Average US Life Insurance Ownership Statistics by Gender, Ethnicity & State

A recent survey conducted by LIMRA revealed that 2023 saw an all-time high when it comes to the number of people who have life insurance policies. Younger adults are more likely to buy policies today than ever before, in large part because of surviving the pandemic.

And while disparities exist in life insurance ownership statistics by age, gender, ethnicity, and state, what remains an issue across all demographics is the misbelief that life insurance is too expensive, when in reality, the average monthly premium for a healthy 35 year old is around $30.

Life Insurance Ownership by Age and Generation

Recent LIMRA data has found that younger generations are more likely to have a coverage gap in their life insurance. Coverage gaps happen when individuals generally take out term policies which they have for specific needs (like a mortgage or children) and then when the policy expires/the need no longer exists, they do not continue with a policy.

• 39%: 39% of people in 2023 intend to buy a life insurance policy within the next year.
• 52%: 52% of American adults have a life insurance policy in 2023.
• 41%: 41% of adults, those with and without a life insurance policy, say their coverage is insufficient.
• 44%: 44% of Gen Z adults intend to buy a life insurance policy within the next year.
• 49%: 49% of Gen Z adults say they need to get coverage or increase how much they have because what they have is insufficient.
• 50%: 50% of Millennials intend to buy a life insurance policy within the next year.
• 47%: 47% of Millennials say that they need additional coverage or they need to get coverage.
• 53 million: 53 million adults from the Gen Z and Millennial generations say that they need to get life insurance policies or increase the protection from their current policy.

Source: LIMRA

A big reason for the increase in life insurance policies particularly among younger generations is that they are experiencing life-altering events like having children, getting married, starting a career, or dealing with a pandemic. All of these things have helped younger individuals realize the amount of protection they need for their loved ones.

Single-Mothers

• 40%: Since 1980 the number of single mother households has increased 40%.
• 41%:  41% of single mothers have a life insurance policy.
• 11%: Single mothers are 11% less likely to have a life insurance policy compared to the general population, despite the fact that single mothers have higher financial concern.
• 59%: 59% of single mothers say they need to get a life insurance policy.
• 5 million: 5 million single mothers across the United States say they are in need of a life insurance policy.

Source: LIMRA

The impact of life insurance policies can be substantial. 60% of all younger parents, insured and uninsured, say that if their primary wage earner were to pass away, they would still be financially secure.

However, 71% of uninsured young parents say they would feel financially secure compared to only 48% of uninsured parents. This indicates a 23% difference among the security for those who have a policy versus those who don’t have a policy.

Marijuana

With the uptick in legal marijuana, there are many adults who do not yet have coverage who are interested in coverage, but have reservations because of marijuana restrictions.

According to Haven Life Insurance, heavy marijuana use increases risk for:

1. Disease
2. Health complications
3. Early death

All three of these mean a direct increase in premiums. For that reason, people hesitate to get coverage who may have legal prescriptions (or not).

• 60%: Nearly 60% of adults said they would hesitate to apply for life insurance because they legally use marijuana and are concerned of what that usage might do to their costs.
• 56%: 56% of people in a Forbes study indicated they would lie about marijuana use to avoid higher insurance costs.

Source: Forbes

Life Insurance by Ethnicity

Race continues to be a dividing factor among life insurance ownership statistics. Disparities exist between ideas of what the purpose of life insurance is, and how much is enough.

White Americans, for example, are more likely to believe that life insurance is there to protect against unpaid debt whereas Black Americans believe it is to pass on generational wealth to their families.

That difference makes more sense when put in the context of the fact that 71.9% of White Americans own homes compared to only 41.8% of Black Americans.

However, one thing shared across all races is the misbelief that life insurance is significantly more expensive than it is.

• 8 in 10: 8 in 10 Black Americans have life insurance on their own or through work.
• 7 in 10: 7 in 10 White Americans have life insurance on their own or through work.
• $50,000: The median amount of life insurance coverage among Black Americans is $50,000.
• $150,000: The median amount of life insurance coverage among White Americans is $150,000.
• 30%: Black Americans who do not have life insurance believe that coverage costs are 30% higher than White Americans without a life insurance policy.
• 22%: 22% of adults across the US considered increasing their life insurance coverage after the pandemic.
• 36%: 36% of Black Americans considered increasing their life insurance coverage after the pandemic.

Source: Haven Life; Forbes

Reasons for Buying Life Insurance Stats

People today continue to buy life insurance to protect their family against debt, cover the costs of funerals, and provide wealth to younger generations. Some of the most common reasons are:

1. To protect families against unpaid debt
2. To supplement retirement income
3. To provide coverage for burial expenses
4. To pass on wealth to younger Generations

The reasons for buying life insurance vary from by gender as well as race with women more likely to buy coverage in order to protect against burial costs while men are more likely to buy it as a supplemental option.

