Life Insurance Losses (2024)

First of all, what do you know about all Life Insurance Losses?

Well, the business of insurance in the United States is classified into three broad sections: life insurance, health insurance, and property and liability insurance.

Altogether it provides about 1,490,000 jobs and has responsibility for assets of more than $289 billion.

But its greatest significance in the American economy is as an absorber of personal and business risks.

The property and liability segment of the insurance business is responsible for assets which at the end of 1971 totaled about $66 billion.

It provides hundreds of forms of financial protection against virtually every known peril.

The business of property and liability insurance employs an estimated 640,000 persons.

About half of these are employees of insurance companies, and about half are agents and brokers, and others are engaged in agency or brokerage operations.

There are nearly 6,000 insurance companies domiciled in the U. S. Some of these companies sell all lines of insurance; many specialize in one or more fields.

More than 2,700 companies sell some form of property and liability insurance, and related lines, including inland marine coverages and surety and fidelity bonds.

A vast majority of the business is written by about 900 companies that operate in all or most states.

The property and liability insurance business play a major role in keeping the American economy moving.

Insurance coverages backstop the extensive commercial and consumer credit system of our nation.

Further, surety bonds are required on almost all commercial construction and public works, to protect against loss in the event the contractor fails to satisfy his obligations.

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In large part because of insurance coverages, the American businessman, the American homeowner, the American housewife—in short, the American people—have more financial protection and a greater sense of security than any people anywhere have ever enjoyed in the history of the world.

Table of Contents

LIFE INSURANCE FACTS ABOUT LOSS

A SUMMARY OF LOSSES

Natural and man-made perils—such as fire, windstorms, accidents on and off the highways, crime, and riots—take a steadily increasing toll on life and property, with a staggering economic loss to the nation. Most of these losses directly impact insurance claims—and an indirect impact on insurance rates.

FIRE LOSSES

Life Insurance Losses (1)

Every day, almost7,000 fires happen in the United States. Every 46 seconds, on average, fire breaks out in a home.
Every 43 minutes, fire claims a life.

In 1971, fire losses in the United States totaled $2,245,835,000, not counting losses from aircraft, motor vehicles, forests, and other non-building fires. Fourteen fires causing damage of $3 million or more each occurred during the year.

Fires in homes account for almost 70 percent of the nation’s building fires and about 32 percent of the dollar fire losses.

Faulty cables and electrical appliances edged out heating and cooking-related purposes as the principal cause of building fires in 1971.

Between them, they were blamed for nearly 35 percent of all building fires of known causes.

ACCIDENT LOSSES

Accidents, the fourth leading cause of death, claimed the lives of approximately 115,000 persons in the United States in 1971. Only heart conditions, strokes, and cancer take more lives.

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Injuries from accidents of all kinds numbered an estimated 11.2 million in 1971.

AUTOMOBILE ACCIDENTS

Life Insurance Losses (2)

Traffic fatalities in the United States declined slightly in 1971, to 54,700 from the 1970 toll of 54,800.

However, slight increases in the number of accidents (22.1 million to 22.65 million) and injuries (4.98 million to 4.99 million).

Together with the rising costs of auto repairs and medical care helped push the estimated dollar cost of highway accidents to an all-time high of almost $16.9 billion.

About 91 percent of all traffic accidents in 1971 were reported to involve improper driving.

Speeding was listed as a factor in about 33.5 percent of all fatal accidents, and about 50 percent of the fatal accidents involved drinking drivers.

Although only 21.6 percent of the nation’s motoring population is under age 25, drivers age 24 and younger were involved in 35 percent of all reported accidents and 33.8 percent of fatal accidents in the United States in 1971.

OTHER ACCIDENTS

Accidents in the home accounted for 27,500 deaths in 1971, slightly more than in the previous year. Accidents at work took about 14,200 lives, but the number of fatalities per 100,000 workers reached an all-time low of 18.

The number of work injuries increased by about 100,000 to an estimated 2.3 million.

Accidents involving commercial or private aircraft killed an estimated 1,525 persons in 1971, 125 more than in 1970.

CRIME LOSSES

The nation’s overall crime index rose by about 6 percent in 1971. Crimes against property showed a 7 percent increase, with robbery up 11 percent, burglary up 9 percent, larceny up 7 percent, and auto theft up 2 percent.

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MISCELLANEOUS

Thirty-one times during 1971, wind or hail storms struck areas of the United States causing property damage above $1 million.

