Life insurance ownership
About sixty percent of all people in the United States were covered by some type of life insurance in 2018, according to LIMRA’s 2018 Insurance Barometer Study. Other findings from the study include: 2018 financial results
According to S&P Global Market Intelligence, in 2018 net income after taxes for the life/annuity insurance industry fell 10.0 percent to $37.9 billion, from $42.1 billion in 2017. Net income before capital gains fell 15.8 percent in 2018, and a net realized capital gains loss of $4.7 billion contributed to lower net income. Premiums and annuity considerations rose slightly in 2018, up 1.3 percent from 2017, as annuity premiums and deposits fell 6.1 percent. Expenses grew by 10.8 percent in 2018 following a drop in 2017. Capital and surplus rose to $400.0 billion in 2018 from $394.9 billion in 2017, according to S&P Global Market Intelligence. Life/Annuity Sector
Traditional life insurance is no longer the primary business of many companies in the life insurance industry. The emphasis has shifted to the underwriting of annuities, which accounted for 48 percent of life/annuity direct premiums written in 2018. Annuities are contracts that accumulate funds or pay out a fixed or variable income stream. An income stream can be for a set time period or over the lifetimes of the contract holder or beneficiaries. Accident and health insurance, which includes distinctive products apart from traditional health insurance, accounts for 27 percent of direct premiums written. Traditional life insurance products such as universal life and term life for individuals, and group life, remain an important part of the business, making up the remaining 25 percent of direct premiums written. In addition to annuities, accident and health, and life insurance products, life insurers may offer other types of financial services such as asset management. Traditional health insurance, which is not included in this section and are not considered a part of the life/annuity sector, are described under Private Health Insurance. Health insurance pays for medical, surgical and hospital services received by the insured, as well as routine and preventive care, usually within a network format. Of the many types of plans available, most include a deductible paid by the insured, and benefits received are tax-free. Accident insurance and health insurance, which is included in the life/annuity and property/casualty (P/C) sectors, encompass a variety of specialty products related to health, such as reimbursement for the time a policyholder spent in a hospital or was disabled; short- and long-term disability based on employment; long-term care, and critical or catastrophic illness insurance. Accident and health insurance are not meant to replace health insurance. Premiums by line
Annuities are the largest life product line as measured by direct premiums written and accounted for 48 percent of direct premiums written by life insurers in 2018. Accident and health insurance accounted for 27 percent of direct premiums written. Accident and health insurance, not to be confused with traditional health insurance, includes reimbursement for certain medical expenses. These include: short- and long-term disability; critical or catastrophic illness insurance; and long-term care. Life insurance accounted for the remaining 25 percent of direct premiums written. Life insurance policies can be sold on an individual, or ordinary, basis or to groups such as employees and associations. Other lines include credit life, which pays the balance of a loan if the borrower dies or becomes disabled and industrial life, small policies whose premiums are generally collected by an agent on a weekly basis. Credit life insurance
Credit life insurance, a form of decreasing term insurance, protects creditors such as banks. The borrower pays the premium, generally as part of the credit transaction, to cover the outstanding loan in the event he or she dies. The face value of a policy decreases as the loan is paid off until both equal zero. When loans are paid off early, premiums for the remaining term are returned to the policyholder. Credit accident and health, a similar product, provides a monthly income in the event the borrower becomes disabled. Investments
Life/annuity and P/C insurers are key players in capital markets, with $8.3 trillion in cash and invested assets in 2018, according to S&P Global Market Intelligence. Life insurance, and annuity cash and invested assets totaled $4.1 trillion in 2018, and separate accounts assets and other investments totaled $2.5 trillion. P/C insurer cash and invested assets were $1.7 trillion in 2018. Because life insurance products are long-term, generally in force for 10 years or longer, payments are predictable. Therefore, life/annuity insurers invest primarily in long-term products. In 2018 life insurers, excluding separate accounts, invested 72 percent of their assets in bonds and 2 percent in corporate stocks. Life insurers invested 13 percent of their assets in mortgage loans on real estate that take seven years or longer to mature. Distribution channels
Life insurance was once sold primarily by career life agents, captive agents that represent a single insurance company, and by independent agents, who represent several insurers. Now, life insurance is also sold directly to the public by mail, telephone and through the Internet. In addition, in the 1980s insurers began to market annuities and term life insurance through banks and financial advisors, professional groups and the workplace. A large portion of variable annuities, and a small portion of fixed annuities, are sold by stockbrokers. Independent insurance agents have held over half of the individual life insurance market over the 10 years from 2009 to 2018, but have lost some ground to affiliated agents and direct response companies, as shown in the charts below.
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