Inc.  $7,133,718 21.0%
2 Prudential Financial Inc.  3,364,765 9.9
3 Securian Financial Group  2,510,157 7.4
4 New York Life Insurance Group  2,054,828 6.1
5 Cigna Corp.  1,703,227 5.0
6 Unum Group  1,617,900 4.8
7 Lincoln National Corp.  1,357,411 4.0
8 Hartford Life & Accident Insurance Co. 1,334,463 3.9
9 Nationwide Mutual Group  1,315,267 3.9
10 CVS Health Corp. (2) 946,226 2.8

(1) Before reinsurance transactions. Based on U.S. total, includes territories. Excludes annuities, accident and health, deposit-type contract funds and other considerations.
(2) CVS Health Corp. and Aetna Inc. completed a merger in 2019.

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

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