Why Consumers Under 40 Are Opting Out of Life Insurance: Understanding the Delay in Traditional Milestones

Introduction: A Shift in Life Priorities

The latest World Life Insurance Report 2026, conducted by Capgemini Research Institute and LIMRA, highlights a critical shift in consumer behavior among adults under 40. While 68% of these individuals consider life insurance essential for financial health, many are choosing to delay purchasing it. This trend stems from their shifting priorities, as traditional life milestones such as marriage and parenthood are increasingly postponed.

The Challenge: Misalignment with Current Needs

Life Insurance and Consumer Expectations

Despite recognizing the importance of life insurance, young consumers often find that many policies do not meet their immediate needs. The report reveals that:

• 63% of individuals under 40 have no plans to marry soon.
• 84% lack immediate child-rearing intentions.

Consequently, insurance offerings that largely focus on death benefits are overlooked by younger consumers who prefer products that provide immediate gratification and benefits they can use during their lifetimes.

The Paradox of Wealth Transfer

As we approach the upcoming great wealth transfer—where millennials and Gen Z expect inheritances averaging $106,000 per person—life insurance remains a key avenue for these funds. Interestingly, 40% of younger adults identify life insurance as the third most vital component of their inheritance investment plan, following stocks and cash savings.

The Industry’s Opportunity: Reimagining Value

Bridging the Gap between Consumers and Insurers

The life insurance industry must adapt to evolving customer expectations. According to Samantha Chow, Global Leader for Life Insurance, the industry cannot rely solely on traditional models. “Life insurers need to demonstrate value that encompasses near-term gratification,” she states.

Redefining the Value Proposition

Executives in the life insurance sector recognize the unique needs of under-40 consumers, influenced by:

• An aging population (64%)
• Delayed life milestones (53%)
• Economic uncertainty (51%)

Younger consumers express their concerns about life insurance, citing:

• Misalignment with their current lifestyle (32%)
• High premium costs (28%)
• A lack of immediate benefits (25%)

Transforming the Product Offering

Emphasizing “Living Benefits”

Young consumers are increasingly interested in “living benefits” that support their current life stages, such as:

• Wellness incentives for healthy behaviors
• Coverage for fertility treatments

Life insurers must innovate their product lines to include these features, thus making them more relevant and attractive to younger adults.

Portability and Flexibility

Also noteworthy is that 44% of employees with group insurance seek coverage that remains with them when they change jobs. However, only 19% of life insurers currently offer this flexibility. A complex conversion process often hampers portability, forcing consumers to switch policies even when satisfied with their initial coverage.

The Role of Technology in Life Insurance

Meeting Digital Demands

Younger consumers expect innovative solutions and direct digital access, with 59% desiring digital engagement. Unfortunately, only 31% of surveyed insurers provide these capabilities, revealing a significant gap.

Moreover, while 77% of consumers expect advanced, data-driven recommendations, only 16% of insurers deliver them at scale due to outdated systems.

Recommendations for Insurers

To effectively reach the under-40 demographic, life insurance companies need to focus on three core strategies:

1. Innovate Product Offerings

• Launch flexible insurance solutions emphasizing living benefits.
• Simplify the underwriting process and gamify customer engagement to deliver tangible value across various life stages.

2. Empower Financial Advisors

• Equip agents with AI-driven tools and insights for a personalized customer experience.
• Update compensation frameworks to attract a younger generation of advisors.

3. Foster Strategic Partnerships

• Collaborate with financial institutions, wellness companies, and HR platforms to integrate life insurance into everyday life, providing contextual and timely value.

Conclusion: The Future of Life Insurance

To ensure a robust future in life insurance, companies must pivot their offerings to align with the needs and expectations of consumers under 40. By embracing innovation, leveraging technology, and understanding the current lifestyle preferences of young adults, insurers can close the gap and secure long-term relationships with the next generation.

Final Thoughts

Engaging with young consumers means understanding their unique challenges and aspirations. As life milestones evolve, so must the approach of life insurance carriers, ensuring they provide relevant and compelling offerings that resonate with the needs of tomorrow’s policyholders.