Life Insurance Ownership Has Fallen for Three Decades. Young Adults Are at the Center of the Drop

When LIMRA and Life Happens researchers asked healthy adults between 18 and 30 to estimate what a basic life insurance policy would cost them, the median answer was roughly $900 a year. Then researchers showed participants the true price: about $192 a year for a $250,000, 20-year term policy for that age group. Some participants still did not believe the number. “Even when young adults were presented with a true median cost of an insurance policy, some participants still doubted us,” said Bryan Hodgens, senior vice president and head of LIMRA Research. “This remains one of the biggest challenges for our industry to overcome.”

That gap between perceived and true cost is not the only reason young adults go uninsured. Life insurance ownership in the U.S. has fallen for more than three decades, from 76.7% of households in 1989 to 56.0% in 2022, a sustained drop that surprised Federal Reserve Bank of Chicago researchers who first documented it. Rising incomes, higher education levels and the growth of two-earner households over that period would have predicted modest ownership gains. Instead, ownership fell steadily. Among young adults, the drop is compounded by delayed life milestones, cost misperception and limited product knowledge, which feed on one another.

LIMRA’s 2025 Insurance Barometer Study puts total life insurance ownership among U.S. adults ages 18 to 75 at 51%. Gen Z and Millennial adults own at rates below that average. What sets young adults apart from other lower-ownership groups is the scale of recognized need: 54 million Gen Z and Millennial adults say they need life insurance or more of it than they currently carry.

The fall in life insurance ownership is one of the most consistent trends in U.S. consumer finance over the past three decades. ACLI’s 2025 Life Insurers Fact Book, drawing on Federal Reserve Survey of Consumer Finances data, documents a steady decline: 69.2% of households owned some form of life insurance in 1998, 62.6% in 2010, 60.1% in 2013 and 56.0% in 2022. The Chicago Fed traced the 1989 baseline at 76.7%, a 16.5-point drop to 60.2% by 2013. The ACLI household series, a separate Survey of Consumer Finances tabulation, continues that decline to 56.0% by 2022. Both measures point the same direction.

The Chicago Fed researchers said the scale of the decline was surprising. Rising incomes, more education and growth in two-earner households over that period would have predicted modest ownership gains, not a sustained fall. The available evidence points more toward changes in consumer behavior and purchase triggers, including delayed milestones and product misunderstanding, than toward broad economic hardship alone.

Term life insurance household ownership fell 7.9 percentage points between 1989 and 2013, from 58.1% to 50.2%, the Chicago Fed found. Cash-value life insurance fell further, dropping 18.7 percentage points from 37.4% to 18.7%. By 2022, ACLI data show 45.6% of households held a term policy and 16.9% held a cash-value policy. LIMRA’s 2025 Insurance Barometer, which surveys adults ages 18 to 75 on individual ownership rather than households, puts current ownership at 51%, a different methodology and population cut, but pointing the same direction.

LIMRA’s 2025 Insurance Barometer puts total life insurance ownership among U.S. adults ages 18 to 75 at 51%. Gen Z and Millennial adults own at rates below that 51% average, per the LIMRA 2025 Barometer conference presentation. Gen X and older generations own at higher rates. LIMRA tracking has consistently shown this ownership gap by generation, even as Millennials have aged into their prime earning years.

Young adults differ from other lower-ownership groups in the scale of the recognized need gap. LIMRA’s 2025 research found that 54 million Gen Z and Millennial adults say they need life insurance or more life insurance than they currently carry. LIMRA’s senior vice president Bryan Hodgens described it in 2025: “The good news is that 54 million Gen Z and Millennial adults recognize their need for life insurance.” The larger problem is the gap between recognizing the need and acting on it.

The need gap, LIMRA’s measure of adults who say they need or need more coverage, stands at 40% of all U.S. adults in 2025, representing roughly 100 million people. That total breaks into about 74 million adults who say they need life insurance and 25 million who say they need more than they have, per LIMRA’s 2025 Barometer conference presentation.

Life insurance has historically been a milestone purchase. Adults buy policies when they marry, have children or take on a mortgage. Each event creates a clear financial risk, and a life insurance policy addresses it directly. For earlier generations, those triggers came reliably in the mid-to-late 20s. For Gen Z and Millennials, they have shifted later, or stalled entirely.

U.S. Census Bureau data show the median age at first marriage rose from 23 for women and 26 for men in 1990 to 28.6 for women and 30.2 for men in 2024. Homeownership rates among adults under 35 remain below historical norms. Capgemini’s 2026 World Life Insurance Report described the shift plainly: traditional purchase triggers “are not happening as soon for today’s under-40 consumer, if they happen at all.”

LIMRA’s 2025 data show the milestone effect is real. Parents with minor children were more likely to own life insurance than the general population in 2025, 59% versus 52%, and parenthood remains one of the strongest purchase triggers in LIMRA’s annual tracking. But even among insured parents, 47% say they do not carry adequate coverage, per the same study. The delayed-milestone pattern creates a window that now stretches from college graduation into the mid-30s, during which many young adults carry real financial exposure without a clear trigger to act on it.

About 55% of working adults in the U.S. have life insurance through their employer, per LIMRA’s 2025 Insurance Barometer. A common assumption holds that eroding employer benefits partly explains the ownership decline. The data do not support that explanation.

