Speak with an experienced advisor! According to the National Association of Insurance Commissioners or NAIC for short: About $163,000 is the average Face Amount of Individual Life Insurance policies for calendar year 2017. The Average yearly face amount, changes each and every year.
Calendar Year 1997: Average Face Amount (Individual Policy): $103,000
Calendar Year 1999: Average Face Amount (Individual Policy): $120,000
Calendar Year 2001: Average Face Amount (Individual Policy): $114,000
Calendar Year 2003: Average Face Amount (Individual Policy): $128,000
Calendar Year 2005: Average Face Amount (Individual Policy): $157,000
Calendar Year 2007: Average Face Amount (Individual Policy): $175,000
Calendar Year 2009: Average Face Amount (Individual Policy): $172,000
Calendar Year 2011: Average Face Amount (Individual Policy): $162,000
Calendar Year 2013: Average Face Amount (Individual Policy): $165,000
Calendar Year 2015: Average Face Amount (Individual Policy): $160,000
Calendar Year 2017: Average Face Amount (Individual Policy): $163,000
*All numbers are approximate and rounded to the nearest $1,000 mark.
What is a Face Amount?
A face amount is closely associated with the death benefit. For many consumers they are essentially the same thing: "The term death benefit can also be referred to as the DB or simply the benefit amount. The term 'Face Amount' is similar in nature. It refers to the initial coverage amount of a policy. With some types of life contracts (whole / universal) the face amount can grow a higher death benefit."
According to the Business Dictionary - the Face Amount is defined as: "Insurance: Sum of money for which an insurance cover is obtained, usually shown on the top sheet (face) of the policy. In life insurance, face amount is the sum paid on the policy's maturity date, on the death of the insured, or (if the policy terms permit) on his or her total disability."
When purchasing any type of Life Insurance Contract the major initial variables concerned include: The Face Amount, Coverage Length (or Term), and Yearly Annual Premium.
They coincide with the four parties to the insurance contract: The Insured, the Policyowner, the Beneficiary, and the Insurer.
Where is the Face Amount Displayed?
A face amount is displayed on the top sheet of the life insurance contract. Caution a Face Amount may not be the current Death Benefit of a Policy for several reasons, including policy loans and or other changes to the policy.
What Does the Average Face Amount Have to Do with Me?
From a consumers standpoint, knowing the average face amount written in any given year, probably helps very little. However if you are wondering if you are crazy wanting to purchase a $170,000 faced value life contract - rest assured this is very near the average coverage amount.
From an Insurer and Insurance Agents standpoint, these numbers help to highlight the overall lack of life insurance coverage in America. Many financial experts recommend ten times earnings and Suze Orman even 20 times earnings. One tenth of $163,000 is $16,300. According to CNBC (via Bureau of Labor and Statistics) the average income of an American from ages 25 to 34 is just over $40,000. That average person would want perhaps $400,000 in life insurance. This points to a large insurance gap, in my opinion. [Of note - some of the people may have two policies.]
Average Individual Life Insurance Face Amounts:
2017: Average Face Amount $163,000
2015: Average Face Amount $160,000
2013: Average Face Amount $165,000
2011: Average Face Amount $162,000
2009: Average Face Amount $172,000
2007: Average Face Amount $175,000
2005: Average Face Amount $157,000
2003: Average Face Amount $128,000
2001: Average Face Amount $114,000
1999: Average Face Amount $120,000
1997: Average Face Amount $103,000
What Does the Average Face Amount Say About the Overall Economic Situation?
The data shows that the average face coverage amount in 2007 peaked at $175,000 and has drifted down for the past ten years. This may be considered leveling off, it is difficult to say.
The National Association of Insurance Commissioners Report can be found here.
Thank you for Reading.