Tropical storm Doria, which struck the Atlantic coastal states in August caused insured losses estimated at $13.5 million, while a series of tornadoes, wind, and hail storms did an estimated $13 million in insured damage in nine central and southern states in May.

From an insurance standpoint, the year’s most costly catastrophe was the earthquake and resulting fires that struck Los Angeles County in February and caused insured damage of approximately $31.6 million.

Life Insurance Losses (2024)

FAQs

Can a life insurance policy lose value? ›

With variable universal life insurance your cash value growth is tied to sub-accounts containing investments of your choice, usually bonds and mutual funds. But you could lose money in the cash value based on the performance of the investments you choose.

What is the loss ratio for life insurance? ›

What Is a Loss Ratio? Loss ratio is used in the insurance industry, representing the ratio of losses to premiums earned. Losses in loss ratios include paid insurance claims and adjustment expenses. The loss ratio formula is insurance claims paid plus adjustment expenses divided by total earned premiums.

Is decreasing life insurance worth it? ›

Typically, decreasing life insurance is often the cheapest option, mainly because of the reducing amount paid out if you pass away, compared to level cover where the payout remains the same throughout the length of your policy.

What is the cash value of a $100,000 life insurance policy? ›

However, most people receive around 20% of the face value on average, according to LISA. So, if we're using that 20% average to calculate the cash value of a $100,000 life insurance policy, the cash value of the policy would be $20,000.

Can you stop life insurance and get money back? ›

Key takeaways for canceling your life insurance

If you just bought your policy, you can back out during the “free look” period and receive a full refund. Free look periods vary by state but typically last 10 to 30 days. You have term life insurance you no longer want. You can simply stop paying premiums and walk away.

Why do people avoid life insurance? ›

What are reasons not to buy life insurance? Reasons not to buy life insurance can include not having beneficiaries, not having beneficiaries who need financial support in the event of your death, or not having enough cash flow to pay for premiums.

Why is life insurance not a good investment? ›

Any permanent life insurance policy with a cash value can be used to invest — but for most people, it isn't the best strategy due to high costs and low returns. Buying a term life policy and contributing to a 401(k) or IRA account is often a better option.

What is the major problem with life insurance? ›

One disadvantage of life insurance is that the older you are, the more you'll pay for a policy. This is because you're more likely to pass away during the policy period than a younger policyholder and will, in turn, cost the life insurance company more money.

What is an ideal loss ratio? ›

With all that in mind, many companies consider a loss ratio between 60% and 70% to be acceptable. That gives them enough leftover to pay expenses and set aside reserves. The acceptable loss ratio does, however, vary wildly from company to company.

What percentage of income should go to life insurance? ›

A common rule of thumb is at least 6% of your gross income plus 1% for each dependent. A stay-at-home parent should get enough life insurance to cover the costs incurred by the family if anything should happen to them.

What is the ultimate loss ratio? ›

Ultimate Loss Ratio: The ultimate loss ratio is calculated by dividing the total ultimate losses by the total earned premiums. This ratio measures the percentage of premiums that will ultimately be paid out in claims.

At what age should you drop life insurance? ›

Many people in their 60s and 70s may no longer need life insurance. They may have already paid off the house, stopped working, sent the kids off to care for themselves or accumulated enough assets to offset the need for life insurance. But sometimes buying or maintaining a life insurance policy over age 60 makes sense.

Is it better to save or have life insurance? ›

In short: Savings may be sufficient for the short term, but it likely won't be enough should your financial needs change. Only life insurance can adequately support you through such adjustments. Get a life insurance quote online now or use the table below to start reviewing some options.

When should I drop my life insurance? ›

You shouldn't hesitate to cancel a life insurance policy—or allow it to expire—if you've identified that you no longer need it. Could my family lose our house or car? Do I have any present or future financial obligations? Will my family be able to keep up with daily expenses without me?

Why would cash value of life insurance decrease? ›

Simply put, your cash value and death benefit may decrease if your investments do not perform well. It also offers: Protection for a lifetime, as long as the contract retains its value.

What is the cash value of a $25,000 life insurance policy? ›

Examples of Cash Value Life Insurance

An example is a cash value life insurance policy with a $25,000 death benefit. Assuming you don't take out a loan or withdraw, the cash value accumulates to $5,000. After the policyholder's death, the insurance company would pay out the full death benefit, which would be $25,000.

Why does my life insurance have no cash value? ›

Term life insurance

It is sometimes called “pure life insurance” because, unlike whole life insurance, there's no cash value to the policy. It's designed solely to give your beneficiaries a payout if you die during the term. Most individual term policies have level premiums, so you pay the same amount every month.

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