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Investing in insurance stocks

The industry is well-positioned to weather recessions but is vulnerable to legislation.

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The big names in this industry are well-established and have a history of healthy dividends. But not all insurance categories are recession-proof and all must answer to government regulation.

What are insurance stocks?

Insurance stocks are stocks from insurance companies. A variety of subcategories exist in this industry including:

  • Car
  • Health
  • Home
  • Life
  • Pet
  • Travel

Many insurance stocks offer exposure to multiple subcategories by offering a variety of different insurance policies, like Allstate. Other companies specialize in only one type of insurance and offer a more targeted investment opportunity, like Trupanion — a pet insurance company.

Why invest in insurance stocks?

Since the products they offer can be considered a type of staple, insurance companies tend to perform well — both in times of economic strength and in times of economic hardship. Plus, well-established insurance stocks have a history of strong and steady dividends — an added bonus for investors seeking a steady return.

Many insurance stocks are considered recession-resistant. That’s because even in periods of economic downturn, people need to maintain their insurance coverage. The staying power of the industry can’t be understated; insurance has been around for hundreds of years and provides a service we’ll continue to need for the foreseeable future.

Regardless of geographic location or socioeconomic status, people rely on insurance policies to protect them from risk. Ongoing demand helps bolster this industry’s ability to weather periods of recession.

Risks of investing in insurance

Insurance stocks are far from invulnerable, and the same economic conditions that safeguard some categories of insurance may put others at significant risk.

Take health insurance companies as an example. When unemployment rates rise, fewer people are employed and able to pay into employer-sponsored health insurance plans. This impacts the provider’s bottom line and has the potential to detract from the value of its stock.

Insurance providers are also subject to government regulation, which means that new legislation has the potential to impact the market in a powerful way.

Insurance stocks

There are plenty of pure-play insurance stocks available, but with numerous types of insurance on the market, you’ll need to learn more about the individual offerings of each company before you invest. Select a company to learn more about what they do and how their stock performs, including market capitalization, the price-to-earnings (P/E) ratio, price/earnings-to-growth (PEG) ratio and dividend yield. While this list includes a selection of the most well-known and popular stocks, it doesn't include every stock available.

What ETFs track the insurance category?

A variety of options exist for investors interested in insurance ETFs, from property insurance ETFs like the Invesco KBW Property & Casualty Insurance ETF to broader insurance ETFs that capture health, life and property insurance companies, like the SPDR S&P Insurance ETF.

  • First Trust Financials AlphaDEX Fund (FXO)
  • Invesco KBW Property & Casualty Insurance ETF (KBWP)
  • iShares U.S. Healthcare Providers ETF (IHF)
  • iShares U.S. Insurance ETF (IAK)
  • SPDR S&P Insurance ETF (KIE)

Compare trading platforms

Before you can invest in insurance stocks, you need a brokerage account. Explore your options by features and fees to find the account that best meets your needs.

Name Product Stock trade fee Asset types Option trade fee Annual fee
Sofi Invest
$0
Stocks, ETFs, Cryptocurrency
N/A
0%
A free way to invest in stocks, ETFs and crypto.
Robinhood
$0
Stocks, Options, ETFs, Cryptocurrency
$0
0%
Make unlimited commission-free trades in stocks, funds, and options with Robinhood Financial.
Moomoo
$0 for US stocks
Stocks, Options, ETFs
$0
Trade stocks on the US, Hong Kong, Shanghai and Shenzhen markets.
TD Ameritrade
$0
or $25 broker-assisted
Stocks
$0 + $0.65/contract,
or $25 broker-assisted
TD Ameritrade features $0 commission for online stock, but watch out for high short-term ETF and broker-assisted trading fees.
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Compare up to 4 providers

Disclaimer: The value of any investment can go up or down depending on news, trends and market conditions. We are not investment advisers, so do your own due diligence to understand the risks before you invest.

Bottom line

Insurance policies play an important role in our daily lives, and many people rely on insurance coverage to protect them from risk. Generally speaking, the industry is well-positioned to weather the highs and lows of a shifting economy, but each insurance category faces unique challenges.

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