Data reveals that there’s an underinsurance crisis that’s being felt by millions of Millennials just as they’re making major life decisions – and as it turns out, this crisis could result in partners and loved ones not having financial protection at a time when they may need it the most.

It’s estimated that 47% of Millennials need more – or any - life insurance coverage.¹ Unfortunately, this underinsurance crisis is happening at a time when Millennials are getting married, buying homes, and having children – milestones that make having life insurance coverage essential.

Why is this underinsurance crisis hitting this particular generation so hard? And what can be done to close this insurance gap?

In their most recent Insurance Barometer Study, LIMRA and Life Happens identified seven critical drivers behind this phenomenon:²

1. Perceived cost (48%)
2. Other financial priorities (35%)
3. Procrastination (30%)
4. Not sure how much or what type I need (29%)
5. Don’t like thinking about death (15%)
6. It is not offered by my employer (14%)
7. No one has approached me about it (9%)

It’s worth noting that Gen X and Gen Z are also feeling cost-conscious; both generations marked perceived costs (52% and 39%, respectively) and other financial priorities (38% and 40%, respectively) as the top reasons why they don’t have enough (or any) life insurance coverage.³

It’s not surprising that “perceived cost” is listed as the top reason why Millennials don’t have life insurance, considering that they’re currently experiencing significant financial demands and pressures unlike generations before them. In fact, a 2023 study found that a whopping 73% of Millennials are living paycheck-to-paycheck, thanks to rising inflation, car loans, and credit card debt.⁴

Millennials are also more likely to be grappling with medical debt than other generations, with 11% citing medical bills as a top reason for debt. Comparatively, only 8% of Gen Z and Gen X and 6% of Baby Boomers listed medical bills as one of their primary debt drivers.⁵

The costs of caregiving – whether it’s paying for childcare or taking care of aging parents – is also taking its toll on Millennials. In a Goldman Sachs report, 79% of surveyed Millennials said that caregiving will undermine their own progress towards retirement goals, while 64% had either paused saving for retirement or drew down their savings.⁶

The end result: a generation of would-be policyholders who feel pressured to put their money towards other priorities, rather than life insurance coverage.

Millennials are understandably busy, between work, parenting, and taking care of aging parents. Carriers aiming to close this insurance gap should make product education accessible and straightforward, enabling Millennials – and other generations – to make informed, more confident decisions about their coverage.

Eighty percent of adults under 45 rely on social media to research financial and insurance products.⁷ Nearly half of Millennials and Gen Z adults value recommendations from influencers and experts, representing a key opportunity for carriers who want to show up in pivotal moments where people may be more open to buying a life insurance policy.

Millennials and their Gen Z counterparts are more likely to overestimate the cost of a life insurance policy. With perceived costs as the top reason why Millennials remain underinsured, it’s important for carriers to offer price transparency as much as possible.

Millennials have plenty of financial priorities to manage, which is why carriers may want to focus on creating more flexible life insurance products that can help them prepare for their financial futures.

While 44% of Millennials prefer shopping online for life insurance solutions, one in four Millennials prefer using a financial advisor to help with life insurance shopping, indicating that this generation still values expert-led, human guidance with important purchases.⁸

While the Millennial underinsurance crisis may seem like a generational issue, the truth is that it’s an industry one. Education barriers, coupled with pricing misconceptions and outdated marketing, have made it so younger Americans are choosing to forgo coverage simply because the perceived value of a policy doesn’t stack up to their competing financial priorities.

For carriers to close this gap, the emphasis should be on value-creation, showing up where Millennials are actually shopping, and building more affordable and transparent products.