Life Insurance Ownership Gaps and Misconceptions
Finding out who has life insurance — and how well they understand their policies — showed us a few concerning gaps to fill. This section uncovers key insights into ownership trends, financial barriers, and common misconceptions about life insurance.
Half of the Americans we surveyed had an active life insurance policy, with millennials (54%) and Gen X (53%) being the most likely to have one. Men were also more likely than women to hold a policy — 56% compared to 45%. Gen Z was the least likely to be insured (36%) but also showed the most interest in getting a policy (24%).
Policyholders reported an average annual income of $67,395, significantly higher than non-holders, whose average income was $44,102. This income gap suggests that financial constraints may be a key reason why some people remain uninsured. Consistent with this finding, another recent study found that the top reasons people did not purchase life insurance were cost and other financial priorities. They also cited uncertainty about choosing the right policy or coverage amount.
Another factor influencing coverage decisions is reliance on employer-provided life insurance. Over half of policyholders (54%) only had coverage through their employer, with Gen Z workers being the most likely to only have this type of policy (68%).
No matter the policy's source, having one doesn’t always mean the holder fully understands its details or seeks advice to manage it effectively. More than half of policyholders (60%) had not consulted a financial advisor, and 40% said they rarely or never review their policies.
This lack of engagement left many policyholders uncertain about important details, like what life insurance covers — 1 in 8 did not know if it would cover their funeral costs and debts. Over 1 in 4 (26%) were also uncertain whether their dependents' education or debts would be covered.
Further complicating matters, 28% of policyholders did not understand how inflation could affect their coverage over time. Many were also unaware of procedural requirements — 1 in 10 didn't know they must name a beneficiary to transfer benefits.
Major life events can also alter life insurance coverage, making it important to review your policy when things like income and expense changes happen.
Case in point: 29% of our respondents had lost a life insurance policy after changing jobs or retiring. In these situations, 23% resorted to personal savings, and 16% bought temporary or short-term policies. The more than 90% who didn't update their policies after a major milestone, such as starting a business or taking on new debt, could have been at risk as well.
Regret is a common feeling among policyholders who now recognize the value of life insurance later in life. Over 1 in 3 (35%) wished they had purchased coverage sooner. These regrets could stem from realizing how life insurance could have provided earlier financial security, lower premiums, or greater protection during unexpected life events.
Confidence in Life Insurance Knowledge
Life insurance education comes from various sources, but overall, many policyholders felt it left room for improvement.
Gen Z policyholders were the least likely to express confidence in their grasp of life insurance terminology at 70%. Satisfaction with life insurance education was highest among people who received this instruction from their employers (59%). Meanwhile, information from life insurance company websites and insurance agents both earned 41% satisfaction from policyholders.
Financial advisors also provided valuable guidance, with more than 1 in 4 policyholders (27%) being satisfied with the instruction they received from them. Government and consumer protection agencies ranked lowest, with just 20% of respondents expressing satisfaction with their guidance. Improving education across all these channels could help policyholders feel more informed about their life insurance coverage.
Many people struggle to understand key aspects of life insurance, leaving them unsure about their coverage. Confusion often arises around complex topics like tax implications, cash value accumulation, and policy exclusions.
What People Get Wrong About Life Insurance
Misconceptions about life insurance and a desire for clearer information were common among respondents. Many expressed interest in learning more about specific aspects of their coverage, from costs to eligibility.
Life insurance is a widely misunderstood financial product. Both policyholders and non-holders have even confused life insurance with other financial products, such as health insurance or retirement plans, with 20% admitting to this misunderstanding.
However, many expressed interest in learning more about key aspects of life insurance, including:
- Tax implications of life insurance payouts (54%)
- Differences between term and whole life insurance policies (42%)
- How premiums are calculated and what affects their cost (42%)
- The impact of pre-existing health conditions on eligibility and premiums (41%)
- Determining the appropriate coverage amount for their needs (40%)
- The process and implications of borrowing against a life insurance policy (36%)
Cost misconceptions were especially widespread. Nearly half of Gen Z respondents (48%) believed life insurance was too expensive, and women (38%) were more likely than men (32%) to share that view. Gen Zers (25%) were also the most likely to think employer-provided policies were sufficient. Additionally, 37% of women, compared to 28% of men, believed people with pre-existing health conditions couldn't get life insurance.
Millennials (38%) were the most likely to believe life insurance is only useful after death, potentially overlooking living benefits such as cash value and borrowing options. Some policyholders and non-holders (20% of each) had even confused life insurance with other financial products, such as health insurance or retirement plans.
Filling Life Insurance Knowledge Gaps
This survey shows that while many Americans have life insurance, there's still a lot of confusion about how it works. Knowing how to find the right coverage, understand costs, and when to make updates were some important areas people were unsure about. Closing these gaps with clearer information and better guidance could help more families feel confident in their financial future — not just for what happens after life, but for the many milestones along the way.
Methodology
Western & Southern surveyed 1,009 Americans about their knowledge of how life insurance works. Of these, 50% were policyholders, and 50% were non-holders. The generational breakdown was Gen Z (15%), millennials (54%), Gen X (24%), and baby boomers (8%). The data was collected in January 2025. Percentages not totaling 100 are due to rounding.
About Western & Southern Financial Group
Founded in Cincinnati in 1888 as The Western and Southern Life Insurance Company, Western & Southern Financial Group, Inc., a Fortune 500® company at No. 284, is the parent company of a group of diversified financial services businesses. Its assets owned ($80 billion) and managed ($42 billion) totaled $122 billion as of Sept. 30, 2024.1 Western & Southern is one of the strongest life insurance groups in the world. Its seven life insurance subsidiaries (The Western and Southern Life Insurance Company, Western-Southern Life Assurance Company, Columbus Life Insurance Company, Gerber Life Insurance Company,2 Integrity Life Insurance Company, The Lafayette Life Insurance Company, and National Integrity Life Insurance Company) maintain very strong financial ratings. Other member companies include Eagle Realty Group, LLC; Fabric by Gerber Life; Fort Washington Investment Advisors, Inc.;3 Gerber Life Agency;4 IFS Financial Services, Inc.; Touchstone Advisors, Inc.;3 Touchstone Securities, Inc.;5 W&S Brokerage Services, Inc.;3,5 and W&S Financial Group Distributors, Inc.6 Western & Southern is a title sponsor of several major community events every year. From 2002 to 2023, it served as title sponsor of Cincinnati’s longtime professional tennis tournament – now named the Cincinnati Open – an ATP Masters 1000 and WTA 1000 event and one of the world’s largest tournaments. The company continues to serve as a major sponsor of the event.
1 The financial information presented here is preliminary and unaudited.
2 Gerber Life is a registered trademark. Used under license from Société des Produits Nestlé S.A. and Gerber Products Company.
3 A registered investment advisor.
4 In the State of California, Gerber Life Agency, LLC is known as and does business as Gerber Life Insurance Agency, LLC.
5 A registered broker-dealer and member FINRA/SIPC.
6 W&S Financial Group Distributors, Inc. (doing business as W&S Financial Insurance Services in CA).
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