In 2025, nearly 100 million Americans are either uninsured or say they need a higher level of coverage, according to the 2025 LIMRA Insurance Barometer Study. With almost half of adults without life insurance, families are exposed to a slew of financial challenges if the primary earner suddenly dies.
The reason so many don’t have insurance? Perceived cost and prioritizing other financial obligations, like managing debt and saving for retirement.
The reality? A 20-year, $250,000 term life policy for a healthy 30-year-old is, on average, $17 a month (Policygenius, October 2025). The data is clear as day: the cost of being uninsured is far greater than the cost of a policy.
This article breaks down everything you need to know to make an informed decision with hard facts.
Key Life Insurance Stats at a Glance
| Statistic | Value | Source |
|---|---|---|
| Adults with life insurance | 51% of U.S. adults | LIMRA Insurance Barometer Study (2025) |
| Need gap (uninsured + underinsured) | 99 million adults | LIMRA Insurance Barometer Study (2025) |
| Average cost of a $500K / 20-year term (healthy 40-year-old) | $39.55 per month | Policygenius (2025) |
| Whole life share of new premium | 37% | LIMRA U.S. Life Insurance Sales Report (Q1 2025) |
| Term life share of new premium | 19% | LIMRA U.S. Life Insurance Sales Report (Q1 2025) |
| Average ownership by age band | 42%–56% (Gen Z → Boomers) | LIMRA Facts About Life Insurance (2025) |
| Ownership by income | 27% (<$20K) → 85% ($100K+) | Financial Health Network (2024) |
| Employer-provided vs individual policy | 23% / 38% | LIMRA Insurance Barometer Study (2025) |
| Average Claim Payout Time | 14–60 Days | Coventry Direct (2025) |
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Who Has Life Insurance? Coverage & Ownership
Life insurance ownership trends among U.S. adults
According to the 2025 LIMRA Insurance Barometer Study, 51% of adults have some form of insurance. On the flip side, about 74 million adults have no life insurance coverage, and 25 million feel like they need more of it. In other words, they’re underinsured. The total “need gap” is approximately 99 million Americans.
Coverage adequacy (income multiples, mortgage coverage)
As stated above, many adults who own life insurance still have less coverage than they actually need. With 25 million U.S. adults underinsured, their current death benefit wouldn’t adequately cover major debts or replace income.
How is coverage adequacy typically assessed or measured? Using benchmarks, such as whether a policy provides several years of income replacement or is enough to pay off an entire mortgage. In practice, many adults hold policies that would replace only a few years of income, far below the commonly recommended 10–15× their annual earnings.
As a result, this can be a serious shortcoming for families that rely on that money to keep them afloat and financially covered after the death of a covered family member.
Why people buy (income replacement, debt payoff, estate needs)
Limra’s 2025 “Facts About Life Insurance” states that Americans own life insurance for five main reasons:
- Cover burials and “final” expenses. (60%)
- Transfer wealth or leave an inheritance. (42%)
- Help replace lost wages or income of a wage earner. (26%)
- Pay off the mortgage. (20%)
- Supplement the retirement income. (19%)
In Limra’s survey, more than half of consumers said that they’d use the proceeds of their life insurance policy to pay for basic living expenses if the primary wage earner, or “breadwinner”, were to die unexpectedly.
Costs: How much is Life Insurance
Average monthly premiums by age and health class
Monthly term life insurance premiums for a $500,000 policy increase with age, starting around $20-$30 on average for adults in their 20s and rising well above $150 for someone in their 60s.
It’s important to note that a couple of variables can significantly affect the price you pay per month: your health profile and whether you smoke. Insurers use this information to assign you a health classification, such as preferred or standard, which determines the price you pay. Premiums also rise with age, as the probability of insurers paying out a death claim increases.
