Why Americans Are Investing In Life Insurance Stocks To Build Wealth

December 13, 2022 at 19:23 PM EST

According to statistics, 52% of Americans had life insurance in 2021. In addition, the second quarter of 2021 saw a 21% increase in life insurance premiums, the biggest year-over-year increase since the third quarter of 1987. The rise was attributed to the COVID-19 pandemic.

The life insurance business involves selling and underwriting annuities and policies against claims. In return, the carriers earn money through premiums paid by their clients. With many people taking out life insurance policies, investing in these stocks can build short-term and long-term wealth.

Are many Americans investing in life insurance stocks in 2022? Herein, we share examples of these stocks and why Americans are buying them in 2022. Read on.

Stock Market Performance In 2022

2022 has been a rollercoaster for the stock market and the economy in general. While a lot has been happening, including the just concluded midterm elections, several factors have played a role in the bearish tendencies of the market this year.

It’s evident that inflation has been skyrocketing throughout the year, and interest rates are rising due to the Fed’s aggressive fiscal and monetary prices. Whereas it’s been painful for most investors, it has been a good year to buy and hold stocks. Like other stocks, investing in life insurance stocks is one of the ways to build wealth over time.

Some of the Life Insurance Stocks Americans Are Buying In 2022

There are several life insurance stocks that Americans have been buying in 2022. One is Lincoln National Corporation (LNC), which is a large annuities and life insurance provider. The company has been in business since 1905 and has a long history of paying dividends to shareholders. LNC currently has an average dividend yield of 3.76%.

Another life insurance stock is Prudential Financial (PRU), one of the world’s largest life insurers. It has operations in the U.S., Asia, and Latin America. In addition, the company has a strong financial position and offers various products, including annuities and investment management services. PRU currently has a dividend yield of 2.6%.

UnitedHealth is another stock with a history of being shareholder-friendly. Since 2010, it has boosted the dividend yearly and spends enormous sums on share repurchases. The corporation also owns Optum, which offers technology and analytics to the healthcare industry. Through mid-2022, UnitedHealth has had total returns for investors of 900%, more than tripling the output of the S&P 500 during the same 10-year period.

MetLife (MET) is another large global insurer that offers a wide range of products, including annuities, life insurance, dental coverage, and vision plans. It has been in business since 1868 and pays shareholders a dividend yield of 2.2%.

Each of these companies has a long history of paying dividends to shareholders and offers various products to meet customers’ needs.

Advantages Of Investing In Insurance Stocks

One of the main reasons why American investors are attracted to life insurance stocks is the potential for high returns. Many of these companies have strong fundamentals and are well-positioned to grow their businesses. In addition, because they tend to be less volatile than other types of stocks, they can provide stability during periods of market turmoil.

Another key advantage of investing in insurance stocks is the ability to hedge against market volatility. These companies often hold large amounts of cash and investments, which can help buffer them against down markets.

Their stock prices are less sensitive to short-term economic fluctuations because they typically have long-term liabilities. Thus this makes them an attractive investment for those looking to protect their portfolios from downside risk.

Further, life insurance stocks offer investors diversification benefits due to their low correlation with other asset classes. It means they can help balance a portfolio and reduce overall risk. For example, if the stock market were to decline, these stocks would likely hold up better than most other investments.

Risks Of Life Insurance Stocks

There are a few risks to investing in life insurance stocks, but they are generally considered lower risk than other investments. One risk is that the insurance company may be unable to pay out claims if it becomes insolvent.

Another risk is that the death benefits paid out by the life insurance policy may not be enough to cover the costs of the final expenses, leaving the beneficiaries with a financial burden. Finally, there’s always the chance that the stock market will crash and take your investment along with it.

Conclusion

Whether you’re looking to buy insurance stocks on the stock exchange or life insurance quotes online as a safeguard for your loved ones, understanding the background of the companies is crucial. The insurance industry represents a more conservative investment option, which means that your money is less likely to fluctuate daily in these stocks.

There are many advantages to investing in life insurance stocks, including the potential for significant returns, the ability to hedge against market volatility, and the diversification benefits of investing in a non-correlated asset class.

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