While necessary to protect your loved ones, life insurance is generally a pretty boring topic.
We’ve put together some interesting facts about life insurance that will be a surprise to most people reading this unless you work in the industry.
The United States has almost 600 billion in Life Insurance Policies Active
This ranks #1 in the world and is greater than both #2 (Japan) and #3 (China) put together. This despite China having a population 5 times greater. This makes the United States the most active life insurance purchaser on a per person basis.
The 600 billion is in reference to the amount of premiums paid annually.
Most Americans are Vastly Under Insured
Studies and surveys show that 48% of life insurance policy owners have less than $100,000 in coverage. Everyone’s incomes and obligations are different but looking at average incomes, under $100,000 is going to come up short in terms of helping replace an income if the beneficiary dies.
Unless you are doing a great job saving money that outpaces inflation, to self-insure yourself, a good general rule of thumb is multiple your annual earnings by 10 times and purchase that amount of life insurance.
The Life Insurance Industry has a Whole Month Dedicated to Awareness
Life Insurance Awareness Month happens every September and is put on by a non-profit organization called Life Happens. Over 100 insurance carriers support the initiative. The main goal is to raise awareness about the importance of including life insurance in any financial planning.
Average Funeral Costs are $8,500 Nationally
Burial and other final expenses are costly. This can be a huge burden on an already grieving family. This amount should be considered in life insurance planning. There are also small permanent policies known as Final Expense policies that are meant to cover these costs.
The last thing grieving families should have to worry about is the strain of borrowing money to pay for a funeral. Proper planning in advance and a small monthly premium can take care of this.
Lots of People Have Both Term and Permanent Policies
The choice between term and permanent (also known as whole life) is one decision that must be made when getting a new policy. It’s widely debated between financial professions whether it’s better to go with a permanent policy that builds cash value or just get pure term life insurance and invest the difference.
Premium prices for whole life are considerably more expensive so if you are diligent on how you invest your money it does make a strong case for term.
So why then do 20% of policy owners have both?
It’s likely a case of planning to account for future life changes. A family may need extra coverage during the years when children are young or there is a large mortgage to payoff. A term policy will cover this nicely. Then they may have a permanent policy in place for long term to leave a legacy and cover final expenses.
Life insurance specialists with simplelifeinsure.com suggest guaranteed universal policies as a good mix between term and permanent. This is policy that stays in force up to age 121 but doesn’t have the investment and cash accumulation aspect of whole life. Because of this, the premiums are much lower although still not as low as regular term insurance.
MetLife is by Far the Biggest Insurance Carrier in the US
MetLife is more than twice as big as #2 (Prudential) and have 13.6% of the market share. In 2017 alone, the wrote a whopping 86 Billion dollars in premiums. Recently, they rebranding and split off their life insurance business which is now operated under the name of Brighthouse Financial but still part of the MetLife family.
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