It is also possible that industry changes have affected life insurance purchases. Over the past two decades, many insurance companies “demutualized” by shifting from being owned by policyholders to being owned by shareholders. Mutual insurance companies appear more inclined to sell life insurance, and so this broader industry trend may be affecting how policies are advertised and sold. Evidence suggests that term life policies became cheaper as they became more widely available on the internet, which may be why term policies have declined less dramatically than cash value policies have.
Finally, although fewer people are buying life insurance, those who do are buying more valuable policies. Apparently, while some families are deciding insurance isn't worth buying, others consider it such a good idea, they're buying more. That only makes the puzzle harder to solve.
This column was provided by Bloomberg News and does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners. Peter R. Orszag is a Bloomberg View columnist. He is a vice chairman of investment banking at Lazard. He was President Barack Obama’s director of the Office of Management and Budget from 2009 to 2010 and the director of the Congressional Budget Office from 2007 to 2008.