The table below reflects the average monthly premiums for a 20-year term life policy for people with a “preferred”, non-smoker classification:
| Age | Gender | $250,000 coverage | $500,000 coverage | $1 million coverage |
|---|---|---|---|---|
| 25 | Female | $14.44 | $21.62 | $33.69 |
| 25 | Male | $17.59 | $28.21 | $45.97 |
| 30 | Female | $15.14 | $23.10 | $37.02 |
| 30 | Male | $18.22 | $29.56 | $49.04 |
| 35 | Female | $16.88 | $26.45 | $43.55 |
| 35 | Male | $19.59 | $32.21 | $54.17 |
| 40 | Female | $21.55 | $35.58 | $61.03 |
| 40 | Male | $25.50 | $43.52 | $75.90 |
| 45 | Female | $29.25 | $50.38 | $90.09 |
| 45 | Male | $36.66 | $64.51 | $118.11 |
| 50 | Female | $43.51 | $78.94 | $139.67 |
| 50 | Male | $56.27 | $103.55 | $188.80 |
| 55 | Female | $60.25 | $110.88 | $206.77 |
| 55 | Male | $81.75 | $152.75 | $282.30 |
| 60 | Female | $103.64 | $190.13 | $354.91 |
| 60 | Male | $143.18 | $264.84 | $500.31 |
Term vs. permanent (cost and long-run trade-offs)
According to Policygenius’s July 2024 breakdown, Term life insurance is more affordable than whole life because it lasts only a specific period, usually 10 to 30 years, and doesn’t build cash value. Whole life insurance, on the other hand, never expires and includes a cash value account that you can use while you’re still alive. The catch? Whole life costs significantly more.
Looking at the numbers: a healthy 30-year-old might pay $23 a month for a $500,000 20-year term policy, compared to a whopping $440 a month for the same dollar amount, but whole life coverage instead. That’s about 21 times the price.
Here’s the main tradeoff: inexpensive, temporary protection versus lifelong guarantees. The former is a good financial safety net for someone’s family, and the latter is an excellent choice for someone with a high net worth or lifelong dependents.
Price drivers: age, health, smoking, policy length, riders
There’s one central idea that life insurance policies are built around: risk. The younger and healthier you are, the less you pay. Smokers pay more because their risk profile is higher, and even small health issues can bump someone up into a more expensive health class.
Policy length matters as well. A 30-year term usually costs more than a 20-year term because the insurer is covering a longer period. Want to add on features to your policy, like riders (that expand the benefits of a base policy)? That can also raise your premium, as it increases the potential payout. Simply put, the more an insurer is at risk of having to pay out a death benefit, the higher your premium will likely be.
Source: Policygenius, How Does Life Insurance Work? (July 2024)
Life Insurance by Demographics
Ownership and coverage by age band
LIMRA’s 2025 Facts about Life Insurance data shows that life insurance ownership rises with age, starting at 42% for Gen Z adults and peaking at 56% for Baby Boomers.
| Age Band | Generation | Ownership Rate |
|---|---|---|
| 18–27 | Gen Z | 42% |
| 28–43 | Millennials | 49% |
| 44–59 | Gen X | 51% |
| 60+ | Baby Boomers | 56% |
Ownership by income band and family status
The more income a household earns, the greater the likelihood of owning life insurance. A January 2024 national report by Financial Health Network found that working-age households earning under $20,000 report only 27% ownership, while households earning $100,000 or more reach 85%.
| Household Income | Ownership Rate |
|---|---|
| < $20,000 | 27% |
| $20,000–$49,999 | 50% |
| $50,000–$74,999 | 65% |
| $75,000–$99,999 | 76% |
| $100,000+ | 85% |
Family structure also plays a significant role, the same study by FHN shows. Single adults with kids show only 53% ownership, well below households with two adults and kids (69%). Overall, 66% of working-age respondents with children hold life insurance, which is higher than those without kids (60%), but still leaves one-third of families with dependents uninsured.
