Life Insurance Myths Millennials and Gen Z Believe (That Cost Them Money)

A Generation Unprotected

Millennials and Gen Z are the most financially informed generations in history. They track credit scores on apps, invest through robo-advisors, and debate retirement strategies on Reddit. But when it comes to life insurance, the numbers tell a troubling story. According to LIMRA's 2025 Insurance Barometer Study, 41% of millennials have no life insurance at all. Among Gen Z adults, the gap is even wider. And the primary reason is not financial hardship or deliberate choice — it is misinformation.

The same LIMRA study found that 48% of millennials say they do not know enough about life insurance to make a purchase decision. Even more striking, 63% of consumers overestimate the cost of a term life insurance policy by three times or more. When asked to guess the annual premium for a $250,000 policy for a healthy 30-year-old, the average response exceeds $1,000 per year. The real cost is closer to $200, which works out to roughly $16 per month.

That gap between perception and reality is not just a knowledge problem. It is a financial one. Every year a young adult delays purchasing life insurance, premiums rise 8% to 10%. A health change can make coverage dramatically more expensive or unavailable entirely. The myths that keep millennials and Gen Z from buying are not harmless misunderstandings — they are costing real money and leaving families unprotected.

This guide dismantles the seven biggest life insurance myths believed by younger adults, replaces them with real data, and shows exactly how to get covered in as little as 10 minutes. If you have already been asking yourself whether you even need coverage, start with our foundational guide on whether you need life insurance and then come back here to separate fact from fiction.

Myth 1: I Am Too Young to Need Life Insurance

Why People Believe It

Life insurance feels like something your parents worry about. When you are 26 and healthy, the idea of dying seems abstract, almost impossible. The thinking goes: "I will deal with it when I am older, when I have a mortgage and kids and real responsibilities." This logic feels reasonable on the surface, but it fundamentally misunderstands how life insurance pricing works.

The Reality

Life insurance premiums are locked in at the age and health status you have when you apply. A healthy 25-year-old who buys a 20-year term policy today will pay that same low rate every month for the next 20 years, regardless of any health changes that happen afterward. If that same person waits until 35, the rate will be 40% to 60% higher for identical coverage. Wait until 45, and it could be two to three times as expensive.

But cost is only half the equation. The other half is insurability. You cannot predict when a health event will change your risk profile. A routine blood test that reveals elevated cholesterol, a diagnosis of anxiety or depression requiring medication, or a family history of heart disease can all push you into a higher premium tier — or trigger exclusions. Buying while you are young and healthy is not just cheaper; it is a form of financial insurance against your own future health. For a deeper look at why your 20s are an ideal time to buy, read our guide on life insurance in your 20s.

Myth 2: Life Insurance Is Too Expensive

Why People Believe It

This is the single most damaging myth in the life insurance industry, and it is driven by a massive perception gap. LIMRA's research shows that 63% of consumers overestimate the cost of term life insurance by a factor of three or more. Millennials in particular, already dealing with student loan debt, high rent, and stagnant wage growth relative to housing costs, assume life insurance is another expense they simply cannot afford. Many picture premiums of $200 to $300 per month or more.

The Reality

A healthy, non-smoking 30-year-old can buy a $250,000 20-year term life insurance policy for roughly $16 per month. That is less than a single meal at a fast-casual restaurant. A $500,000 policy runs approximately $25 to $35 per month. To put it in perspective, the average American spends $35 per month on coffee shop visits and $53 per month on streaming subscriptions. Life insurance for a young, healthy adult costs less than either of those categories.

The confusion often comes from conflating term life insurance with whole life insurance. Whole life policies, which include a cash value savings component and last your entire lifetime, cost five to fifteen times more than term policies for the same death benefit. When someone hears that life insurance costs "$300 per month," they are almost certainly hearing about whole life. Term life, which is what most younger adults need, is dramatically more affordable. For a complete cost breakdown by age and coverage amount, see our guide on how much life insurance costs.

Myth 3: My Employer Coverage Is Enough

Why People Believe It

Many employers offer group life insurance as a standard benefit, often at no cost to the employee. When you see "life insurance" checked off on your benefits enrollment form, it feels like the box is checked. You have life insurance. Done. This creates a false sense of security that prevents many younger workers from ever shopping for their own policy.

