Life insurance ownership in the U.S. 2020
In 2020, 54 percent of Americans owned life insurance. Life insurance is a contract between an insurer and a policyholder, which is a form of financial protection for named beneficiaries of the insured person in case of their death. In 2019, 37 percent of policyholders said that they owned life insurance to replace income, whereas 30 percent said it was to cover burial or final expenses.
Reasons why Americans don’t have life insurance
However, there are still many Americans without life insurance for a variety reasons. Over half of those surveyed in 2019 who didn’t own life insurance said that it was too expensive. Almost one fifth of the respondents said that they didn’t think they needed it. There are also several misconceptions about life insurance among those without it, such as beneficiaries having to pay income taxes on the death benefit, which is untrue. The proceeds of life insurance aren’t taxable and don’t have to be reported to the IRS, but any interest received is taxable.
Reasons why Americans don’t have life insurance
However, there are still many Americans without life insurance for a variety reasons. Over half of those surveyed in 2019 who didn’t own life insurance said that it was too expensive. Almost one fifth of the respondents said that they didn’t think they needed it. There are also several misconceptions about life insurance among those without it, such as beneficiaries having to pay income taxes on the death benefit, which is untrue. The proceeds of life insurance aren’t taxable and don’t have to be reported to the IRS, but any interest received is taxable.
