How life insurance closes the financial confidence gap

In today’s dynamic economic landscape, Americans are seeking greater financial confidence and security. Although challenges such as inflation, market volatility and rising living costs create uncertainty, they also present unprecedented opportunities for insurance professionals to help clients build stronger, more resilient financial foundations.

New York Life’s recently released Wealth Watch survey reveals that while 92% of American adults report having some financial concern in the current economic environment, there are proven strategies that can dramatically improve financial confidence and outcomes.

Market intelligence: What the data reveals

The survey data reveals a market ripe with opportunity: More than 1 in 3 adults (35%) have delayed or are considering delaying retirement, citing lack of savings (51%), inflation (46%) and the changing economic environment (32%) as primary drivers. Among those delaying retirement, nearly half (47%) plan to postpone it by at least five to 10 years past their desired date.

Perhaps most telling for the insurance industry: Only 23% have a formal retirement strategy, and a mere 17% are working with a financial professional. This gap between confidence and preparation is exacerbated by the fact that 43% of adults now carry credit card debt averaging $6,879.17 per cardholder — a 7.3% increase from 2024. 

The key to addressing these concerns lies in closing what we call the “financial confidence gap” — the difference between where people feel they are financially and where they want to be. This gap is particularly pronounced when it comes to financial preparedness, with many Americans feeling uncertain about their ability to handle unexpected expenses, manage debt effectively or secure their financial future. 

The market opportunity behind the gap

The Wealth Watch data reveals several compelling trends that savvy insurance professionals can capitalize on. Most significant, 71% of adults are actively adjusting their financial habits this year, with 40% cutting discretionary spending and 29% making changes to their budgeting and financial strategy. This behavioral shift indicates heightened receptivity to financial guidance and protection solutions. 

The retirement planning landscape presents particularly strong opportunities. With 42% of adults actively planning for retirement but only 17% working with financial professionals, the market penetration opportunity is substantial. More telling is that 60% of adults are confident they can save enough for retirement, yet nearly a third (32%) aren’t sure they won’t outlive their savings — a classic financial confidence gap that life insurance and annuity products are uniquely positioned to address together. 

Confidence-building financial strategies 

Financial professionals are uniquely positioned to help clients bridge this financial confidence gap through proven strategies that go beyond traditional financial advice. Research at New York Life has identified three key behaviors that are consistently associated with improved financial confidence and outcomes: 

» Owning protection products such as life insurance
» Working with a financial professional
» Having a comprehensive financial strategy in place 

The power of professional guidance 

The impact of these behaviors on closing the financial confidence gap is remarkable and presents clear business advantages for insurance professionals. Consider the confidence boost that comes from owning protection products: 85% of individuals who own protection products such as life insurance report feeling confident in their ability to meet their financial goals, compared to only 58% of those without protection products. 

When it comes to debt management, protection product owners feel significantly more capable (40% versus 24% for non-owners). For emergency preparedness, the gap is also pronounced, with 35% of protection product owners feeling prepared for financial emergencies compared to just 18% of those without protection products. 

The value proposition for working with financial professionals is even stronger. Those who work with a financial professional report feeling more equipped to manage debt (53% versus 26% for those without professional guidance) and substantially more prepared for financial emergencies (50% versus 19% for those going it alone). Most important for retirement planning, 87% of those working with financial professionals feel confident in their ability to save enough to last through retirement, compared to only 49% of those without professional guidance. 

Bundling these proactive behaviors into a holistic strategy creates even greater benefits in closing the financial confidence gap. People who work with a financial professional and own protection products are far more likely to have retirement savings (75%) compared to those who don’t do either (22%).

Industry opportunity 

Despite these clear benefits, a significant knowledge gap persists about the value these key behaviors provide. Many individuals don’t know where to begin when it comes to financial planning, or they may not understand the importance of doing so at all. This is where the financial services industry has both an opportunity and a responsibility to educate, empower, and guide more people through holistic planning that can effectively close their financial confidence and protection gaps.

Life insurance as a strategic foundation 

Meeting client demand. During times of economic uncertainty, we often see a renewed interest in life insurance. Consumers are focused on protecting what matters most, including their families and their futures. This desire for stability and security drives many to consider life insurance as a reliable means of building a financial foundation. 

However, misunderstandings persist about the role life insurance plays in a comprehensive financial strategy. People often think about the death benefit life insurance provides, but life insurance can also add flexibility and long-term value, making it foundational to closing the financial confidence gap through holistic financial planning. 

Different types of life insurance policies can address a wide range of needs and contribute to greater financial confidence. For example, whole life insurance not only provides a death benefit but also functions as an asset class in its own right. It offers living benefits, including access to cash value that can be used for emergencies, educational expenses or retirement income. This dual-purpose nature makes it a powerful tool for clients seeking both protection and growth while building their financial confidence. 

Beyond protection: Strategic applications. Life insurance can also play a strategic role in tax diversification and legacy planning. For clients who have maxed out traditional retirement vehicles, a permanent life insurance product with tax-advantaged cash value growth can be an additional tool. These policies can help clients manage tax exposure and provide a legacy for their heirs. 

Beyond these benefits, life insurance can serve as a conversation starter that opens the door to improved finances across the board. When clients begin to understand how life insurance fits into their broader strategy, they often become more engaged in discussions about budgeting, debt management, retirement planning and estate planning. This engagement creates a ripple effect, encouraging more best practice financial behaviors and fostering a deeper relationship between you and your clients while systematically closing their financial confidence gaps. 

The path forward 

Our research supports the fact that this approach has far-reaching benefits. Clients who view life insurance through the lens of holistic planning are more likely to experience both short-term peace of mind and long-term financial confidence. 

By offering guidance on often-overlooked features — such as flexibility to convert to a new type of policy without underwriting, riders that could address future critical illnesses and customization of premium payments — you can uncover added value and customization opportunities that align with your clients’ evolving needs. 

Financial professionals play a critical role in helping clients understand the value of life insurance and how it supports their broader goals while closing their financial confidence gaps. By offering clear, compassionate and informed guidance, you can help clients make decisions that not only protect their loved ones but also empower a forward-looking financial strategy that builds lasting confidence and security.

Ramon Casanova is head of life insurance solutions at New York Life. Contact him at [email protected].