This phenomenon is affecting financial decisions in other important ways. A Capgemini report shared exclusively with Fortune in September shows that even though nearly 70% of adults under the age of 40 see life insurance as essential for a healthy financial future, the options they have don’t currently align with their financial priorities—making them forgo it altogether in some cases.

Samantha Chow, global leader for life insurance, annuities, and benefits sector at infotech and consulting firm Capgemini, told Fortune Gen Z and millennials will get life insurance if it’s super cheap or free. But the thought of having to pay for it when they still can’t afford to buy a home doesn’t make sense to them.

“They’re getting married later, having children later, not [making] financial decisions like [buying] a home or something of that nature,” she said. “They tend to either put more away, like in the 401K, or they tend to open up their own type of investment accounts and take that extra money and put it away.”

The study, which was conducted jointly with LIMRA, was based on a survey of more than 6,100 people aged 18-39 across 18 markets, 200 senior insurance executives across 18 markets, and macroeconomic forecasts developed in collaboration with Oxford Economics. Results show 63% of these consumers have no immediate marriage plans and 84% of both single and married people have no immediate plans to have a child.

Gen Z and millennials want ‘living’ benefits

A traditional life-insurance policy is essentially a financial contract between an individual and an insurance company that allows the user to make regular payments (premiums). In return, the insurer promises to pay a sum of money (a.k.a. death benefits) to the user’s named beneficiaries at the time the insured person dies. Typically, those are used to cover things like funeral costs, debts, living expenses, or even education or a mortgage.

But, there are other add-on features to life insurance policies called “living benefits” that the insured can use while they’re still alive. One living benefit includes accelerated death benefits, say, if the insured were to be diagnosed with a terminal illness. But other benefits like cash value access let the insured borrow or withdraw from their policy during their lifetime. That could allow for the insured to make major purchases like buying a home. Even Chow said she used her life insurance policy to purchase her first home.

“I purchased my first life policy at the age of 21. I paid almost cash for my first home,” she said. “I just pulled it out of the cash value. But no one explains that to people.”

That gets at the crux of the problem: Many members of the younger generations don’t realize or understand these living benefits can be available to them.

“You give us this much money for this amount of time, it’s going to build cash value. That’s not too overly complicated,” Chow said. “But how you can use it, when you can use it, the things you can use it for, what happens when you do these things versus something else, how it impacts the future. That’s the part that gets overly complicated.”

While some insurance carriers offer living benefits, 1 in 4 consumers are still turning down life insurance because the process is too confusing and the complex jargon makes policies difficult to understand and use, according to the Capgemini study.

The life insurance industry needs to change

Thanks to the $124 trillion Great Wealth Transfer, millennials and Gen Z are expecting an average inheritance of $106,000 per person. That makes life insurance an “important destination” for these funds, according to Capgemini. Of the people surveyed, 40% ranked life insurance and annuities as the third-most important place for their inheritance, behind stocks and cash savings. 

To prepare for generations with a different approach to savings, investments, and finances, the life-insurance industry needs to change, said Chow, who worked in the insurance industry for more than 25 years. 

“We failed you 1,000 times over,” Chow said of the insurance industry. “We don’t educate you at the time that you’re going through your benefit selection.”

Chow also argues life insurance needs to become more of a flexible financial product, like savings or investments. 

“It has to be a financial product. It has to meet the needs of a critical illness, of buying a home, of paying for your child’s college in the future. It needs to be an all-in-one type, flexible product that grows with your life.”

A version of this story was originally published on Fortune.com on September 15, 2025.

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