Life Insurance Statistics

Around half of Americans have an active life insurance policy, according to LIMRA and Life Happens' 2022 Insurance Barometer study. However, while 50% of Americans have a life insurance policy, the same survey found that 68% need one. A closer look at life insurance statistics can help you appreciate consumers’ financial concerns around purchasing a policy, gaps in coverage and opportunities in the industry.

To help readers better understand current life insurance policy ownership, MoneyGeek gathered a variety of statistics from the 2022 survey mentioned above. These statistics explore policy ownership from various angles, such as age, sex, ethnicity and household income; the survey fielded data from 8,517 total respondents.

As of 2022, around 50% of the U.S. population had life insurance. The graph below shows how the trend has changed over the years.

Source: Life Insurance Barometer Study

Over the last 11 years, the number of Americans with life insurance policies has fluctuated. The figure was highest in 2011 at 63%.

Between 2011 and 2018, ratios increased and decreased incrementally. However, it's crucial to note that 2018 marked the beginning of a continuous downward trend.

Since then, the percentage of the population with life insurance has decreased by at least 2% per year. From 59% in 2018, it reached an all-time low in 2022 at 50%, indicating that fewer people were investing in life insurance plans.

Not everyone purchases their life insurance policy — some get it from their employers. MoneyGeek presents life insurance statistics showing which source most policyholders utilized in 2022.

Source: Life Insurance Barometer Study

Half of the American population already has life insurance, but not everyone secured theirs from the same source. A more significant segment of insured respondents (59%) said they purchased their life insurance plan through the retail market.

Employers sometimes offer life insurance as part of their benefits package, which is how other respondents obtain coverage. However, they make up a smaller portion of the insured population at 23%.

Policyholders with life insurance from both sources are the most financially secure. They typically have higher coverage and remain protected even if they decide to leave their current employer. Unfortunately, they also make up the smallest segment of the insured population. From 22% in 2021, the ratio went down to 18% the following year.

Another angle to explore is the type of life insurance policy people purchase. Depending on the situation, some prefer term life insurance, which provides coverage for a predetermined period. However, others lean toward whole life insurance, a type of permanent life insurance, because it provides life-long protection. MoneyGeek's graph shows how numbers have changed from 2021 to 2022.

Source: Life Insurance Barometer Study

Out of the total respondents, only 15% have both types of life insurance (permanent and term). It's a 3% drop from 2021 figures, which was 18%. That indicates that the majority only had one or the other.

The ratio of policyholders only having term life insurance has remained the same since 2021 at 34%. Even 2020 numbers were similar — back then, 33% opted for this life insurance policy type.

In comparison, more people have opted to purchase permanent life insurance in 2022. Numbers increased by 3% from the previous year. You can observe the same pattern across various demographic areas. Whether you focus on age, gender, race, ethnicity or household income, more policyholders have whole life insurance (i.e., a permanent life plan) rather than term life insurance.

The 2022 Insurance Barometer Study by Life Happens and LIMRA explores life insurance statistics from various angles, including age. The graph below breaks this down in detail.

Source: Life Insurance Barometer Study

According to the numbers, life insurance ownership increases in direct proportion to age. Of the four age groups surveyed, Baby Boomers have the most policyholders — 57% of respondents 58 to 75 years old have coverage.

It's also worth highlighting that the two youngest generations, Gen Z and Millennials, have the lowest ratios at 34% and 45%, respectively. Members of the younger generation are less likely to be familiar with life insurance products, contributing to fewer individuals purchasing a policy.

Thirty-five percent of millennials name cost as the primary reason they don't have coverage. However, eight in 10 individuals think it's more expensive than it is.

Trends in life insurance ownership don't just vary across age groups — it's also different between men and women. 2022 numbers showed that men are more likely to have life insurance coverage than women.

Source: Life Insurance Barometer Study

The number of policy owners decreased from 2021 for both genders. Of 58% of men with life insurance coverage, only 53% had it in 2022. The numbers for women show a similar trend — from 47% to 46%.

It's essential to note, however, that fewer women consistently have life insurance coverage, and financial literacy could be a contributing factor. The TIAA Institute's data brief on financial literacy among women in the U.S. found that only 45% answered the P-Fin Index questions correctly. In comparison, 55% of men gave correct answers.

Lack of knowledge results in less confidence in making the right choices when comparing and purchasing financial products. Misconceptions about life insurance (especially regarding cost) can prevent someone from getting coverage.

