Jeffrey Wade
Life insurance is a crucial financial product that provides peace of mind and financial protection for individuals and their loved ones. In 2021, the total value of individual life insurance policies reached $13.6 trillion, reflecting a steady 2.1% annual growth rate since 2011. While the number of policies issued annually varies globally, the Life Insurance Corporation of India issued 21.9 million new individual policies in 2020, and Australia's life insurance industry was valued at $32.2 billion in 2021. In the United States, there were approximately 267 million life insurance policies in force as of 2025, with a mix of term, whole, and group life insurance plans. The life insurance industry is dynamic, adapting to changing demographics and economic conditions, and it plays a significant role in the lives of many.
| Characteristics | Values |
|---|---|
| Number of life insurance policies in force in the US in 2022 | 250 million |
| Number of life insurance policies in force in the US in 2008 | 335 million |
| Number of life insurance policies in the US | 267 million |
| Number of new individual policies issued by the Life Insurance Corporation (LIC) of India in 2020 | 21.9 million |
| Market size of the life insurance industry in Australia in 2021 | $32.2 billion |
| Number of millennials in the UK with life insurance that isn't an employee benefit | 3.7 million |
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What You'll Learn
- Demand for life insurance has increased due to COVID-19
- Types of life insurance: term vs permanent
- Life insurance covers death from accidents, illnesses, old age, etc
- Life insurance ownership in the US has dropped over the past decade
- Life insurance policies in force across the US in 2022 exceeded 250 million
Demand for life insurance has increased due to COVID-19
The COVID-19 pandemic has had a significant impact on the life insurance industry, causing a notable shift in customer behaviour and demand for life insurance products. While the industry experienced an initial decline in business, with a loss of around 4 million policies and $6 billion in revenue during the first six months of 2020, it has since witnessed a strong rebound. The recovery can be attributed to insurance companies' proactive efforts to address the changing needs and behaviours of their customers.
One of the key factors contributing to the increased demand for life insurance is the shift in customers' perception of it as a pure risk cover rather than an investment product. This change in perspective has led to a preference for pure term plans and protection-based products over investment-linked insurance plans. Customers now view life insurance as essential spending, prioritising it to manage the uncertainties brought about by the pandemic. This shift in perception has been observed across various markets, including India, where 70% of uninsured respondents in a survey expressed a newfound need to purchase life insurance.
The pandemic has also accelerated the digital transformation within the industry. Customers are increasingly adopting digital and zero-contact channels to purchase insurance, driven by their strong focus on health and safety. This shift has resulted in a 16% year-on-year growth in new business premiums from the second quarter of 2020 to 2021. Additionally, the demand for product innovation and customisation has increased, with customers seeking innovative features, enhanced benefits, flexible payment options, and improved digital capabilities from insurers.
The roll-out of COVID-19 vaccinations has further influenced the life insurance landscape. Insurers are now more enthusiastic about providing coverage to individuals with underlying health conditions, and the widespread use of vaccines has reduced the perceived risks associated with offering insurance to a broader range of customers. However, some insurers are considering vaccination status in their underwriting process, with vaccinated individuals potentially being offered improved terms or enhanced coverage.
Overall, the COVID-19 pandemic has heightened people's awareness of risk and mortality, leading to a greater demand for life insurance products. The industry has demonstrated resilience and adaptability by meeting customers' evolving needs and leveraging digital channels to rebound strongly. As economic recovery continues and customer behaviour continues to evolve, the life insurance industry is expected to experience robust growth in the coming years.
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Types of life insurance: term vs permanent
Life insurance is a way to protect your loved ones financially if you're no longer there to provide for them. The death benefit can be used for anything from replacing your income to covering outstanding debts, paying for final expenses, or providing a tax-free inheritance. There are two main types of life insurance: term insurance and permanent insurance.
Term insurance is the simplest form of life insurance. It only pays out if death occurs during the term of the policy, which is usually from one to 30 years. Most term policies have no other benefit provisions, but some are renewable or convertible into permanent life insurance. The most common term length is 10 years, and 99% of all term policies never pay out a claim because most people let their policies lapse. Term insurance generally offers the largest insurance protection for your premium dollar, and the annual monthly price doesn't change throughout your coverage period. It is also the least expensive type of life insurance because it doesn't build cash value.
Permanent insurance provides long-term financial protection. These policies include both a death benefit and, in some cases, cash savings. Whole life/permanent insurance pays a death benefit whenever you die, even if you live to be 100 years old. There are three major types of whole life or permanent life insurance: traditional whole life, universal life, and variable universal life, with variations within each type. Whole or ordinary life is the most common type of permanent insurance policy, offering a death benefit along with a savings account. Because of the savings element, premiums tend to be higher and can be withdrawn while the policy is active.
