The TIP in Tipping Point: Trust, Influence and Price

The TIP in Tipping Point: Trust, Influence, and Price

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Author

Stephen Wood
Research Director, Consumer Markets
LIMRA and LOMA

June 2025

2025 marks the 15th year of LIMRA and Life Happens’ Insurance Barometer Study. Year after year, one of the strongest Barometer Study findings is how egregiously most Americans overestimate the cost of life insurance. It has always been abundantly clear that if a person hasn’t spent time shopping for a policy, they have no concept of how much it will likely cost them in monthly or annual premiums.

Prior to this year, the Barometer survey would ask respondents to estimate the annual premium for a $250,000 20-year level term life insurance policy for a healthy 30-year-old male. Consistently, over half would estimate more than three times what that true cost would be, and three-quarters of Americans would overestimate to an appreciable degree.

In 2024, we began asking on what respondents were basing their estimates and found that over half — 54 percent — said they relied on a “wild guess” or a “gut feeling.” These findings make for attention-grabbing headlines, but we wanted to know if people would be better at estimating what their own cost would be for that same 20-year level term policy.

In other words, LIMRA, Life Happens, and our members wanted a better picture of the life insurance pricing issue. Asking an older woman to price a policy for a younger man wasn’t giving us a clear picture of where the disconnects truly are.

To do this, we had each respondent self-assess their health on a 0-10 scale. Using that self-rating along with their gender and age, a matrix was developed using publicly available life insurance pricing models. For simplicity’s sake, let’s focus on the cohort most likely to be shopping for (nonfinal expense) life insurance. These are often the same consumers who are targeted by marketing and advertising: healthy young adults.

To be fair, these are often the same consumers least likely to have thought about life insurance in any context, let alone having spent time seriously shopping for it. This bears itself out in the data.

Of all age groups and ratings classes, young healthy respondents overestimate the true cost of their life insurance the most — on average, about 6 to 12 times more than what the true cost would be.

	Annual Premium Est. (Median)		How many times larger than the accepted range is the median guess?
Age	Male	Female	Male	Female
<31	$ 2,000	$ 2,000	10.42	11.9
31-35	$ 1,486	$ 1,000	7.28	5.56

Take a moment to think about that. What other product or service can you think of that people routinely overestimate the cost by even half that much? Why is this the case for life insurance, and moreover, what can we do about it?

Too Good To Be True?

LIMRA consumer research has found that young consumers assume that life insurance is priced similarly to their auto, home, or health insurance. The literal definition of life insurance is just not something many people, especially younger adults, understand. The idea that someone can pay a few hundred dollars annually for just a few years, and in the event of a tragedy, their beneficiaries, in the above example, would receive $250,000 seems almost unbelievable. With limited understanding of life insurance, risk pools and underwriting, this simply doesn’t make sense to too many people.

Convincing them that these products are legitimate and that claims will be paid as promised is perhaps harder than many realize. After all, if a shopper believes a product will cost them $1,500 per year and they are being told that the exact product is only a fraction of that, they may be wary of your product and company.

It is probably not fair to expect single people in their 20s to know what a particular type of life insurance would cost. It is not usually something they are thinking about as they begin their careers and typically have less discretionary income. But those in their early 30s who are getting married and perhaps starting families are still overestimating 5-7 times the true cost.

Trust and Influence

According to the Barometer Study, 14 percent of young consumers say they don’t trust life insurance companies and LIMRA’s April 2025 Consumer Sentiment Study finds that just over 1 in 4 young consumers (29 percent) report having more than some confidence in life insurance companies today. However, 41 percent of individual life insurance owners this age exhibit a high level of confidence.

Perhaps the old saying, “An educated consumer is a more likely consumer” needs to include the element of trust. A dichotomy exists in today’s world: an enormous amount of information is easily accessible to almost everyone, but which sources are trustworthy?

An interested consumer has a variety of means to obtain a general idea of premium pricing — notably comparison sites, AI platforms and online calculators. Social media influencers across platforms are another place many young adults receive financial and investing information.

Figure 2. Who Do Young Adults Follow on Social Media?

Who Do Young Adults Follow on Social Media?

The definition of each category above was left to the respondents’ own discretion, and we can assume there is a lot of overlap. However, the data suggest that LIMRA member companies are, in some very important ways, on equal social media footing with so-called influencers.

We cannot know who these “advisors” and “influencers” are — or where the two become one. But we as an industry — with marketers and social media professionals — must navigate a world of misinformation and even disinformation when it comes to certain aspects of our business.

Conclusion

This is likely not an easy battle to win. Social media influencers do not have compliance departments or brand standards. There is often little to no oversight regarding their content. And young consumers are approaching insurance and financial institutions with distrust. However, by approaching online content in a creative and fun way, with trustworthy, informational and interesting content, we can begin to make some headway in creating a generation of informed consumers