Our page on life insurance facts also shares ownership data across various ethnicities. Among the different races and ethnicities surveyed, three out of four showed that over half of respondents had life insurance coverage in 2022. The bar graph below provides life insurance policy ownership statistics for Asian, Black, Hispanic and white individuals.

Source: Life Insurance Barometer Study

Of the survey's respondents, those who identified as Black had the largest insured population — 55% said they had life insurance. Asian and White Americans followed closely, with 52% and 51%, respectively.

However, the ratio of insured Hispanic individuals was noticeably lower at 41%.. LIMRA highlights that it was a 10% drop from 2021 results. It suggests that COVID-19 significantly impacted employment status. According to the study, insured Hispanics were more likely to secure life insurance through company benefits than any other race.

Further, the Hispanic population stated their primary reasons for not purchasing life insurance were cost and having other financial priorities.

Several factors may influence your decision to purchase a policy — income is one of them. Life insurance statistics show a direct relationship between the number of policyholders and household income. The graph below shows the percentages across various income ranges.

Source: Life Insurance Barometer Study

Households with higher incomes tend to have more people with life insurance. In 2022, two ranges had more than 60% of their population covered:

• Household income of $100K to $149K: 63%
• Household income of $150K and higher: 64%

About 36% of U.S. households earn below $50,000 a year. Although the percentages aren't so different, the portion of their respective populations with life insurance coverage varies significantly.

Only 31% of households with annual incomes below $50,000 had life insurance in 2022, suggesting a significant need in the market.

Many people see the need for life insurance for reasons such as estate planning, ensuring their burial expenses are covered or serving as an income replacement. However, acknowledging the need for life insurance doesn't mean they purchase a policy.

The simplest way to describe the need-gap in life insurance is the difference between those who say they need insurance versus those who have it.

The need-gap has been present since LIMRA and Life Happens released the first Insurance Barometer in 2011. From a 7% gap in 2011, it has reached an all-time high of 18% in 2021 (and maintained in 2022). The graph below shows the need-gap's movement over 11 years.

Source: Life Insurance Barometer Study

The lowest recorded figure was in 2013, at 3%. Since then, it rose to 10% in 2015 and fluctuated by 2% at the most for each year until 2019. After that, a 7-point jump occurred in 2020, which coincided with the COVID-19 pandemic. The pandemic may have heightened individuals' awareness of the value of investing in a life insurance policy.

The need-gap comes from two profiles — non-owners (individuals who don't have life insurance) and owners (those who have policies but need more coverage). While the number of owners contributing to the need-gap decreased by 3 million from 2021 to 2020, non-owners increased by 7 million (from 73 million to 80 million).

LIMRA and Life Happens' Insurance Barometer aims to track the various financial concerns of consumers in the U.S. and see how these connect to specific financial behaviors regarding life insurance. Their 2022 survey comprised 8,517 responses from adults between 18 and 75 who made financial decisions for their households. These included those who were unemployed and retired.

LIMRA and Life Happens' primarily collected data via an online panel. However, some consumers did not participate, which may have created selection bias in survey samples. To address it, they made propensity-score adjustments. The same adjustments applied to age, gender, ethnicity, race, region and income.

Keep in mind that survey results have an error margin of +/- 3% points.

Source: Life Insurance Barometer Study

Source: National Association of Insurance Commissioners

Understanding life insurance statistics can help you better understand the industry and opportunities within the U.S. market. MoneyGeek gathered the most commonly asked questions on this subject to provide more information.

Life insurance is a broad topic, and online resources can provide information in addition to statistics. MoneyGeek included a list of pages that may broaden your understanding of this financial product and other related areas.

• Is Life Insurance Worth It? How to Decide Whether to Get Life Insurance: Most say life insurance is a worthy investment, but do you need it? Use this page to weigh the pros and cons.
• Term vs. Whole Life Insurance: What’s the Difference?: Life insurance policies come in different forms. Understand the difference between term life insurance and whole life insurance, a type of permanent life plan, to determine which is best for you.
• Universal Life Insurance vs. Whole Life Insurance: What’s the Difference and Which One Should You Get?: If you decide to get permanent life insurance, which one should you purchase? Use this page to understand the differences between universal and whole life insurance.
• How to Compare Life Insurance: A Step-by-Step Guide to Getting the Best Life Insurance Quotes: Many life insurance providers and products are in the market for you to determine the best fit. MoneyGeek guides you through the selection process to ensure you get the best deal possible.
• How Many Americans Have Enough Life Insurance Coverage?: The need-gap in life insurance is undeniable. Read about common misconceptions regarding this financial product and why people choose not to purchase a policy.