The life insurance industry is facing a major challenge. Young adults are harder to reach, slower to hit traditional milestones, and heavily influenced by social media voices rather than industry experts. New data from the 2025 Insurance Barometer Study reveals that most young consumers underestimate their need for life insurance and overestimate its cost, which fuels a widening coverage gap.

Understanding why this gap exists and how to close it requires a look at evolving consumer behavior, shifting financial priorities, and the impact of online information sources.

Why Young Adults Misunderstand Life Insurance

According to the 2025 Insurance Barometer Study by LIMRA and Life Happens, young adults often assume life insurance is far more expensive than it actually is. Cost perception is only one part of the problem. Many do not understand how life insurance works or how much protection they need. Knowledge and ownership are tightly linked. Nearly half of Gen Z adults and millennials who own life insurance say they are knowledgeable about the product, while those who admit limited understanding are more likely to be uninsured or underinsured.

A growing number of young adults also face a coverage gap. More than half of those who say they lack life insurance knowledge recognise that they need coverage but do not have enough. This disconnect is partly generational. As fewer adults own life insurance overall, younger people are not exposed to it at home, which limits awareness and normalisation.

The Shift in Life Milestones and Financial Priorities

LIMRA researchers note that the definition of young adulthood is changing. Many people now delay buying homes, getting married or having children, which postpones the moments when life insurance becomes top of mind. They also have far more investment and savings options than previous generations. Quick, simple financial apps and alternative investment vehicles can appear more attractive than traditional life insurance products.

Life insurance has a longstanding reputation for being slow, complex and difficult to understand. Although the industry is improving with accelerated underwriting and fewer invasive medical requirements, these improvements are still not widely known among young consumers.

How Social Media Shapes Life Insurance Decisions

Social platforms have replaced traditional search engines as a source of financial education. The Insurance Barometer Study found that 62 percent of consumers now use social media to learn about financial products. For Gen Z and millennials, TikTok, Instagram, YouTube and Facebook are more influential than company websites.

This shift is a double edged sword. Social media gives insurers new ways to reach young audiences, but it also increases the spread of unreliable financial content from charismatic but unlicensed influencers.

Where the Industry Must Focus

To close the coverage gap and reconnect with younger adults, life insurers must rethink how they communicate, where they show up and how they simplify their products. The industry must also acknowledge the realities of modern financial life and offer policies that align with each stage of a young adult’s journey.

What Insurers Need to Prioritize

• Showing up consistently across TikTok, Instagram, YouTube and other platforms

• Using simple, relatable storytelling instead of technical product descriptions

• Highlighting brand history and longevity to build trust

• Sharing real stories of families helped by life insurance

• Making products clearer and offering faster, easier application processes

These steps help insurers compete with influencers while reinforcing credibility. As LIMRA researchers noted, many life insurance companies have been around for more than a century. Young adults need to hear that message now more than ever.