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Life insurance benefits your family and can be a crucial safety net for them. But do you know how far-reaching the impact actually is? A new report from Prudential and Oxford Economics reveals how life insurance can actually boost the U.S. economy and save taxpayers money.

You buy life insurance to protect your family from the financial devastation your death would bring. But a payout has an impact that goes beyond just one family. The report revealed life insurance payouts can benefit society in the following ways:

  • Lowering poverty levels;
  • Reducing unemployment rates; and
  • Increasing home values.

But how?

How does life insurance lower poverty levels?

As much as we want to believe that everyone is living the American dream (successfully), this isn’t the case. In 2016, more than 40.6 million people in the U.S. lived below the poverty line. And even those above the poverty line still face financial issues.

The hard truth is that the majority of Americans don’t have emergency funds. 60 percent of us would be hard-pressed to come up with even $1,000 at a moment’s notice. Consider that the average cost of a funeral is $7,200. How would a family deal with the financial toll of an unexpected death? Is this their path to poverty?

What does this have to do with taxpayers?

To show just how much of an influence life insurance can have, Prudential and Oxford measured the effects of hypothetical situations. In the year 2016, had there been an increase of just five percent in life insurance payouts, 108,100 people would have been lifted out of poverty or avoided falling into it.

The amount the U.S. government spent on career, technical and adult education programs in 2016 was $16,100 per person.

The impact of a $1 increase on every life insurance death benefit payout:

  • U.S. taxpayers would have saved $0.35 in costs associated with federal welfare payments.

While this doesn’t seem like much at first glance, it’s the total amount Americans could save that’s significant:

  • Total savings: $1.7+ billion

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How does life insurance reduce unemployment rates?

What happens to a small business if an owner or key employee dies unexpectedly? Small businesses are often highly susceptible to financial hardships in these cases. Daily operations can be disrupted and may even cause a business to collapse.

Life insurance on a key person or using life insurance to fund a business buy-sell agreement can save a business should a member key to its success dies.

The death benefit provided by these life insurance policies can keep the business running—and hopefully keep the staff intact—as the surviving owners work to manage the inevitable changes caused by the death.

What does this have to do with taxpayers?

A hypothetical five percent increase in death benefit payouts in 2016 would have prevented 134,200 Americans moving from employed to unemployed.

The amount the U.S. government spent on federal unemployment programs in 2016 was $4,500 per person.

The impact of a $1 increase in death benefit payouts:

  • U.S. taxpayers would have saved $0.12 in costs associated with federal unemployment programs.

While this doesn’t seem like much at first glance, it’s the total amount Americans could save that’s significant:

  • Total savings: $609 million

How does life insurance increase home values?

Sure, it’s fairly easy to see how life insurance can keep people out of poverty. OK, it’ll help keep people’s jobs. But increase in home values? It seems like a stretch, but read on.

For many families, it takes two incomes to pay a mortgage. If an earner dies without life insurance, holding on to, maintaining, and improving a home can be very difficult for the survivors. Homes can fall into disrepair or may have to be sold at a loss or foreclosed on, also driving down the value of neighboring houses.

A life insurance payout can enable a family to remain in their home. Or in the very least, afford them time to grieve and make a plan instead of quickly selling their house under financial pressure.

In an overall picture, houses in well-kept neighborhoods generally demand higher prices. Being able to remain in the family home and properly maintain and improve it increases your house’s value.

A hypothetical five percent increase in death benefit payouts in 2016 equates to an $800 increase in every house’s value.

The impact of a $1 increase in death benefit payouts:

  • Every U.S. home value increases $22.

In 2016, there were 135.7 million housing units in the U.S. which would have totaled a $109 billion increase in household wealth.

Life Insurance Is Beneficial to All

Life insurance and lack thereof has the potential to change lives. Life insurance can be the difference between a child going to college or not. The difference between buying a car so you’re able to get to work on time or losing a job. And the difference between providing your child the basic necessities to survive or applying for government assistance.

You can’t predict your death, but you can protect your loved ones from the unexpected.

Life insurance affects individuals. It affects families. It affects society.

Term Life Insurance Is Affordable and Can Fit into Your Budget

Life insurance doesn’t have to be expensive. In fact, for what it offers, it’s an easy decision to buy term life insurance if you have loved ones to protect.

Term life insurance can be customized to fit into most budgets. There are many term lengths and coverage options to choose from.

Average Term Life Insurance Monthly Premiums for a Healthy Non-Smoking Individual
Age Face Amount 20-Year Term (Males) 20-Year Term (Females) 30-Year Term (Males) 30-Year Term (Females) 40-Year Term (Males) 40-Year Term (Females)
30 $100,000 $10 $9 $13 $12 $19 $16
$250,000 $13 $11 $19 $16 $30 $23
$500,000 $19 $16 $30 $26 $54 $39
$750,000 $26 $20 $41 $35 $78 $56
$1,000,000 $31 $25 $54 $44 $102 $72
40 $100,000 $11 $10 $18 $16 $28 $23
$250,000 $18 $15 $29 $23 $61 $49
$500,000 $29 $25 $50 $40 $113 $90
$750,000 $40 $33 $72 $57 $167 $133
$1,000,000 $50 $41 $93 $74 $219 $174
50 $100,000 $22 $18 $36 $29 N/A N/A
$250,000 $39 $31 $69 $52 N/A N/A
$500,000 $72 $56 $130 $96 N/A N/A
$750,000 $105 $81 $191 $141 N/A N/A
$1,000,000 $134 $98 $248 $182 N/A N/A

Buy what you can afford. Even if you’re in a tight situation in which spending an extra $30 a month may be tricky, imagine what would happen to your loved ones if you suddenly died tomorrow. That tight situation gets even tighter.

Here at Quotacy, we always say that a $100,000 life insurance policy is a million times better than none. A 20-year $100,000 policy for $10 per month can be worth so much more to the family you leave behind.

» Calculate: Life insurance needs calculator

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Life insurance's impact on society infographic


About the writer

Headshot of Natasha Cornelius, a life insurance writer, for Quotacy, Inc.

Natasha Cornelius, CLU

Senior Editor and Life Insurance Expert

Natasha Cornelius, CLU, is a writer, editor, and life insurance researcher for Quotacy.com where her goal is to make life insurance more transparent and easier to understand. She has been in the life insurance industry since 2010 and has been writing about life insurance since 2014. Natasha earned her Chartered Life Underwriter designation in 2022. She is also co-host of Quotacy’s YouTube series. Connect with her on LinkedIn.