Lessening the Government’s Spending Burden
Apr 24, 2025
Lessening the Government’s Spending Burden
Apr 24, 2025
A new research study by the American Council of Life Insurers revealed that Americans’ ownership of financial protection products offered by life insurers significantly lessens the government’s financial burden. In fact, the life insurance industry will save the federal government more than $120 billion.
I spoke about the life insurance industry’s vital role recently with Semafor CEO Justin Smith. The life insurance industry doesn’t create volatility, it absorbs it. We’re there for people at the worst, most stressful periods of their lives. We also serve as the ballast of the U.S. economy, taking premium payments from our customers and investing them in assets across the country. And we reduce the ultimate burdens on the federal government and government services.
Here’s how:
- Most Americans start receiving their Social Security benefits by the time they reach age 65. But many would prefer to postpone claiming their benefits until later, when their monthly checks would be larger. Annuities offered by life insurers can give savers a financial bridge between retirement and Social Security, providing them with guaranteed monthly income similar to a traditional pension. These steady funds give many Americans the financial freedom to postpone claiming their Social Security benefits. And this results in a significant savings for the federal government of $100 billion over time.
- More than a quarter of America’s 20-year-olds will suffer a disabling condition before they reach traditional retirement age, taking them away from their job for more than a year. Some receive disability insurance benefits from the federal government. But those covered by private disability income insurance get benefits provided by life insurers. This coverage lessens the federal government’s burden by about $8 billion over the next 10 years.
- About seven-in-ten Americans 65 and older will require long-term care during their lives. Many will rely on Medicaid to pay for this care. But retirees with private long-term care insurance will have their own resources. This will lower the federal government’s Medicaid outlays by $14 billion over the next 10 years.
America’s life insurers alleviate the federal government’s safety net burden. As policymakers consider tax and budget measures, they should ensure that these measures support Americans’ ability to access the affordable financial protection products offered by life insurers.
David Chavern
David Chavern is President and CEO of the American Council of Life Insurers (ACLI) whose mission is to provide financial certainty to Americans regardless of where and how they work, their life stage, or the economic status of their household. ACLI’s 275 member companies represent 93 percent of industry assets and provide financial security products and services to 90 million families.
