Life Insurance in North America: Market Trends Reshaping the Industry

Declining ownership, generational gaps, and misperceptions around cost plague the U.S. and Canadian life insurance markets. With more than 40% of them underinsured, and consumers seeking digital education with human connection, carriers must rethink distribution, product design, and engagement strategies to survive. 

A Hundred Million People in the Gap 

The North American life insurance market is losing ground. Over the past two decades, carriers have watched policy ownership decline not because consumers don't need protection, but because the industry hasn't adapted to meet them where they are.

The numbers tell the story. As a share of the U.S. and Canadian economies, life insurance has lost nearly a quarter of its footprint since 2007, falling from 3.5% to 2.7% of GDP,¹ according to Capgemini’s World Life Insurance Report 2025. According to McKinsey’s Global Insurance Report 2025: The Pursuit of Growth, the number of policies in force in the U.S. has dropped 13% since 2011,² and roughly half the population has coverage.³

The market opportunity is clear: 100 million Americans know they need more life insurance coverage or need to purchase it for the first time, yet they're not buying,⁴ according to LIMRA. According to a survey conducted by PolicyMe in partnership with Angus Reid, 42% of Canadians either don’t have life insurance or are not certain whether they do.⁵ These individuals haven’t decided they don’t need protection; rather, they haven’t found the right solutions among current offerings.

The gap is particularly pronounced among younger generations. Only 42% of Gen Z adults and 49% of Millennials have life insurance, compared to 56% of Baby Boomers,⁶ LIMRA reports. This stark generational divide highlights a significant opportunity for insurers.

The racial disparities are equally significant: while Asian Americans (58%) and Black Americans (57%) have ownership rates above the national average, only 40% of Hispanic consumers have coverage, the lowest rate of any demographic group and a substantial untapped market.⁷

Additionally, most working adults with life insurance (55%) obtain it through their employer,⁸ according to LIMRA, underscoring the challenges carriers face in the individual market.

Price isn’t the Only Problem 

Young adults vastly overestimate the cost of life insurance, believing it to be 10 to 12 times more expensive than it actually is,⁹ LIMRA reported. But perception isn't the only barrier. According to Capgemini, 52% of consumers ages 28 to 43 say they don't have enough income to save for the future, and 72% report that inflation has significantly impacted their financial well-being.¹⁰ These immediate financial pressures create stiff competition for carriers.

The knowledge gap compounds the challenge. Only 29% of consumers feel knowledgeable about life insurance,¹¹ according to LIMRA. Nearly a quarter say they haven't purchased because they don't know what they need,¹² and another quarter of Gen Z adults say nobody's approached them about buying.¹³

The trifecta: consumers overestimate cost, struggle with affordability, and lack understanding of the product itself.

The Market Is Transforming 

The U.S. and Canadian populations are aging rapidly. In the United States, the proportion aged 65 and older will grow from 18% to 21% by 2033, while Canada will see an even sharper increase to 25%,¹⁴ according to McKinsey.

Despite this demographic shift, Capgemini reports that 54% of U.S. households have zero retirement savings.¹⁵ The retirement savings gap across eight major markets including the U.S. and Canada will balloon from $106 trillion in 2022 to $483 trillion by 2050,¹⁶ McKinsey predicts.

Meanwhile, family structures are evolving. Fewer marriages, lower fertility rates, and more dual-income households are challenging traditional insurance product design.¹⁷ Traditional life insurance products built for nuclear families may not fit the diverse household structures that define today's market.

The Digital Research-to-Human Purchase Journey

In 2025, 92% of consumers researched life insurance online, LIMRA said, up from 71% in 2015.¹⁸ More than half say they'd use AI tools like ChatGPT to understand coverage options, jumping to 61% among Millennials.

But, according to LIMRA, only a quarter will complete the purchase online.¹⁹ And nearly half still want to speak with a financial professional when it's time to buy. Even Gen Z, often assumed to be the most digital generation, is the least likely to buy without human contact, LIMRA found.

Another challenge is that the purchase journey isn't linear. Consumers use digital tools for education, social media for validation, and humans for trust. Sixty-two percent use social media to learn about financial products, LIMRA said, rising to 80% among younger consumers.²⁰ More than 6 in 10 younger adults trust social media influencers for insurance information, according to LIMRA, and three-quarters would trust one who worked in insurance. Meanwhile, 45% follow financial advisors on social platforms, and a third follow insurance companies.

To succeed, distribution strategies must embrace this hybrid journey: digital research, social validation, human interaction for trust, and seamless digital payment.

What Comes Next for Life Insurance 

The trends are undeniable: carriers are losing younger consumers, underserving diverse markets, and relying on products designed for a bygone era. Ownership rates are declining, the industry’s economic footprint is shrinking, and 100 million Americans lack adequate coverage despite recognizing their need.

Addressing these challenges requires more than incremental adjustments. It demands a complete rethinking of the industry’s approach: designing products for modern families, engaging consumers online where they’re seeking information, building hybrid distribution models that blend digital education with human interaction, and crafting value propositions that account for consumers’ immediate financial pressures.

The opportunity remains vast: an aging population, a looming retirement crisis, and millions of Americans aware of their coverage gaps. The carriers that thrive will be those that adapt to meet consumers where they are: financially stretched, online, eager for education, and seeking simplicity.

The market has evolved. The question is: will the industry evolve with it?

Are you ready to shift your organization’s treasury operations into high gear? Get in touch with the One Inc team to discover the driving force that self-service and automation can bring to your insurance company.

Sources

1. Capgemini - https://www.capgemini.com/wp-content/uploads/2024/12/WLIR_2025_Final-with-latest-corrections.pdf 
2. McKinsey - https://www.mckinsey.com/~/media/mckinsey/industries/financial%20services/our%20insights/global%20insurance%20report%202025/global-insurance-report-2025-the-pursuit-of-growth.pdf?shouldIndex=false 
3. Ibid.
4. LIMRA - https://www.limra.com/siteassets/newsroom/liam/2025/2025_facts_about_life_insurance.pdf 
5. PolicyMe - https://www.policyme.com/blog/life-insurance-gap-study 
6. LIMRA - https://www.limra.com/siteassets/newsroom/liam/2025/2025_facts_about_life_insurance.pdf
7. Ibid.
8. Ibid.
9. LIMRA - https://www.limra.com/en/newsroom/news-releases/2025/adults-age-30-and-younger-overestimate-life-insurance-cost-by-1012-times/ 
10. Capgemini - https://www.capgemini.com/insights/research-library/world-life-insurance-report-2025/ 
11. LIMRA - https://www.limra.com/siteassets/newsroom/liam/2025/2025_facts_about_life_insurance.pdf/ 
12. Ibid.
13. Ibid.
14. McKinsey - https://www.mckinsey.com/industries/financial-services/our-insights/global-insurance-report 
15. Capgemini - https://www.capgemini.com/insights/research-library/world-life-insurance-report-2025/ 
16. McKinsey - https://www.mckinsey.com/industries/financial-services/our-insights/global-insurance-report 
17. Ibid.
18. LIMRA -https://www.limra.com/siteassets/newsroom/liam/2025/2025_facts_about_life_insurance.pdf 
19. Ibid.
20. LIMRA - https://www.limra.com/en/newsroom/news-releases/2025/adults-age-30-and-younger-overestimate-life-insurance-cost-by-1012-times/