The Reality

Employer-sponsored life insurance has two critical flaws that make it insufficient as your only coverage. First, the benefit amount is almost always one to two times your annual salary. If you earn $60,000, your employer provides $60,000 to $120,000 in coverage. Financial planners recommend 10 to 15 times your income, meaning your employer coverage falls short by $480,000 to $780,000 or more if you have a mortgage and children.

Second, and more importantly, employer life insurance is not portable. The moment you leave your job, whether voluntarily or through a layoff, that coverage ends. Millennials change jobs every 2.8 years on average. That means your life insurance disappears and reappears repeatedly throughout your career, with gaps in coverage that could last weeks or months during transitions. Some employers offer a conversion option, allowing you to convert group coverage to an individual policy when you leave, but the converted premiums are typically much higher than what you would pay buying an individual policy on your own. The bottom line: treat employer life insurance as a nice bonus, not your primary protection. Always carry your own individual term policy.

Myth 4: I Am Single, So I Do Not Need It

Why People Believe It

The traditional narrative around life insurance centers on protecting a spouse and children. If you are a 28-year-old single person with no kids, it is natural to think life insurance is irrelevant to your life. Nobody depends on your paycheck, so what would a death benefit even cover?

The Reality

There are three situations where single people benefit meaningfully from life insurance. First, if you have co-signed debts, particularly private student loans where a parent is the co-signer, your death could leave them responsible for the full balance. Federal student loans are discharged at death, but private student loans are not. A policy that covers your outstanding co-signed debt protects the person who helped you.

Second, if you financially support anyone, whether it is an aging parent, a sibling, or another family member, your income matters to someone even if you are not married. Life insurance replaces that support if you are no longer there to provide it.

Third, and this is the strategic argument, buying a small policy while you are young and healthy locks in the lowest possible rate. If you develop a health condition in your 30s before getting married or having children, you will already have coverage in place at a rate that reflects your healthier, younger self. A $250,000 term policy at age 25 might cost just $12 to $16 per month. Think of it as future-proofing at a minimal cost.

Myth 5: I Can Always Get It Later

Why People Believe It

Procrastination is human nature, especially for purchases that protect against unlikely events. Life insurance does not feel urgent when you are healthy and nothing bad has happened yet. The assumption is that you can always buy coverage next year, or the year after that, and it will be basically the same deal. This thinking treats life insurance like a subscription service you can start anytime at the same price.

The Reality

The cost of waiting is concrete and measurable. Premiums increase by approximately 8% to 10% for every year you delay. Here is what a $500,000 20-year term policy costs at different ages for a healthy, non-smoking applicant:

• Age 25: approximately $20 to $28 per month
• Age 30: approximately $26 to $35 per month
• Age 35: approximately $32 to $45 per month
• Age 40: approximately $50 to $65 per month
• Age 45: approximately $75 to $100 per month
• Age 50: approximately $120 to $170 per month

A 25-year-old who buys a $500,000 20-year policy at $24 per month will pay approximately $5,760 in total premiums over the life of the policy. If that same person waits until age 40 and buys the same coverage at $57 per month, the total premium cost over 20 years is $13,680 — nearly $8,000 more for the exact same protection. And that calculation assumes their health stays perfect. A single health diagnosis during those 15 years of waiting could double or triple the premium, add exclusions, or make standard coverage unavailable entirely.

Myth 6: Only Breadwinners Need Life Insurance

Why People Believe It

Traditional life insurance marketing has focused on the "provider" — typically the highest-earning spouse. The imagery is almost always a father protecting his family's income. This framing leads many people to believe that if they are not the primary earner, they do not need their own policy. Stay-at-home parents, part-time workers, and lower-earning spouses often assume their death would not create a financial burden.

The Reality

The economic value of a non-earning spouse is enormous and often invisible until it needs to be replaced with paid services. Childcare alone costs an average of $12,000 to $22,000 per year per child depending on where you live. Add household management, cooking, transportation, scheduling, tutoring, and all the other tasks a stay-at-home or part-time parent handles, and the total replacement cost exceeds $180,000 per year according to Salary.com. If the non-earning spouse dies, the surviving partner must either pay for all of those services or reduce their own work hours to take them on, losing income either way.