Employer-provided vs. individually purchased coverage
According to data from the 2025 LIMRA Insurance Barometer Study, the primary way individuals access life insurance is by purchasing individual policies; 38% of respondents reported holding such a policy. Meanwhile, just 23% of respondents reported holding a group policy through their employer. The remaining respondents either hold multiple types of coverage or receive coverage through other organizations.
Life Insurance by State
Life insurance participation by state
Life insurance participation looks very different depending on where you live. According to Western & Southern Financial Group’s April 2025 analysis of ACLI’s (American Council of Life Insurers) state-level data on policies in force, some states have nearly one active policy per resident, while others have far fewer.
Alabama leads the nation with 0.91 policies per capita, followed by Louisiana, Mississippi, and South Carolina. On the other end of the spectrum, states like Arizona, Alaska, Washington, and Utah all fall below 0.25 policies per capita, suggesting major gaps in household protection.
Average death benefits also vary widely. Utah, Connecticut, and Alaska all report average payouts above $280,000, while states like Alabama fall closer to $65,000, showing that coverage amounts can be just as uneven as participation.
Premium spending by state
Even though life insurance pricing depends on individual factors like age and health, state-level spending varies dramatically when you look at how much residents collectively pay. Western & Southern Financial Group’s April 2025 report shows states like South Dakota, Delaware, and Minnesota spend the most on life insurance premiums per person, ranging from $900 to over $2,000 annually.
Meanwhile, residents of Oregon, New Mexico, and Maine spend under $370 per person. These differences don’t reflect price changes by state. Instead, they show how much coverage people maintain and how participation in life insurance can differ significantly across regions.
High-risk states with low coverage
Some states face higher mortality risks than others, but that doesn’t always translate into stronger life insurance protection. CDC data shows that West Virginia has the highest mortality rate in the country, 1,116 deaths per 100,000 residents, yet only 0.47 life insurance policies per capita. Oklahoma, at 1,026 deaths per 100,000 residents, has even fewer policies at 0.35 per capita, according to the same W&S Financial Group report.
These gaps reveal a disconnect between real-world risk and household protection. Even low-risk states like Hawaii, New York, and California have low coverage levels, suggesting that underinsurance is primarily a behavioral issue rather than one tied solely to risk.
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Claims, Denials & Appeals
Top denial reasons (material misrepresentation, lapse, contestability)
Life insurance companies pay out the vast majority of claims, but when denials do happen, they typically fall into a few categories. The most common reasons include material misrepresentation on the application (such as undisclosed medical conditions or smoking), policy lapse due to unpaid premiums, and issues discovered during the contestability period, when insurers are allowed to review the application more closely.
Other denial factors can include exclusions (e.g., certain high-risk activities), fraud, or lack of beneficiary documentation, but these occur less often. (Western & Southern Financial Group, May 2025)
Contestability periods and documentation
Every life insurance policy has a contestability period. This is usually the first two years after the policy starts. If the policyholder dies during this window, the insurer can pause the claim and review everything more closely. They’ll compare the application against medical records, confirm the cause of death, and look for any missing or inaccurate information. It doesn’t mean they won’t pay; it just means the claim isn’t automatic. Clear, updated documentation (beneficiary info, medical history, contact details) helps prevent delays and keeps the claim moving. (Ethos, November 2025)
How to escalate a stalled claim
If a claim stalls, the fastest escalation path is to confirm that all required documents are on file, then push the insurer for a written explanation of what’s causing the delay. From there, you can escalate to your state insurance department or bring in a life-insurance attorney if the carrier still won’t move.
According to the Law Offices of Jason Turchin (July 2025), most delays stem from missing paperwork, contestability-period investigations, beneficiary disputes, or simple internal backlogs. Start by confirming that the insurer has the certified death certificate, completed claim form, policy number, and any other requested paperwork. If everything has been submitted, follow up with the claims department and politely request a status update. Keep a log of names, dates, and conversations so you can document the delay in case anything goes wrong.
