Americans are purchasing far fewer life insurance policies than they did a few decades ago. The reasons for the decline are not clear.
Life insurance can be a key tool in estate planning. This is because it provides a way to provide cash to families who might need it, especially while the rest of an estate is settled in probate. Life insurance can also help equalize inheritances between children, when other estate assets are difficult to divide.
Americans are purchasing fewer policies than before. Between 1965 and 2016 the population grew by approximately 50%. However, the total number of life insurance policies purchased by Americans remained about the same as Financial Advisor reports in “The Decline of Life Insurance Is A Mystery.”
What is not clear, is why?
One reason could be that fewer middle and lower income Americans can afford to purchase the policies or find them difficult to get because of increasing medical standards required by policy providers. As evidence for this explanation, the value of the policies that people are purchasing is increasing and wealthier Americans are purchasing even more policies.
Whatever the ultimate reason for the decline in life insurance, the industry as a whole remains healthy.
Reference: Financial Advisor (Feb. 27, 2018) “The Decline of Life Insurance Is A Mystery.”