As we enter Life Insurance Awareness Month in September, Americans are more aware of life insurance than they’ve been for decades – due to COVID-19.
The pandemic sparked a historic spike in insurance coverage. Total life insurance new annualized premiums grew 20% in 2021, representing the highest annual growth since 1983, according to research by LIMRA and LOMA.
In addition, America’s life insurers paid more than $90 billion to beneficiaries of life insurance policies in 2020, the highest ever in any single year. Payments rose 15.4% over 2019, the largest year-to-year increase since the 1918 Influenza Epidemic.
Awareness doesn’t always translate into action, however. Just 50% of Americans have any life insurance coverage, down from 63% a decade ago.
Unfortunately, many Americans have misunderstandings about life insurance, which discourages them from obtaining coverage.
One of the misunderstandings is fundamental: most Americans believe life insurance is too expensive.
According to LIMRA and LOMA, eight-in-ten Americans overestimate the cost of life insurance. In fact, more than half of Americans overestimate the actual cost by as much as threefold.
Estimates by younger consumers, who generally pay lower rates, are especially off base. 43% of Millennials think that the annual cost of a term life insurance policy for a healthy 30-year-old would be $1,000. In fact, it would cost about 1/6 as much or around $170.
Safeguarding and expanding access to affordable coverage is in the public interest. In the event of an unexpected death, life insurance can save a home. It can pay for education. It can be an important part of extending prosperity and financial security across generations. And permanent life insurance policies provide families and small business owners experiencing economic hardship with a crucial source of funds by borrowing against the policy’s cash value.
Life insurance should be at the core of a family’s financial security plan. That’s something more Americans need to understand. And through initiatives like Life Insurance Awareness Month and the Help Protect Our Families initiative, America’s life insurance industry is committed to build awareness – and understanding – as we help more families take action to obtain financial security.
Susan K. Neely was President and CEO of the American Council of Life Insurers (ACLI), the nation’s leading trade association determined to help families live better lives by achieving financial security and certainty. As president and CEO, Neely drove public policy and advocacy on behalf of ACLI’s member companies that represent 93 percent of industry assets and serve 90 million families. She is CEO Emeritus through December, 2024.