If the claim is still stuck, request a written explanation outlining the exact reason for the holdup. When things are on record, insurers are far more responsive. If the delay becomes unreasonable, your next escalation step is filing a complaint with your state’s department of insurance, which can trigger a regulatory review and usually speeds up the process.
And if none of that works? Consult a life-insurance attorney, who can investigate bad-faith handling, challenge improper delays, or push the insurer to pay the claim. In many cases, legal involvement alone is enough to get a stalled claim moving again.
Policy Types & Riders
Market share by policy type (term, whole, universal, IUL, VUL)
LIMRA’s 2024–2025 data shows how new life insurance sales break down across policy types. A few trends are clear: whole life continues to dominate, term has slipped slightly, and universal life products are splitting across fixed, indexed, and variable designs.
(Note: LIMRA reports share of new annualized premium, not policy count, so the percentages below reflect premium share.)
According to LIMRA’s U.S. Individual Life Insurance Sales Report (Q1 2025):
- Whole Life: 37% of new premium (steady growth).
- Term Life: 19% of new premium (slight decline).
- Indexed UL: 24% of new premium, with strong growth in both premium and policy counts.
- Variable UL: 14% of new premium, reflecting rapid growth.
- Fixed UL: 6% of new premium, continuing to decline.
Common riders (accelerated death benefit, waiver of premium, child rider)
Life insurance riders are optional add-ons that expand the benefits of a base policy. The most common include accelerated death benefit riders, waiver of premium riders, and child term riders.
Accelerated Death Benefit (ADB)
Most modern policies include this at no extra cost. It allows the policyholder to access a portion of their death benefit early if they’re diagnosed with a terminal illness (generally with a life expectancy of 12–24 months, depending on the insurer).
Waiver of Premium Rider
This rider waives future premiums if the policyholder becomes totally disabled (as defined by the insurer), allowing the policy to stay in force even when the insured can’t work.
Child Rider (Child Term Rider)
A child rider provides term life insurance coverage for eligible children, usually from 15 days old until age 18–25. It offers a small death benefit (often $5,000–$25,000 per child) and can often be converted into a permanent policy when the child ages out.
Cash value accumulation basics (brief, non-advisory)
Some permanent life insurance policies build a cash value component over time. This cash value grows tax-deferred and acts like a small savings stash inside the policy.
With whole life, cash value grows at a fixed rate set by the insurer. With universal life, growth depends on the policy’s credited interest rate. Indexed universal life ties growth to a market index (with caps and floors), and variable universal life invests cash value in market subaccounts.
Over time, policyholders can borrow from or withdraw against their cash value, but doing so reduces the future death benefit and may create tax implications. If the policyholder dies, the insurer pays the death benefit only; the cash value does not get added on top.
Source: Investopedia (2025)
2026 Trends to Watch for Life Insurance
Rate environment, reinsurer dynamics, and pricing
Life insurers head into 2026 with a mixed pricing environment shaped by interest rates and reinsurance market shifts. According to the Swiss Re Institute’s (November 2024) outlook, “still elevated interest rates” in major markets like the US are expected to continue supporting life insurance profitability and drive global life premium growth of about 3% per year in 2025–2026.
Meanwhile, the reinsurance side is softening. Fitch Ratings (September 2025) reports a “deteriorating” global reinsurance outlook for 2026 as capacity returns and competition pushes pricing down, even though underwriting discipline remains generally intact.
Antares CEO, Michael van der Straaten, notes that while reinsurers plan to hold the line on pricing discipline, buyer power is increasing and terms are gradually easing ahead of the 2026 renewals.
Health data, underwriting automation, and exam-free policies
Underwriting is moving toward a fully digital model in 2026. According to Life Insurance Predictions for 2026 (November 2025), accelerated underwriting (AUW) has expanded dramatically, with some carriers now approving policies up to $5 million without medical exams, powered by richer digital health data and more advanced risk scoring. Experts in the same report highlight the growing use of electronic health records (EHRs), wearables, and behavioral data to enable faster, more personalized decision-making.