Both partners in a household should carry coverage. The breadwinner's policy replaces income. The non-earning spouse's policy replaces the services they provide. Together, the two policies ensure the family can survive financially regardless of which parent is lost.

Myth 7: Life Insurance Is Too Complicated to Buy

Why People Believe It

The traditional life insurance buying process was genuinely confusing. It involved in-person meetings with agents, stacks of paperwork, medical exams with blood draws and urine samples, and weeks of waiting for an underwriting decision. For a generation that orders groceries on an app and invests in stocks with three taps, the idea of sitting through an insurance pitch and scheduling a nurse visit feels unbearably outdated.

The Reality

The life insurance industry has modernized significantly. Many major insurers now offer fully digital applications that you can complete on your phone in 10 minutes or less. For healthy applicants under 40 or 45 seeking coverage up to $500,000 to $1 million, many companies offer no-exam policies that use data-driven underwriting instead. The process works like this: you answer health questions online, the insurer checks prescription databases and public records, and an algorithm determines your rate. Some companies can approve you and bind coverage the same day.

The decision itself is also simpler than most people think. For the vast majority of millennials and Gen Z buyers, the right policy is a 20- or 30-year term life insurance policy with a death benefit of 10 to 15 times their annual income. That is it. No cash value riders, no investment components, no complicated policy structures. You pick a term length, pick a coverage amount, answer some health questions, and start paying your premium. It is genuinely no more complicated than signing up for car insurance.

The Social Media Misinformation Problem

Millennials and Gen Z get a significant portion of their financial advice from social media, and life insurance is one of the topics most distorted by influencer culture. TikTok, Instagram, and YouTube are filled with content creators who present themselves as financial experts while earning commissions from insurance companies. The advice they give is often technically legal but deeply misleading.

The most common misleading narratives on social media include:

• "Term life insurance is a scam because you outlive the policy." This is like saying car insurance is a scam because you did not get into an accident. The purpose of term life is to protect your family during your highest-risk financial years. Outliving the term means you no longer have the mortgage, young children, and debts that created the need in the first place.
• "Whole life insurance is a better investment than a 401(k)." The cash value component of whole life insurance typically grows at 1% to 3.5% annually, net of fees. A low-cost S&P 500 index fund has averaged roughly 10% per year historically. Over 30 years, the difference in wealth accumulation is enormous. Whole life has legitimate uses for specific estate planning situations, but as a primary investment vehicle it significantly underperforms standard market investing.
• "Become your own bank with infinite banking." This strategy involves overfunding a whole life policy and then borrowing against the cash value. While the concept has some theoretical merit in narrow circumstances, it is extremely expensive, takes decades to break even, and is aggressively marketed by agents who earn substantial commissions on the high-premium policies required to make it work.

The underlying incentive structure explains the bias. Agents earn significantly higher commissions on whole life and indexed universal life policies than on term policies. A term life sale might pay an agent $200 to $500 in commission, while a whole life sale can pay $2,000 to $5,000 or more. Content creators who are also licensed agents, or who receive affiliate payments from insurance companies, have a strong financial incentive to steer viewers toward more expensive products. Always verify insurance advice against neutral, authoritative sources like the NAIC, FTC, or a fee-only financial planner. For a clear comparison of your options, read our guide on term life vs. whole life insurance.

What Life Insurance Actually Costs by Age: Real Numbers

Since cost misperception is the biggest barrier to coverage, here are real-world monthly premiums for term life insurance. These are approximate rates for a healthy, non-smoking applicant buying a 20-year term policy.

