- How the life insurance industry impacts the economy
- June 5, 2015
According to Insurance Information Institute, the insurance industry provides some 2.4 million jobs that encompass a wide variety of careers, from human resource administrators to public relations managers and financial analysts. The industry’s financial assets were about $6 trillion in 2013, including $1.2 trillion for the property/casualty sector and $4.7 trillion for the life sector. Insurers contribute more than $413 billion to the nation’s gross domestic product.
For example, the industry is one of the largest purchases of municipal bonds in Texas and the sixth largest source of tax revenue in Texas.
“The U.S. economy appears to be picking up steam, which translates into more economic activity and the addition of capacity. This means more businesses and people will need more insurance, implying further increases in insurance premium volume,” said Dr. Steven Weisbart, senior vice president and chief economist with the I.I.I.
The life insurance industry, alone, makes significant contributions to the US economy that include key findings from the American Council of Life Insurers:
· 75 million American households have life insurance or annuity coverage through life insurance companies.
· The life insurance industry provides financial assistance to families experiencing major life events. In 2010, the industry paid $365 billion to policyholders covered by life insurance and annuity policies.
· Life insurance provides a significant cushion against the financial impact of the untimely death of an income earner. The face value of life insurance policies in 2010 totaled $18 trillion.
· Only four percent of the children in households without life insurance have financial assets equal to at least 12 months of household income, while 82 percent of the children in households with life insurance have protection through life insurance coverage equal to or greater than one year of household income, according to an analysis of the Federal Reserve Board’s 2007-2009 Panel Survey of Consumer Finances.
· Annuities offered by the life insurance industry are the only product to protect against outliving one’s assets. Guaranteed annuity payments during retirement are an important supplement to Social Security.
· Innovations in the industry have expanded life insurance products to include accelerated death benefits and protection against disability as well as long-term care coverage.
Guaranteed life is another product added to the life insurance mix that provides life insurance without a medical exam. Many highly-rated life insurers offer no exam underwriting with initial rate guarantees of 10, 15, 20, 30 years and even lifetime coverage depending on the applicant’s age, state and health profile.
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