Shrinking the life insurance coverage gap with education and awareness

The experiences of beneficiaries who have received a life insurance payout illustrate why coverage can support that level of confidence.

Life insurance beneficiaries say their payout: 

• Covered burial and other final expenses (43%)

• Relieved financial stress during an extremely emotional period (35%)

• Allowed me/my family to maintain our current lifestyle (26%)

• Gave me/my family the time and flexibility to determine next steps (20%)
  
  

Reducing the life insurance coverage gap can help bring peace of mind and protection to more Americans. Currently, half of Americans say they don’t have a life insurance policy, and 7% don’t know if they do. And of those with a policy, 27% say they need to increase their existing coverage.

Underrepresented groups

Focusing on groups that are least likely to have coverage can help boost life insurance ownership. For example:

• Lower income: Income is strongly correlated with having life insurance and as income declines so does policy ownership. Americans with income of more than $100,000 are more than twice as likely to have life insurance than those with less than $50,000 (67% vs. 31%).

• Self-employed: Self-employed individuals are less likely to have life insurance than those working for an employer in the private sector (36% vs. 64%).

• Gen Zers: Gen Zers lag baby boomers considerably in policy ownership (32% vs. 51%).

• Single and never married: Married individuals are significantly more likely to own life insurance than somebody who has never been married (59% vs. 32%).

• No children: Survey respondents without children are significantly less likely to have coverage than individuals with children (33% vs. 55%). 
  
  

Surveyed Americans have a mixed understanding about life insurance. Their responses to a series of questions about life insurance-related concepts demonstrate a basic understanding of the topic, but at the same time reveal key knowledge gaps pointing to educational opportunities, including:

Differentiating between term and permanent life insurance policies

• 59% of Americans incorrectly believe that with term life insurance you can build a cash value that allows you to take steps like make withdrawals, save for the future, or take out a loan.
  Fact: Permanent – not term – life insurance allows individuals to build cash value.

• Only half (53%) recognize that you can buy a term life insurance policy to match the number of years and outstanding balance left on a home mortgage.
  Fact: Flexibility is a key feature of term life policies.

Addressing key Gen Z knowledge gaps

• 1-in-3 Gen Zers (34%) don’t understand that the cheapest time to buy life insurance is when you are younger and healthier.
  Fact: The cheapest time to buy is when you are younger and healthier.

• More than half of Gen Zers (57%) incorrectly believe that with most term life insurance policies, the premium increases every year.
  Fact: Premiums don’t change with most term life insurance policies.

Explaining the life insurance process

• One-third of survey respondents (34%) incorrectly think that medical exams and blood tests are required to qualify for any life insurance policy.
  Fact: Many policies do not require testing and those that do are typically for larger policies.

• 37% incorrectly believe that it takes at least a month to get life insurance approval.
  Fact: Some insurance policy approvals can be completed in as little as one week or less.

Clarifying that employer life insurance isn’t portable

• 43% of Americans incorrectly believe that when you leave your employer, you can typically bring your workplace life insurance policy with you.
  Fact: Employer life insurance is not portable – coverage ends when employment ends.
   

Almost 4-in-10 Americans without life insurance (38%) say cost is the top reason for not buying life insurance, followed by having more important financial obligations (21%). However, individuals are misperceiving the cost of life insurance, with only 10% correctly estimating the $13 monthly premium¹ for a 20-year $250,000 term policy for a healthy 30-year-old.

In fact, more than half of Americans (57%) overestimated the monthly premium, and 32% said they didn’t know what it would cost. Clearing up cost misconceptions could help more people realize that life insurance is more affordable than they may have thought. 
 

The amount needed to cover final expenses is the second most common way Americans determine how much coverage to purchase. Yet only 37% have taken the time to estimate the total potential cost of funeral and end-of-life expenses should they or their spouse pass away. That percentage drops even further to 31% for Americans making less than $50,000.

Underestimating end-of-life expenses

Approximately three-quarters of respondents estimate the average cost of a funeral and end-of-life medical expenses to be greater than $7,500 – generally enough to cover the average cost of a funeral nationwide ($7,736). However, should an individual also need end-of-life medical care, four out of five Americans underestimated the nationwide average total cost ($24,204), potentially financially burdening loved ones should they pass away.²
 

Making it easier for people to buy life insurance may help reduce the coverage gap. Survey respondents say the following processes would make them more likely to buy a policy.

• Having minimal paperwork (39%)

• No medical exam or blood test requirements (38%)

• Being able to apply online (36%)

• Being able to complete the application on my own time (32%)

• Having a financial professional or insurance agent walk me through the process (29%)

In addition, almost three-quarters of respondents (73%) say they would be more likely to buy a life insurance policy if there was a 24-hour online approval process. The reality is that many of the processes that would make individuals more likely to buy life insurance already exist.

Moving people from curious to covered 

Many individuals (41%) have looked into getting life insurance but stopped before buying a policy. More than half didn’t buy a policy because the process was too confusing (24%) or too long (18%), and due to the burden of a medical exam or blood test requirements (12%). Improving awareness of programs that already address these obstacles could nudge individuals to complete the buying process and obtain the coverage they need.
 

Life insurance living benefits³ can be accessed while you are still alive to help cover things like medical expenses, college costs, or retirement income needs. When asked about living benefits offered through certain types of life insurance policies, more than 80% of respondents say these benefits would be valuable for:

• Covering emergencies (87%)

• Receiving financial support when facing a critical medical diagnosis (86%)

• Covering long-term care costs, such as nursing home or at-home care (84%)

• Having a savings benefit that grows tax-free and can be borrowed against (82%)

These life insurance living benefits closely align with what Americans say are their top financial concerns: unexpected expenses, running out of money in retirement, long-term care costs for myself or a family member, and health care costs in retirement.

The appeal of building cash value and taking advantage of various living benefits features appears to resonate with individuals in the market to purchase life insurance. Survey respondents planning to purchase life insurance are more than twice as likely to buy permanent life insurance than a term policy (62% vs. 26%).
 

Greater education about life insurance benefits can help reduce the coverage gap, and at the same time, provide individuals with more options to address their financial concerns and meet their financial goals.

At Corebridge, we’re committed to helping Americans better protect their families with life insurance for a more secure and worry-free financial future.

Learn more about life insurance solutions from Corebridge Financial or talk to a life insurance professional today.

We believe great things can happen when people take action. Action is everything. 

¹Female, 30-year-old, preferred non-tobacco, Select-a-Term, $250,000, 20-year duration; rates as of May 15, 2025.

²Ashlee Valentine, "The most expensive states to die in, ranked," Forbes Advisor, September 13, 2023. https://www.forbes.com/advisor/life-insurance/most-expensive-states-to-die-in/

³Terms and limitations apply to life insurance living benefits. Living benefit features and riders may vary from policy to policy and insurer to insurer.

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