Life insurance premium surges, but coverage is still falling short for many

Despite individual life insurance new annualized premium surging 10% in 2025, the fourth record-setting year in the past five, just over half of Americans (52%) say they own life insurance.

Nearly 100 million Americans report being either uninsured or underinsured.

These are some of the findings of the 2026 Insurance Barometer Study, conducted jointly by nonprofit industry trade associations LIMRA and Life Happens, presented at the Life Insurance and Annuity Conference last week.

While some people may not be able to afford life insurance, the study revealed that 40% of Americans overestimate the cost of a basic 20-year term policy for themselves. Interestingly, around 48% of all survey respondents said they were basing their estimate on a “gut feeling” or “wild guess.”

Younger people, particularly young men, greatly overestimate the cost of life insurance. Only 4% of consumers under age 30 correctly estimated a basic term policy’s annual premium.

“Young men pay a lot in car insurance and don’t realize that because they’re young and healthy they would pay pennies on the dollar for life insurance,” said Steve Wood, research director of LIMRA Markets Research.

The reasons for this may come down to a lack of knowledge or understanding of life insurance. The study, which has been conducted annually for the past 16 years, reveals that 37% of Americans say they are only somewhat or not at all knowledgeable about life insurance.

Consumers research online, but seek human help

When it comes to how they gather information on financial or insurance products, 62% of consumers use social media. This is true among all income levels, with 60% of households making $200,000 or more per year saying they use social media for research.

When it comes to needing more information or having a question about insurance, investments or savings, however, 31% of consumers say they prefer having an in-person conversation.

This is also true for younger generations, with almost one third (29%) of Gen Z and millennial consumers (who have or are seeking a financial professional) preferring in-person conversations. If you add in other live methods like telephone and video chat, that number jumps to 53%.

“When it comes to life insurance, people still want to work with people, including meeting in person," Wood said. "This is true of all generations and income levels. The question is: How can the industry merge the physical and the digital world and make it seamless for consumers?"

This is an opportunity for advisors since the study revealed that less than half (45%) of Americans say they currently have an insurance agent and/or professional primary financial advisor/planner. More than a quarter (26%) of Americans say they don’t have one, but are looking for someone to work with.

The vast majority of those who aren’t exclusive purchasers online (81%) say they’d speak to a human/professional before making an important decision regarding life insurance.

Consumers looking for simplicity

While technology has allowed companies to offer more innovative and complicated offerings, consumers — particularly younger generations — said they want simpler and easier to understand solutions to protect their families’ immediate and future financial security.

This year’s Barometer study asked consumers how attractive they’d find various features and riders – some real and some fictional. They were told to ignore cost and underwriting implications.

Some hypothetical policy add-on features, such as free planning/budgeting or estate planning services, paying for things like rehabilitation or house downpayment/improvements costs, or gym memberships, were less popular.

Instead, Americans would be slightly more interested in policies that allow them penalty-free access to emergency funds as needed. They would also be interested in the ability to customize the policy multiple times based on personal life events and changes, if such a feature were possible.

“Despite listing several innovative and interesting bells and whistles, people still chose final expenses and retirement income as the most attractive features of a life insurance policy," Wood said. "With all the technology advancements, what people want in their policies is simplicity. They want simple, clean policies at a reasonable price."

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Brooke E. Lacey has more than 20 years of experience writing about the financial services industry. Contact her at [email protected]