Life Insurance Product Penetration

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Life Insurance Product Penetration

An overview of life insurance products in the United States, market distribution rates, and five trends in the life insurance and annuities market have been provided in this research brief. The types of life insurance products available in the US are term life insurance, whole life insurance, universal life insurance, and variable universal life insurance. Northwestern Mutual has the largest market share in the US life insurance market.


Types of Products Available

  • The types of life insurance products in the United States are term life insurance, whole life insurance, universal life insurance, and variable universal life insurance.
  • Term life insurance policies offer coverage for specific death benefits for a predetermined period such as 10, 20, or 30 years. It is useful for parents who want to ensure that their children are taken care of until they become adults. Term policies lose their value after a term is complete.
  • Whole life insurance policies provide coverage for an entire lifetime. There is guaranteed pay after death and several benefits when one is alive. For instance, the accumulated tax-deferred cash value can be used.
  • Universal life insurance policies accumulate tax-deferred cash values. The policies are more flexible compared to whole life. For instance, death benefits and premium payment amounts or schedules can be changed.
  • Valuable universal life insurance policy allows flexible premium payments enabling one to choose the frequency of payments and amount. Policyholders have access to various investment options, such as bonds, equity, and money market portfolios, which help them in achieving their goals.

Market Share

  • The top companies in the US by market share that provide life insurance products include North Western Mutual, New York Life Insurance Co., Mass Mutual, and Lincoln Financial Group.
  • Northwestern Mutual offers term life, whole life, and universal life insurance. The company has a market share of 10.3%.
  • New York Life Insurance Co offers term life, whole life, universal life, and variable universal life insurance. The firm has a market share of 6.9%.
  • Mass Mutual provides term life, whole life, universal life, and variable universal life. It has a market share of 5.5%.
  • Lincoln Financial Group offers term life, universal life, and variable universal life insurance. The company has a market share of 5.4%.
  • Prudential provides term life, universal life, and variable universal life insurance. The firm has a market share of 5.4%.

Future Growth Estimates

  • In the last five years, the compound annual growth rate (CAGR) in the US life insurance sector has been 1.7%. Furthermore, assets under management are much lower when compared to mutual funds and retirement accounts.
  • There is industry consensus that key market segments are underserved. Several studies have found that there is a huge life insurance coverage gap in the US.
  • Despite the fact that a significant percentage of middle-class clients do not have enough savings for retirement, the industry has failed in communicating the value and importance of its products.
  • As a result of increased salaries, operational expenses, and technology costs, the industry continues to shrink. According to CFOs and CIOs, the industry can be strengthened by bringing in stronger top-line group or material cost improvements.
  • As it stands, life insurance in the US is not considered the default choice when it comes to retirement savings.


  • Only a small percentage of term insurance policyholders die “during the term of their insurance policy.” Consequently, many of them convert their term insurance policies to Whole Life or Universal Life before their coverage expires.
  • Term life insurance is less costly compared to other life insurance policies, which makes it popular among people with a modest budget. It is ideal for people between 20 and 30 years who will most likely look for a more permanent option once they turn 50.
  • Despite many term life plans being convertible, many policyholders fail to take advantage of this option. Instead, they prefer to let the term life policy lapse and then buy a new, similar policy or opt out of getting coverage.
  • Many policyholders in their fifties are supporting their grown children who have student-loan debt while some have refinanced their mortgage and renewed for another term.
  • Policyholders in this age group could be divorced or have not saved enough for retirement. Therefore, they are likely to renew their term insurance when their coverage is about to end.


Financial Wellbeing

  • The US has a significant retirement savings gap and life insurers are “positioning their brands around financial wellbeing.” Employers are interested in the financial wellbeing of their employees because it affects their productivity and health.
  • Only a few companies have defined financial wellbeing when it comes to full value propositions or product offerings. These firms believe that consumers need assistance in creating financial plans, making good decisions, and remaining committed to their goals.
  • Northwestern Mutual is an example of a company that is following this trend. The company is positioning itself around financial wellbeing by publishing articles and “how-to” guides on the topic.

Search for New Talent

  • Life insurers are concentrating on revamping their talent base and workforce since many of their staff will retire soon. In addition, several back-office and administrative functions will be carried out using machine learning, artificial intelligence, and bots. Furthermore, life insurers are losing their employees to asset managers and banks because of compensation.
  • The aging workforce gives companies a chance to hire diverse, young workers who have digital and technology skills. Leading life insurance firms are now searching for experience and skills in science, technology, engineering, and mathematics (STEM).
  • New York Life Insurance is an example of a firm that is leading this trend. The company gives students opportunities to launch their careers in technology, finance, and actuarial development

Operational Excellence and Cost Efficiency

  • Many life insurers are compelled to achieve operation excellence and cost efficiency since core processing platforms restrict process automation, digital toolset adoption, cloud migration, and data collection and analysis.
  • Insurers have to formulate a plan to achieve operational excellence that is in line with broader business strategy. Since achieving operation excellence can be challenging, technology leaders and businesses should collaborate to identify processes that require automation and optimization.
  • MassMutual is a company that leads this trend by promoting creativity, open-mindedness, leadership alignment, friendliness, and corporate caring in the organization.

Regulatory Pressures

  • Regulatory issues in the life insurance industry are complex. They focus on issues such as financial reporting and regulation and data privacy and security. As such, insurance firms are constantly working towards managing these pressures.
  • Financial regulations such as the IFRS 17 deadline and the California Consumer Privacy Act remain issues of concern to insurers. The implementation of the Global Capital Insurance Standards will have a significant impact on complementary pension and variable annuity products for US life insurance firms.
  • The Lincoln Financial Group is an example of a company that is leading this trend. The company focuses on complying with privacy regulations while at the same time focusing on its customers’ best interests.

Increased Wealth

  • Personal financial assets are increasing in the mass-affluent and wealthy markets. Between 2015 and 2017, the number of households with over $25 million in assets increased by 10%. In 2018, millionaire households in the US increased by 700,000.
  • Greater wealth has created various business opportunities for life insurers due to an increase in customers.
  • An example of a company that is taking advantage of this trend is Fidelity. The company announced that millionaires who use retirement accounts tripled, which gave life insurers opportunities to come up with value propositions for these segments.

Research Strategy

While we found most of the requested information, we did not find any regarding changes in market distribution rates among diverse types of products within the life insurance industry. We looked at industry sites, such as Ernest & Young and Foleon, however, these sources focused on trends in the life insurance industry. We then attempted to look at the top life insurance firms and their market distribution rates; however, we could not find anything relevant on their websites or on news platforms, such as Forbes, PR Newswire, and Wall Street Journal. For these reasons, we concluded that the requested information is not available in the public domain.