The type of life insurance that's best for you depends on your individual needs and circumstances. Term insurance is a good option if you're looking for the most coverage for your money and only need protection for a specified period. On the other hand, permanent insurance is designed to provide coverage for your entire lifetime and can be useful if you want to build cash value.
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Life insurance covers death from accidents, illnesses, old age, etc
Life insurance is designed to provide financial protection for your beneficiaries in the event of your death. It covers most causes of death, including accidents, illnesses, old age, and other natural causes. However, it's important to note that not every cause of death is covered, and exclusions may apply.
Accidental deaths, such as car accidents or drowning, are typically covered by life insurance. These policies can provide financial security for your loved ones in the event of an unexpected passing. Additionally, life insurance can help cover final expenses, such as funeral costs, which can be surprisingly high.
Life insurance also covers death due to illnesses, whether they are critical, terminal, or chronic. Some policies offer optional coverages or riders that provide additional benefits in these cases. For example, a critical illness rider pays out a lump sum if you are diagnosed with one of the specified critical illnesses covered under the policy. An accelerated death benefit rider allows you to access your death benefit while still alive to help cover medical expenses and treatment costs.
Old age is also a factor considered by life insurance policies. As we age, the cost of life insurance tends to increase, and the coverage options may vary. Senior life insurance, also known as graded death benefit plans, offers eligible older applicants minimal whole life coverage without a medical examination. However, these policies may have limitations, such as providing only a return of premium or graded benefits if death occurs within the first few years of the policy.
It is important to carefully review the terms and conditions of your life insurance policy to understand the specific coverages, exclusions, and limitations. Exclusions may include suicide, dangerous or illegal activities, substance abuse, misrepresentation, or pre-existing medical conditions. Additionally, accidents caused by intoxication or high-risk activities may not be covered. Understanding the details of your policy will ensure that you and your beneficiaries are adequately protected.
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Life insurance ownership in the US has dropped over the past decade
There are several types of life insurance policies available to consumers, including term and permanent plans or a combination of the two. Term insurance provides coverage for a specified period, which could be as short as a year or for a set number of years, such as 5, 10, or 20 years. It generally has lower premiums initially but does not accumulate cash value over time. On the other hand, permanent insurance offers coverage for the entirety of the policyholder's life and often includes a cash value component.
The life insurance industry in the US is regulated at the state level, with each state having its own rules regarding purchasing, maintaining, and claiming life insurance. This regulatory landscape may contribute to the complexity and perceived accessibility of life insurance for consumers.
The decrease in life insurance ownership could be attributed to various factors, such as a shift in consumer preferences, increasing healthcare costs, or a lack of awareness about the benefits of life insurance. To counter this trend, life insurance companies may need to adapt their offerings to better meet the changing needs and preferences of consumers.
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Life insurance policies in force across the US in 2022 exceeded 250 million
The life insurance industry in the US is regulated at the state level, with rules varying across states regarding the purchase, maintenance, and claiming of policies. Despite the large number of policies in force, life insurance ownership in the US has declined in recent years. In 2023, about half of US adults owned life insurance, a decrease from 63% a decade earlier. This decline in ownership could be attributed to several factors, including misconceptions about cost and a lack of awareness about the benefits of life insurance.
There are two primary types of life insurance plans: term and permanent, with various combinations and products available within these categories. Term insurance provides coverage for a specified period, ranging from one year to several years or up to a certain age. On the other hand, permanent insurance lasts a lifetime or until an advanced age and includes whole life, universal, and variable life insurance. Permanent coverage accounts for a significant portion of direct purchases, while term insurance is generally more affordable and often chosen by younger individuals.
Life insurance is designed to provide financial protection to loved ones in the event of the policyholder's death. The death benefit can be used for various purposes, such as replacing lost income, covering debts, paying for final expenses, or providing a tax-free inheritance. The cost of life insurance depends on several factors, including age, gender, health, and nicotine use. Simplified and guaranteed issue life insurance options are available for those with health concerns or who want quicker approval, but these policies generally come with higher premiums and lower coverage amounts.
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Frequently asked questions
In 2021, the Life Insurance Corporation (LIC) of India issued around 21.9 million new individual policies.
There are approximately 267 million life insurance policies in the United States as of 2025. In 2022, the total number of policies in force across the US exceeded 250 million, down from around 335 million in 2008.
Whole life insurance is the most common type of life insurance policy.