ACLI’s 2025 Fact Book, drawing on Bureau of Labor Statistics data, shows that access to employer-sponsored life insurance among private industry workers held at 55% to 59% from 2010 to 2024: 59% in 2010, 55% in 2016 and 58% in 2024. Employers have not cut the benefit at scale. That does not support a simple explanation based on reduced employer benefits for the ownership decline, but it does not by itself reveal what is driving it.

Two structural factors are more likely candidates. The first is workforce composition: workers in part-time, gig or contract roles may fall outside the employer benefit system, making employer-sponsored coverage less reliable for some young adults. The second is job mobility: group life insurance is typically tied to employment and may end or require conversion or portability election after a job change. Many workers do not replace it individually. A typical group plan also pays one to two times annual salary, well below the 10 to 12 times income most financial planners recommend for families with dependents.

The most common explanation young adults give for not buying life insurance is a belief they cannot afford it. LIMRA’s 2025 Barometer found that 48% of Millennials and 39% of Gen Z adults cite perceived cost as a main barrier. Their estimates are off by a wide margin.

LIMRA’s 2026 Insurance Barometer presentation put specific numbers on the gap. Adults under 31 estimated an annual basic policy premium at roughly $900 per year. The true annual cost for that age group was roughly $192 per year for a $250,000, 20-year level term life policy, per that same 2026 presentation.

Bryan Hodgens, senior vice president and head of LIMRA Research, described how deep the misperception runs: “Even when young adults were presented with a true median cost of an insurance policy, some participants still doubted us. This remains one of the biggest challenges for our industry to overcome.”

Cost misperceptions do not exist in isolation. Less than 25% of Gen Z adults and Millennials say they understand how life insurance underwriting works, the process that sets premiums based on age, health and lifestyle factors, per LIMRA’s 2025 research. Without that understanding, young adults are left guessing what a policy would cost, and they guess high.

The gap is not only about money. In the broader Barometer data, LIMRA’s 2025 conference presentation found that 46% of respondents cited not knowing how much or what type of coverage to get as a barrier, compared to 33% who cited perceived cost, 22% who cited other financial priorities and 21% who cited procrastination. Knowledge and cost barriers work together, each reinforcing the other.

The connection between knowledge and ownership runs throughout LIMRA’s data. Among Gen Z and Millennial adults who own a policy, 47% describe themselves as very or extremely knowledgeable about life insurance. Among young adults who recognize they need coverage but do not have it, 53% describe themselves as not very knowledgeable. Social media is filling some of that gap: LIMRA’s 2025 Barometer found that 80% of adults under 45 now use social media to research financial and insurance products, up from 29% in 2019.

Young adults consistently say they plan to buy life insurance. LIMRA’s data show that more than half of Millennials report intending to buy a policy in the next 12 months, with Gen Z numbers close behind. Ownership rates have not moved to match. The 2025 Barometer puts Gen Z and Millennial ownership below the 51% adult average despite years of elevated stated intent.

The gap between planning and purchasing points to a process breakdown. One in three young adults says the main obstacle is uncertainty about what type of coverage to get or how much to buy. LIMRA’s 2025 Barometer conference presentation found that 51% of young adults would use an AI tool to research a life insurance policy, and 55% would use one to shop for coverage. When it comes time to buy, though, 42% say they would prefer to complete the purchase with a financial professional in person. Interest in researching coverage is high. A clear path to a decision often does not follow.

The case for buying life insurance as a young adult is not only about current need. It is about the cost of waiting. Term life insurance premiums rise with age and, more importantly, with any health conditions that develop in the years between applications.

A healthy 25-year-old who buys a $500,000, 20-year term life policy locks in rates at the lowest level they are likely to see. High blood pressure, elevated cholesterol, a history of anxiety or a change in weight between 25 and 35 can each move an applicant into a higher underwriting rate class, raising premiums for every year the policy runs. Waiting a decade to buy typically means paying more for the same death benefit across the full term.

One important consideration when choosing a policy is term length. A 20-year policy bought at 25 expires at 45, which may fall short of covering a mortgage taken out in the late 20s or children still in school at that age. Buyers who expect to have dependents or carry significant debt into their 40s should consider matching the term to those anticipated obligations, which often means a 30-year term or buying again at 35. MoneyGeek’s life insurance calculator can help translate age, health and income into a coverage amount and term length that fits the household’s coverage window.

For young adults who plan to marry, buy a home or have children in the next 10 years, buying before those milestones means locking in coverage during the years of highest financial exposure. MoneyGeek’s guide to the cheapest life insurance companies shows that for many healthy adults in their 20s, a substantial policy is far more affordable than most people expect before they look up the price.

This article draws on two different measures of life insurance ownership that are not directly comparable. Historical figures from 1989 to 2022 come from Federal Reserve Survey of Consumer Finances data, which tracks household ownership (meaning whether anyone in a household holds a policy), as compiled by the Federal Reserve Bank of Chicago and the American Council of Life Insurers 2025 Fact Book. LIMRA’s 2025 Insurance Barometer tracks individual adult ownership through an annual survey of adults ages 18 to 75. All premium figures from the LIMRA 2026 Barometer conference presentation refer to a $250,000 policy scenario for a healthy adult under 31. Premiums vary by insurer, state and individual health profile.