Why about half of Americans still don't have enough life insurance

If you don't have life insurance — or you're not sure the coverage you have is actually enough — you're not the outlier you might think. Roughly half of American adults are in the same position, and according to the industry's own research, it's mostly not because they've decided against it.

What the 2026 research actually found

Every year, LIMRA — the life insurance industry's own research and trade organization — and Life Happens, a nonprofit consumer-education group, run the Insurance Barometer Study, the industry's longest-running survey of how Americans think about life insurance and how much of it they actually own. The 2026 edition, reported on by InsuranceNewsNet, found that just over half of Americans (52%) say they own a life insurance policy, and nearly 100 million Americans report being either uninsured or underinsured. More strikingly, 37% of Americans say they're only somewhat or not at all knowledgeable about life insurance — a bigger blind spot than most other major financial products.

That knowledge gap isn't a side note — per LIMRA's own newsroom writeup of the study, life insurance "remains one of the least understood financial products," and "confusion — not lack of interest — continues to limit coverage," a pattern LIMRA says is "reinforced by widespread overestimation of cost." In other words, a meaningful share of the roughly half of Americans without adequate coverage aren't opting out. They're stuck on "I don't understand this enough to buy it" or "I assume it costs more than I could afford" — both fixable problems, not real barriers.

That confusion sits alongside a genuinely growing market: LIMRA's own data shows individual life insurance new annualized premium topped $17.5 billion in 2025, a record, with policy sales up 7% for the year. People who do buy are buying more — the gap isn't a dying product, it's an unevenly distributed one.

Why the gap persists

A few things keep showing up in LIMRA's research as reasons people go without coverage or underestimate what they need:

• Cost overestimation. LIMRA's own framing calls this out directly as a driver of the confusion — people who've never priced a policy tend to assume it costs far more than insurers actually charge, particularly for healthy applicants at younger ages.
• Not knowing where to start. With over a third of Americans saying they're only somewhat or not at all knowledgeable about the product, the practical question — "how much coverage, and what type" — often just doesn't get answered.
• Assuming employer coverage is enough. Group life insurance through work is common, but it's usually a modest flat amount that doesn't scale to what a household would actually need, and it typically doesn't follow you if you leave the job.

How to tell if you're underinsured

There's no single number that applies to every household, and the Insurance Information Institute (III) is candid about that. III specifically calls out the old "20 times your salary" rule of thumb as "simplistic" — it implicitly assumes no inflation, and III's own modeling shows that under a normal 3% inflation rate, a lump sum sized that way would run out in roughly 16 years, not last a family's lifetime.

III's own preferred approach instead adds up several concrete pieces:

• Lost income your household would need replaced, for however many years you're providing for dependents.
• Social Security survivor benefits, which offset — but rarely fully replace — lost income.
• Employer benefits that disappear with you, like health insurance and 401(k) matching.
• Replacement-services costs — childcare, household labor, and other unpaid work a surviving spouse would otherwise have to pay for.
• Final expenses, which III puts at a minimum of $15,000 for funeral and related costs alone.

Add those up against what you already have — including any employer group policy — and the gap between that total and your current coverage is a much more honest number than any flat multiple of salary.

Where to go from here

If you already have some coverage and are trying to decide between adding more term coverage or restructuring into something like whole life, our breakdown of term vs. whole life insurance walks through the actual cost math on each. If you're starting from zero, run the numbers with our life insurance needs calculator rather than guessing — a rough estimate beats no plan, but a real one, priced against your actual household numbers, is what closes the gap LIMRA's research keeps finding. From there, browse life insurance coverage basics and compare your options against a documented standard before you talk to a licensed agent or carrier.

ClearValue Insure is an educational publisher and comparison resource — not a licensed insurance agent, broker, or insurer. Use this as a starting point for the conversation you have with a licensed agent or your own carrier, not a substitute for it.