Younger clients push back on life insurance, forcing advisors to rethink approach

A growing number of younger adults are deciding that life insurance is not for them, reshaping the way financial advisors must guide clients, a new report reveals.

While 68% of consumers still consider life insurance essential to financial wellness, under 40s often see policies as a poor fit with around a third saying that coverage doesn’t align with their stage of life, 28% citing affordability concerns, and another quarter feeling that policies offer little immediate benefit.

That’s according to the latest World Life Insurance Report from Capgemini and LIMRA, which also shows that traditional triggers for life insurance are no longer driving demand with 63% of younger adults having no near-term plans to marry and 84% delaying or opting out of parenthood.

However, life insurance does still play a role in estate planning and as Millennials and Gen Z expect to inherit an average of $106,000 each, life insurance ranks just behind stocks and cash as a preferred tool for intergenerational wealth transfer.

Watch: Here's why life insurance should be a core part of any financial plan

Survey respondents are keen to see tangible value in their life insurance policies while they are alive, with a strong appetite for ‘living benefits’ such as fertility treatment support, wellness incentives, or access to emergency funds.

“As the next generation accumulates wealth and pursues a less traditional life path, their expectations around financial protection are evolving. The life insurance industry cannot rely solely on traditional death protection to sustain its future. Life insurers need to demonstrate value to include near-term gratification — delivering tangible benefits that customers can access during their lifetime,” says Samantha Chow, global leader, Life, Annuity and Benefits Sector at Capgemini.

The survey also reveals that:

• 59% want to interact directly online, though only 31% of insurers provide that
• 77% expect data-driven recommendations, but just 16% of carriers deliver them at scale
• 44% want coverage that follows them across jobs; only 19% of policies do so today.

“Carriers need a different playbook when marketing life insurance to the younger generations,” adds Bryan Hodgens, head of LIMRA Research. “Our joint research shows that the price misconceptions, coupled with competing financial priorities, positions life insurance at a disadvantage with younger adults. Carriers must not only demonstrate the accessibility and affordability of life insurance but also need to reimagine the product to address younger adults’ current financial priorities while adapting to meet their future financial goals as they age.”

For financial advisors, the findings signal the need for fresh conversations with younger clients. The report urges advisors to emphasize flexibility, integrate insurance into broader financial ecosystems, and use digital tools that bring greater personalization.

It also recommends that advisors push carriers to innovate by offering products with living benefits, easier underwriting, and portability, so that clients see value both now and in the future.