Does life insurance have a role to play in supporting society and reducing the cost of government safety nets? At first blush, it may seem an odd question. After all, life insurance benefits are paid directly to the beneficiaries of their policyholders—not the public at large. Still, it stands to reason that the greater the number of people who are financially self-sufficient—for whatever reason—the lighter the burden on government programs and charitable organizations aimed at helping the financially distressed. That’s particularly worth considering right now, when many government budgets are stressed even though we are nine years into one of the longest economic expansions in U.S. history.
To understand more concretely how life insurance proceeds help support communities and benefit the common good, Prudential commissioned Oxford Economics to examine the relationship between life insurance payouts and various societal outcomes over a 16-year period—the first such research, we believe, of its kind. While the findings suggest a clear link between the two, we invite others to look further into this topic to more fully understand the socioeconomic impact of life insurance, particularly as it relates to government and other financial safety nets. Such research offers insights as to how private solutions may help alleviate some pressure on certain government programs.