Facts + Statistics: Life 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.

 
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 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 2018. 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, 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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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 2018. 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, 2017-2019

($000)

  2017 2018 2019
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 $181,849,769 26.3% $207,806,482 28.3% $217,475,933 28.6%
Group annuities 134,348,059 19.4 146,170,467 19.9 148,066,084 19.5
Total $316,197,828 45.7% $353,976,949 48.3% $365,542,017 48.1%
Accident and health (3)            
Group 126,286,104 18.3 134,734,119 18.4 139,417,933 18.4
Other 63,725,793 9.2 61,947,822 8.4 63,817,827 8.4
Credit 830,946 0.1 852,520 0.1 888,758 0.1
Total $190,842,843 27.6% $197,534,461 26.9% $204,124,517 26.9%
Life            
Ordinary life 143,537,902 20.8 142,275,947 19.4 149,041,507 19.6
Group life 39,856,057 5.8 38,489,603 5.2 39,744,357 5.2
Credit life (group and individual) 808,621 0.1 814,935 0.1 808,078 0.1
Industrial life 123,394 (2) 107,475 (2) 74,820 (2)
Total $184,325,973 26.7% $181,687,959 24.8% $189,668,763 25.0%
All other lines 3,839 (2) 4,723 (2) 5,093 (2)
Total, all lines (4) $691,370,484 100.0% $733,204,093 100.0% $759,340,391 100.0%

(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, 2009-2018

($000)

Year Credit life Credit accident and health
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
2018 815,280 857,886

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, 2017-2019 (1)

($ billions, end of year)

  Amount Percent of total investments
Investment type 2017 2018 2019 2017 2018 2019
Bonds $2,973.5 $2,989.1 $3,087.8 72.97% 72.48% 71.11%
Stocks $104.9 $94.1 $105.3 2.57% 2.28% 2.43%
     Preferred stock 10.5 12.3 12.9 0.26 0.30 0.30
     Common stock 94.5 81.8 92.4 2.32 1.98 2.13
Mortgage loans on real estate $477.0 $521.5 $565.5 11.71% 12.65% 13.02%
     First lien real estate mortgage loans 468.5 512.6 557.3 11.50 12.43 12.83
     Real estate loans less first liens 8.6 8.9 8.3 0.21 0.22 0.19
Real estate $23.5 $20.4 $23.0 0.58% 0.50% 0.53%
     Occupied properties 6.0 5.8 5.9 0.15 0.14 0.14
     Income generating properties 17.0 14.1 16.0 0.42 0.34 0.37
     Properties for sale 0.5 0.5 1.1 0.01 0.01 0.03
Cash, cash equivalent and short term investments 104.7 104.7 118.7 2.57 2.54 2.73
Contract loans including premium notes 128.9 129.2 131.0 3.16 3.13 3.02
Derivative 58.7 56.4 79.5 1.44 1.37 1.83
Other invested assets 175.1 187.1 206.0 4.30 4.54 4.74
Receivables for securities 5.3 4.5 5.0 0.13 0.11 0.11
Securities lending reinvested collateral assets 16.9 12.6 15.5 0.41 0.30 0.36
Write-ins for invested assets 6.4 4.5 5.3 0.16 0.11 0.12
Total cash and invested assets $4,074.8 $4,124.1 $4,342.5 100.00% 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, 2019

($000)

Rank Group/company Direct premiums written (1) Market share (2)
1 MetLife Inc. $95,079,321 13.0%
2 Prudential Financial Inc. 56,206,131 7.7
3 Equitable Holdings 44,721,302 6.1
4 New York Life Insurance Group 33,425,321 4.6
5 Massachusetts Mutual Life Insurance Co. 30,375,127 4.2
6 Lincoln National Corp. 28,471,688 3.9
7 Principal Financial Group Inc. 27,038,400 3.7
8 American International Group (AIG) 25,684,294 3.5
9 Jackson National Life Group 23,056,675 3.2
10 Transamerica 22,360,111 3.1

(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, 2019

($000)

Rank Group/company Direct premiums written (1) Market share
1 Northwestern Mutual Life Insurance Co. $11,271,640 8.4%
2 Lincoln National Corp. 8,255,755 6.2
3 New York Life Insurance Group 8,009,957 6.0
4 Massachusetts Mutual Life Insurance Co. 7,882,498 5.9
5 Prudential Financial Inc. 6,212,700 4.6
6 John Hancock Life Insurance Co. 4,812,785 3.6
7 State Farm Mutual Automobile Insurance 4,748,696 3.5
8 Transamerica 4,570,238 3.4
9 Pacific Life 3,874,563 2.9
10 American International Group (AIG) 3,571,493 2.7

(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, 2019

($000)

Rank Group/company Direct premiums written (1) Market share
1 MetLife Inc. $7,328,698 20.8%
2 Prudential Financial Inc. 3,429,660 9.7
3 New York Life Insurance Group 3,043,820 8.7
4 Securian Financial Group 2,543,280 7.2
5 Cigna Corp. 1,767,992 5.0
6 Unum Group 1,713,032 4.9
7 Hartford Life & Accident Insurance Co. 1,504,115 4.3
8 Lincoln National Corp. 1,395,326 4.0
9 Nationwide Mutual Group 1,036,250 2.9
10 Standard Life & Casualty Insurance Co. 985,585 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.

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, 2010 and 2019

 

(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, 1975-2019, LIMRA, 2020.

View Archived Graphs

 
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.

 
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, 2014-2018.) In 2018, separate accounts contributed $37.3 billion to the total amount of life/annuity insurance revenue of $905 billion.

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