Facts + Statistics: Life insurance

 
Life insurance ownership

In 2020, 54 percent of all people in the United States were covered by some type of life insurance, according to LIMRA’s 2020 Insurance Barometer Study. Other findings from the study include:

  • While historically, most consumers preferred in-person sales, by  2020 most consumers preferred other distribution methods like phone, mail and online.
  • The proportion of consumers who preferred internet/online sales grew from 17 percent in 2011 to 29 percent in 2020. This increase reflects the COVID-19 epidemic lowering the popularity of in-person sales.
  • LIMRA says there was a “needs gap” of 16 percent in 2020, which translates to 41 million consumers who say they need life coverage, but do not have it.
  • Americans consistently overestimate the cost of term life coverage. Half the population estimate the cost of life insurance at more than three-times the actual cost.

 
2020 financial results

Net income after taxes for the life/annuity insurance industry fell 50.5 percent in 2020 to $22.2 billion from $44.7 billion in 2019, according to S&P Global Market Intelligence. Contributing to the decline in net income after taxes was a 36.2 percent decline in net income before capital gains and a capital loss of $10.7 billion. Premiums and annuity considerations fell 7.9 percent in 2020, following substantial growth in 2019, as annuity premiums and deposits, the largest sector for revenue, fell 13.3 percent. Expenses fell slightly in 2020, down 2.1 percent. Capital and surplus rose to $440.0 billion in 2020, up 4.3 percent from $421.7 billion in 2019, according to S&P Global Market Intelligence.

 
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.

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, 2018-2020

($000)

  2018 2019 2020
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 $207,806,482 28.4% $217,475,954 28.6% $206,547,542 26.9%
Group annuities 146,170,467 20.0 148,066,084 19.5 163,115,551 21.3
Total $353,976,949 48.4% $365,542,038 48.1% $369,663,092 48.2%
Accident and health (2)            
Group 133,644,322 18.3 139,734,341 18.4 140,945,658 18.4
Other 61,922,237 8.5 63,839,456 8.4 68,111,710 8.9
Credit 852,520 0.1 889,583 0.1 725,330 0.1
Total $196,419,079 26.8% $204,463,380 26.9% $209,782,698 27.3%
Life            
Ordinary life 142,275,804 19.4 149,042,367 19.6 148,026,528 19.3
Group life 38,489,576 5.3 39,747,260 5.2 39,208,653 5.1
Credit life (group and individual) 814,935 0.1 810,896 0.1 687,128 0.1
Industrial life 107,475 (3) 74,820 (3) 85,053 (3)
Total $181,687,790 24.8% $189,675,343 25.0% $188,007,363 24.5%
All other lines 4,723 (3) 5,093 (3) 5,103 (3)
Total, all lines (4) $732,088,541 100.0% $759,685,854 100.0% $767,458,257 100.0%

(1) Before reinsurance transactions.
(2) Excludes accident and health premiums reported on the property/casualty and health annual statements.
(3) Less than 0.1 percent.
(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 $9.0 trillion in cash and invested assets in 2019, according to S&P Global Market Intelligence. Life insurance and annuity cash and invested assets totaled $4.3 trillion in 2019, and separate accounts assets and other investments totaled $2.8 trillion. P/C insurer cash and invested assets were $1.9 trillion in 2019.

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 2019 life insurers, excluding separate accounts, invested 71 percent of their assets in bonds and 2 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, 2020

($000)

Rank Group/company Direct premiums written (1) Market share (2)
1 MetLife Inc. $103,335,055 13.0%
2 Equitable Holdings 62,688,657 7.9
3 Prudential Financial Inc. 61,913,976 7.8
4 New York Life Insurance Group 40,211,642 5.1
5 Massachusetts Mutual Life Insurance Co. 38,461,197 4.9
6 Principal Financial Group Inc. 26,439,671 3.3
7 Lincoln National Corp. 25,385,450 3.2
8 Western & Southern Financial Group 22,920,717 2.9
9 Transamerica 22,875,109 2.9
10 American International Group (AIG) 22,620,803 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, 2020

($000)

Rank Group/company Direct premiums written (1) Market share
1 Northwestern Mutual Life Insurance Co. $11,287,564 8.4%
2 New York Life Insurance Group 8,046,047 6.0
3 Massachusetts Mutual Life Insurance Co. 7,805,449 5.8
4 Lincoln National Corp. 6,876,633 5.1
5 Prudential Financial Inc. 6,660,935 5.0
6 State Farm 4,921,089 3.7
7 John Hancock Life Insurance Co. 4,722,689 3.5
8 Transamerica 4,563,324 3.4
9 Pacific Life 3,989,033 3.0
10 Guardian Life Insurance Co. of America 3,619,273 2.7

(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, 2020

($000)

Rank Group/company Direct premiums written (1) Market share
1 MetLife Inc. $7,254,717 21.3%
2 New York Life Insurance Group 3,648,277 10.7
3 Prudential Financial Inc. 3,397,341 10.0
4 Securian Financial Group 2,687,827 7.9
5 Hartford Life & Accident Insurance Co. 1,981,096 5.8
6 Unum Group 1,703,775 5.0
7 Lincoln National Corp. 1,493,860 4.4
8 Standard Life & Casualty Insurance Co. 1,064,218 3.1
9 Nationwide Mutual Group 729,980 2.1
10 Sun Life Financial 680,906 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

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.

From 2011 to 2020 independent insurance agents’ share of the individual life insurance market remained at 49 percent. The direct response channel grew over the same ten years, from 4 percent to 7 percent. Affiliated agents have lost some ground, falling from 40 percent to 38 percent, as shown in the chart below.

 
Life Individual Market Share by Distribution Channel, 2011 and 2020

 

(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, 1975-2020, LIMRA, 2021.

View Archived Graphs

 
Online sales

Studies from the Life and Health Insurance Foundation for Education (LIFE) and LIMRA show how purchasing preferences for life insurance have changed over the past five years. The 2020 Insurance Barometer Study found that in 2016, 51 percent of respondents to the poll preferred in-person sales. By 2020 that proportion fell to 41 percent. Most of the 10 percent decline was attributed to the increase in the number of life insurance customers who preferred to purchase the insurance online. That number grew from 21 percent in 2016 to 29 percent in 2020. The 2020 study was conducted in January 2020, among 1,997 online respondents. LIFE and LIMRA note that the COVID-19 pandemic will result in an even higher proportion of life insurance customers avoiding in-person sales, thus raising preferences for online purchasing and other channels. Of note the 2021 Insurance Barometer did not address purchasing preferences.

Another finding in the 2020 poll is that the majority of life insurance customers consult the internet to get information on life insurance products. About one-third (34 percent) of poll respondents said they go online to a company website when researching an insurance brand. Twenty-seven percent of respondents said they go to whatever website their search turns up first, and an equal proportion say they go to their local agent’s website. Only 12 percent said they would not use an online search.

 
Other sales channels

 
Worksite Life Insurance Sales By Line Of Business, 2018

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

Source: Eastbridge Consulting Group, Inc.

View Archived Graphs

  • 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 $8.51 billion in 2018, up 4.5 percent from 2017.

 
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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