• 22%: 22% of Black adults see life insurance as a viable way to pass wealth to younger generations.
• 37%: 37% of Black Americans believe that life insurance can protect their families from unpaid debt.
• 8%: 8% of white adults believe that life insurance is how to pass on wealth to the next generations.
• 64%: 64% of White Americans believe that life insurance can protect their families from unpaid debt.
• 10%: Men are 10% more likely than women to see life insurance as a way to supplement their retirement income.
• 10%: Women are more likely than men to want life insurance policies to cover burial expenses.

Source: Haven Life; Forbes

Life Insurance Ownership by Gender

Life insurance ownership statistics by gender show some very different information about policy ownership. Women, for example, are half as likely as men to feel confident that they understand how life insurance policies work.

For example, life insurance ownership for women has decreased for the last five years in a row. 14% of women in 2020 lost their coverage and of them, 36% of them cited the fact that they unexpectedly lost their jobs.

• 1 in 5: 1 out of 5 women own their life insurance policy.
• 6 in 10: 6 out of 10 men own a life insurance policy.
• 2 in 10: 2 in 10 women are confident that they are highly knowledgeable about life insurance policies.
• 4 in 10: 4 out of every 10 men believe they are highly knowledgeable about life insurance policies.

Source: LIMRA; Forbes

Life Insurance Coverage by State

California, Texas, Florida, and New York had the highest total direct premiums in 2022 while Alaska, Wyoming, and Vermont had the lowest.

• $104,899,591: California had $104,899,591 in total direct premiums for insurance coverage in 2022.
• $80,475,416: Texas had $80,475,416 in total direct premiums for insurance coverage in 2022.
• $75,754,056: Florida had $75,754,056 in total direct premiums for insurance coverage in 2022.
• $58,997,898: New York had $58,997,898 in total direct premiums for insurance coverage in 2022.
• $1,852,814: Alaska had $1,852,814 in total direct premiums for insurance coverage in 2022.
• $1,593,760: Wyoming had $1,593,760 in total direct premiums for insurance coverage in 2022.
• $1,492,710: Vermont had $1,492,710 in total direct premiums for insurance coverage in 2022.

The table below shows the total direct premiums written by state in 2022:

Source: III

Life Insurance Claims Statistics

Life insurance claims in 2022 covered:

1. Life insurance death benefits
2. Annuity benefits
3. Disability benefits
4. Other benefits

Of the four, the biggest payout in 2022 was for death benefits and cash withdrawals, which, combined, represented $348.1 billion. Combined, in 2022, these 4 represented a total of $797.7 billion worth of payouts.

• 10 billion: Death benefit claims increased over $10 billion from 2018 to 2022.
• 2 billion: Surrender benefits dropped by $2 billion from 2018 to 2022
• 11 billion: Annuity benefits claims increased by 11 billion from 2018 to 2022.
• $200,000: Matured endowment life insurance claims increased by over $200,000 from 2018 through 2022.

The table below provides a comparison of the most common life insurance claims statistics from 2018 through 2022:

Source: III

Life Insurance Fraud Statistics

According to the FBI, the large size of the insurance industry contributes to substantial opportunities for fraudulent activities. The average cost of fraud costs families across the United States between $400 and $700 each year. These increased costs are the result of higher premiums because of the efforts made by insurance companies to cover and stop fraudulent activities.

Premium diversions are the most common life insurance fraud, where other companies take the premiums for personal use.

Below is a table breaking down the most common life insurance fraud schemes:

The FBI encourages people to reach out to the life insurance company with whom they have a policy, or from whom they believe they are being contacted. Doing so can help determine whether the contact is legitimate, and many companies have anti-fraud systems in place.

People can also reach out to the National Insurance Crime Bureau (NICB) at (800) 835-6422 or the National Association of Insurance Commissioners (NAIC) at www.naic.org.

Source: FBI

Life Insurance Costs Statistics

The greatest obstacle that prevents younger individuals, particularly younger parents from having enough coverage for themselves and their children is a lack of knowledge. Moreover, one of the most significant challenges in getting life insurance as younger adults is not understanding that it’s not as expensive as perceived.

Younger adults are increasingly turning to platforms like social media to educate themselves and looking for ways to buy insurance online which can be difficult if providers don’t offer online options for quotes, or if they don’t provide engaging content on these platforms.

• 33%:  33% of Gen Z and Millennial parents are admittedly knowledgeable about life insurance which means that two-thirds of parents are not.
• 40%:  40% of Gen Z parents say they don’t have life insurance coverage because they don’t know what type to buy or how much they need.
• 29%:  29% of millennial parents admit that they haven’t bought a life insurance policy because they don’t know which type to buy or how much coverage to get.
• 64%: 64% of American adults believe that you should take out life insurance to cover existing debt.
• $30: The average cost of a term policy for someone in their 30s is around $30 per month with good health.

Source: LIMRA; III

The table below provides the average monthly life insurance for a 35-year-old female (Millennial) for a 20 year term policy.

According to the III, traditional life insurance policies are not the primary focus of underwriters anymore.

• 48%: 48% of contracts in 2022 were annuities, contracts that accumulate money with a variable or fixed income stream.
• 26%: 26% of new policies in 2022 had accident and health insurance coverage as well.

Source: III