Consumers still believe life insurance costs too much

Why don’t consumers buy life insurance? There are many reasons, but a big one is that consumers are likely to overestimate the cost of coverage.

That is one of the takeaways from the 2025 Life Insurance Barometer, conducted by LIMRA and Life Happens. Results from the barometer survey will be presented during the 2025 Life and Annuity Conference, hosted by LIMRA, LOMA, American Council of Life Insurers and the Society of Actuaries.

Steve Wood, LIMRA research director, consumer markets, said survey respondents were asked how much they believed life insurance would cost for them, and found that many believe the cost of coverage is much more than it actually is.

“We were able to look at the age they rate themselves, how healthy they are and their gender, and then come out with metrics as far as how much people overestimate the cost,” he said. The study had a particular focus on Generation Z and millennials as they are soon to be a key demographic for life insurers.

Consumers overestimate cost of term life

He said the study found Gen Zers and millennials who rated themselves in excellent health overestimated the cost of a $250,000 level term life policy anywhere from six to 10 times above its actual cost.

The study also asked consumers how knowledgeable they are about life insurance and found that 41% of those surveyed said they aren’t knowledgeable about it.

“Although that sounds like a slightly alarming percentage, it's probably more like 41% really don't know the ins and outs of life insurance,” Wood said. “And with all the different types of policies, the regulations and the riders – who understands the underwriting and mortuary tables and all that?”

The survey also showed that 48% of women said they are not knowledgeable about life insurance as opposed to 31% of men who said their knowledge about the product falls short.

Gen Zers were more likely than those of any other age group to overestimate the cost of life insurance – by a lot, Wood said. He attributed that finding to Gen Zers being more familiar with the cost of auto and home insurance, products whose premiums have skyrocketed in recent years.

The percentage of consumers who reported owning life insurance remained steady at 51%, Wood said, with much of that coverage coming from employer-sponsored life insurance.

Social media continues to influence the life insurance purchasing decision, the study showed. Wood said a 62% of all consumers and 80% of Gen Zers they obtain information about life insurance from social media platforms such as TikTok as well as from podcasters.

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