$250,000 Coverage (20-Year Term)

• Age 25: $12 to $16 per month
• Age 30: $14 to $19 per month
• Age 35: $17 to $24 per month
• Age 40: $27 to $38 per month
• Age 45: $42 to $58 per month

$500,000 Coverage (20-Year Term)

• Age 25: $20 to $28 per month
• Age 30: $25 to $35 per month
• Age 35: $32 to $45 per month
• Age 40: $50 to $65 per month
• Age 45: $75 to $100 per month

$1,000,000 Coverage (20-Year Term)

• Age 25: $30 to $42 per month
• Age 30: $38 to $55 per month
• Age 35: $50 to $72 per month
• Age 40: $82 to $115 per month
• Age 45: $130 to $180 per month

Look at those numbers for a 25- or 30-year-old. A half-million dollars of coverage for the price of a couple of coffees per week. The gap between what people think life insurance costs and what it actually costs is the single biggest reason younger adults remain unprotected.

How to Buy Life Insurance in 10 Minutes

The process of getting life insurance has been streamlined dramatically in recent years. Here is a step-by-step breakdown of how modern digital applications work for younger, healthy applicants.

1. Determine your coverage amount (2 minutes). Use the DIME method: add up your Debts, multiply your Income by the years of replacement needed, add your Mortgage balance, and add estimated Education costs for each child. Subtract existing savings and employer coverage. The result is your target death benefit. A quick rule of thumb is 10 to 15 times your annual income.
2. Choose your term length (1 minute). Match the term to your longest financial obligation. If your youngest child is a toddler, a 20- or 25-year term covers them until independence. If you just bought a house with a 30-year mortgage, consider a 30-year term. Most millennials choose 20- or 30-year terms.
3. Get quotes and compare (3 minutes). Use an online comparison tool or work with a licensed independent agent who can pull quotes from multiple carriers simultaneously. Premiums can vary by 30% to 50% between companies for identical coverage, so comparing is critical. Never buy the first quote you see.
4. Complete the application (3 minutes). Most digital applications ask basic personal information, health history questions, lifestyle questions (smoking, extreme sports, travel), and beneficiary details. Answer honestly — misrepresentations on a life insurance application can result in a denied claim. For no-exam policies, the insurer runs background checks using prescription databases, motor vehicle records, and credit history.
5. Get your decision (1 minute to a few weeks). For accelerated or no-exam underwriting, many applicants receive an instant or same-day decision. If a medical exam is required or your health history triggers a review, underwriting may take two to six weeks. Either way, you have done your part in about 10 minutes.

That is the entire process. For a generation that can order dinner, book a flight, and file their taxes from their phone, buying life insurance should not feel like an obstacle. The technology has caught up. The only remaining barrier is taking the first step.

Who Needs Life Insurance Right Now: A Millennial and Gen Z Checklist

If any of the following apply to you, you should strongly consider purchasing a term life insurance policy today, not next month, not next year:

• You are married or have a domestic partner who depends on your income
• You have children or are expecting a child
• You own a home with a mortgage
• You have co-signed private student loans, car loans, or other debt
• You financially support an aging parent, sibling, or other family member
• You own a business or have a business partner
• You want to lock in the lowest possible premium rate while you are young and healthy

Even if none of those apply today, your circumstances can change faster than you expect. Marriage, a new baby, a home purchase, or a parent's declining health can create an urgent need for coverage overnight. Buying a small policy now means you are already protected when life changes happen.

The Bottom Line: What These Myths Are Really Costing You

The seven myths covered in this guide are not just misconceptions. They are financial mistakes that compound over time. Every year you delay buying life insurance because you think it is too expensive, too complicated, or unnecessary, you pay a real price: higher future premiums, increased risk of becoming uninsurable, and the possibility of leaving your family exposed during the years when they need protection most.

The data is clear. A $250,000 20-year term policy for a healthy 30-year-old costs about $16 per month. The application takes 10 minutes on your phone. No medical exam is required for most healthy applicants under 40. And the death benefit is paid tax-free to your beneficiaries, providing immediate financial stability during the worst moment of their lives.

Millennials and Gen Z are the most capable generation when it comes to taking control of their finances. Life insurance should not be the exception. Stop letting myths drive the decision. Look at the real numbers, take 10 minutes, and get covered. Your future self, and the people who depend on you, will thank you for it.

Ready to take action? Start with our guide on whether you need life insurance, find out exactly how much life insurance costs, compare term life vs. whole life insurance, or explore our specific advice on buying life insurance in your 20s.