Deloitte’s 2026 Global Insurance Outlook (October 2025) reinforces this trend, noting that AI-driven underwriting tools are moving from pilot programs to real operational use. Successful implementation, however, depends on stronger data quality, modernization of legacy systems, and governance frameworks to ensure fairness and accuracy.
Claims processing modernization
Insurers continue modernizing claims processes with AI, automation, and digital servicing. Deloitte’s 2026 Global Insurance Outlook notes that insurers are increasingly using machine learning for fraud detection, gen-AI tools for claims triage, and mobile/web claims experiences that’ve already improved customer satisfaction.
Carriers in Asia are deploying AI chatbots and automation for faster routing and initial assessment, shortening cycle times while keeping humans involved in complex cases. These efforts align with broader trends toward omnichannel service and “right-channeling,” which guide customers to the most efficient digital or human touchpoint based on their needs.
FAQ
How much life insurance do I actually need?
Most people choose coverage equal to 10–15× their annual income, or enough to replace income, pay off debts, and protect dependents. The right amount depends on your financial obligations and future goals.
What's the difference between a "beneficiary" and a "contingent beneficiary"?
A beneficiary is the person who receives the life insurance payout. A contingent beneficiary is the backup: they receive the payout only if the primary beneficiary dies or cannot collect.
Can I be denied life insurance?
Yes. Insurers can deny coverage for reasons like serious health issues, high-risk occupations, dangerous hobbies, or inaccurate information on your application. Approval depends on your risk profile.
Does life insurance cover suicidal death?
Generally, yes, but only after the policy’s suicide clause period, which is two years in most states. When the exclusion period ends, the policy's beneficiaries can receive a death benefit if the covered person dies by suicide. (Cornell Law School, 2021)
What happens to life insurance if the beneficiary is deceased?
If the beneficiary dies first and a contingent beneficiary is named, they receive the benefit instead. If no contingent beneficiary is listed, the payout typically goes to your estate.
Is a life insurance payout taxable?
No. Life insurance payouts to beneficiaries are usually not taxed as income. That said, interest earned on the payout or certain estate-related situations may trigger taxes.
Sources & Citations
- LIMRA, Insurance Barometer Study 2025
- Bankrate, Life Insurance Facts and Statistics 2025
- LIMRA, Facts About Life Insurance (2025)
- The Policygenius Life Insurance Price Index October 2025
- Policygenius, Term vs Whole Life Insurance (2024)
- Financial Health Network, Life Insurance in America: Understanding and Closing Coverage Gaps (2024)
- Western & Southern Financial Group, Mapping Life Insurance Participation and Protection Levels by State (2025)
- Western & Southern Financial Group, 9 Reasons Life Insurance Won't Pay (2025)
- Ethos, Life Insurance Contestability Period: A Practical Guide (2025)
- Law Offices of Jason Turchin, What to Do When a Life Insurance Claim Is Stalled (2025)
- LIMRA, U.S. Life Insurance New Premium Exceeds $3.9 Billion in the First Quarter 2025 (2025)
- Investopedia, Understanding Cash Value in Life Insurance: Definition and Example (2025)
- Swiss Re, Life Insurance Drives Global Premium Growth as Interest Rates Remain Higher for Longer (2024)
- Carrier Management, Competition to Drive ‘Deteriorating’ Reinsurance Market, More M&A in 2026 (2025)
- ReInsurance Business, Reinsurance Pricing Discipline to Hold Despite Returning Capital in 1.1 Renewals (2025)
- Digital Insurance, Life Insurance Predictions for 2026 (2025)
- Deloitte, 2026 Global Insurance Outlook (2025)
- Cornell Law School, Suicide Clause (2021)
- Coventry Direct, How Long Does it Take for Life Insurance Payout (2025)
