2022 Life Insurance Statistics

It's never too soon or too late to purchase a life insurance policy. No matter what type of coverage you need, this guide contains information on 2022 life insurance statistics, including average costs, payout amounts and coverage by state. It also covers the basic types of life insurance policies and offers information on obtaining funds from a policy as a beneficiary.

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Types of Life Insurance

There are two main types of life insurance you should know about: term life and permanent life insurance. Here are some key facts about each one.

Term life insurance:

• Valid for a specified period of time
• Premium amounts vary based on your age, health and other factors
• Pays out at death and cannot be redeemed for cash value upon expiration

Permanent life insurance:

• Coverage never expires
• Policy builds cash value that can be redeemed at a date prior to the death of the policyholder if desired
• Premiums tend to be more expensive

It's also important to note that there are two primary types of permanent life insurance policies: whole life insurance and universal life insurance. Put simply, both offer lifelong coverage, but whole life insurance has consistent premium amounts and cash value accumulation while universal life insurance allows for flexible premium payments and policyholder choice in death benefit.

Average Cost of Life Insurance

Much like other types of insurance, life insurance costs vary based on factors such as age, location and health. You may need to undergo a physical examination to obtain coverage. According to Quotacy, the average annual cost of a $500,000, 20-year term life insurance policy is $277 for men age 30 and $192 for women age 30. After age 50, the cost of term life insurance jumps to $835 for men and $650 for women. By age 70, both genders are paying an average of over $8,000 per year for term life insurance.

As previously mentioned, permanent life insurance is significantly more expensive. Per the same source, for a $500,000 whole life insurance policy, super preferred* men and women age 30 pay an average annual rate of $4,985 and $4,372 respectively. By age 50, the annual costs rise to nearly $10,000 for each gender. After 70 years of age, both men and women pay well over $25,000 a year for life insurance coverage.

*Super preferred refers to individuals in excellent health with a clean family medical history.

What Percentage of the Population Has Life Insurance?

According to the Insurance Information Institute, approximately 54% of the population is covered by some form of life insurance. Additionally, 16% of people—or 41 million individuals—without life insurance claim that they need it.

Usually, you can either have life insurance through an individual plan that you purchase yourself from an independent agent or through a group plan that provides coverage at a subsidized rate. Out of the 54% of people who do carry coverage, 27% are insured through private plans and 27% are insured through a group plan. 

What Is the Average Payout on Life Insurance?

A review of 2022 life insurance statistics indicates that the average life insurance payout is $168,000.

Unfortunately, many people neglect to file a claim and lose money they are entitled to as beneficiaries. Unclaimed policies can range anywhere from $2,000 to $300,000, and there is currently more than $1 billion in unclaimed life insurance policies in the nation, according to CNBC.

How to Obtain a Life Insurance Payout

Contrary to what might be popular belief, life insurance doesn't payout automatically upon death. There are a few administrative tasks you need to take care of as a beneficiary to ensure you get the payout you're entitled to.

• File a claim: When the policyholder dies, you must file a claim with the insurance company. You'll need to provide the death certificate for the policy to be paid out.
• Choose a payout plan: A lump sum of cash is the standard method for receiving a life insurance payout. However, many life insurance companies now offer alternative payout options, which can include receiving the money in annuity payments or a retained asset account. 
• Appeal any denial, if necessary: In some cases, the insurance company may deny the life insurance claim. Keep all documents and records related to the case, and contact a life insurance claims denial attorney to advise and represent you.

Also, be aware that life insurance policies generally take 60 to 90 days to payout, assuming there's no issue with processing the claim.

Coverage Varies by State

Not all states are equal when it comes to life insurance coverage. According to Statista, here are the five states with most and least coverage as of 2018. All dollar amounts are in billions.

Most Coverage

1. California: $356.98
2. Texas: $275.72
3. New York: $218.55
4. Florida: $188.85
5. Illinois: $135.54

Least Coverage

1. Wyoming: $4.59
2. Alaska: $7.36
3. Montana: $7.40
4. North Dakota: $7.70
5. Vermont: $7.91

2022 Life Insurance Statistics

Below are some fast facts about life insurance in the United States.

• Northwestern Mutual Group is the largest life insurance company, with just under 9% of market share.
• Just under a third of consumers report that they're more likely to buy a life insurance policy online.
• Smokers pay an average of two to three times more for life insurance coverage than non-smokers.
• Millennials hold 16% of all life insurance policies.
• In 2020, $747 billion was paid out to beneficiaries in the form of death benefits, annuity payments, surrender values and other payments.

Life insurance is one of those things you'll probably never regret purchasing. Give yourself and your family the peace of mind that they'll be able to remain financially secure in the event of your passing. Talk to your financial advisor today incorporating life insurance into your retirement and wealth management plan.