The Wider Role of Life Insurance in Our Society

Life insurance has long served as a crucial financial safety net for families and households experiencing the loss of a loved one. In 2019, the life insurance industry benefits and claims reached over $760 billion according to the Insurance Information Institute. These death benefit payments to beneficiaries often provide a vital lifeline at a difficult time: helping make up for lost income so rent/mortgages and child-care costs can continue to be paid, protecting savings from being depleted, paying off debts, or covering the estate taxes that arise when someone dies. This is important given that 63% of workers say it would be very or somewhat difficult to meet their current financial obligations if their next paycheck were delayed for a week.

But beyond this, life insurance plays a wider role—helping to protect and boost the health of the U.S. economy by:

Lowering poverty levels

Life insurance payouts help protect household incomes. When a primary income earner passes away, payouts may provide enough of a cushion to help lift a family out of poverty or prevent them from entering into poverty altogether.

Reducing unemployment rates

Life insurance acts to stabilize businesses and minimize disruptions in the face of the unexpected, allowing them to continue to operate and safeguard jobs.

Increasing house prices

Life insurance payouts—especially in the event of a primary income earner’s death—can help homeowners maintain their homes and take their time making decisions, rather than selling their homes quickly under economic duress or being forced into foreclosure. This ultimately boosts both home and neighborhood desirability, since houses in well-kept neighborhoods generally demand higher prices, and also reduces the availability of housing stock in the U.S.—further boosting house prices. In fact, for every $1 in life insurance payouts, the sum of all national home values increases by approximately $22.

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