September is Life Insurance Awareness Month, which is the sort of thing most people scroll past. Fair enough. But the research group behind the campaign published a number this year that changed how I think about the whole category.
LIMRA asked Americans to price a basic term life policy. People under 31 guessed a median of $1,200 a year. The actual cost for that age group was $192.
That is not a rounding error. That is looking at a $16 monthly bill, deciding it costs a hundred dollars a month, and walking away from coverage you could have paid for out of the change in your checking account.
The price isn’t the obstacle. The guess is.
Every year LIMRA and the nonprofit Life Happens run a consumer survey called the Insurance Barometer Study. The 2026 edition found that 52% of American adults have some kind of life insurance, individual or through work. Another 38% say they need coverage or need more of it, which works out to roughly 92 million adults walking around knowing they have a gap.
Ask those people why they haven’t bought anything and the top answer, in every generation surveyed, is that it costs too much. Half of Gen X respondents said so. Forty percent of millennials. Thirty-eight percent of Gen Z.
Meanwhile only 32% of adults say they feel knowledgeable about life insurance at all. Those two findings are obviously related. People are pricing a product they’ve never priced, arriving at a scary number, and filing it under “someday.”
The actual numbers, by age
LIMRA published the guesses alongside the real costs for a basic term policy, and the spread is the most useful thing in the whole study.
Under 31: median guess of $1,200 a year against an actual cost of $192. Ages 31 to 35: guess of $900, actual cost of $204. Ages 36 to 40: guess of $500, actual cost of $252.
Two things stand out. The gap narrows as people get older, probably because by 40 you’ve had a few insurance conversations and recalibrated. And the real cost barely moves across a decade of your life. Going from your late twenties to your late thirties raises the price by about $60 a year. Waiting until your fifties is a different story, because term life pricing is banded by age and health, and both of those get more expensive at an accelerating clip.
Broader market data lines up with LIMRA’s figures. NerdWallet cites average pricing of about $26 a month for a 20-year, $500,000 term policy. Half a million dollars of coverage for roughly the cost of two streaming services.
Your work policy is doing less than you think
Of the Americans who do have life insurance, nearly half (47%) have it through their employer. That coverage is easy to like. It’s cheap or free, there’s no medical exam, and you got it by checking a box during onboarding.
It also has two holes in it.
The first is the amount. Most group policies default to one times your salary, sometimes two. If you earn $70,000 and your family is carrying a mortgage, that payout covers the funeral and maybe a year of breathing room. LIMRA found that 47% of Americans say they’d have trouble paying living expenses within six months of losing their primary earner, and only 29% think they’d still be financially secure two years out. Group coverage is a big part of why those numbers look the way they do.
The second hole is that the policy usually belongs to the job, not to you. Leave, get laid off, or retire, and the coverage typically ends or converts into something much more expensive. An individual term policy you bought yourself follows you across every job change for the length of the term.
None of this means you should drop the employer benefit. Take the free coverage. Just stop treating it as the whole plan.
Where the $16 comes from in a tight budget
If you’re stretching every dollar already, here’s the honest framing. Sixteen to thirty dollars a month is a subscription. It’s roughly one streaming service, or a gym membership you’ve been meaning to cancel, or three takeout coffees. It is a smaller line item than almost anything else you’re currently paying for automatically.
The move that works for most people is to fund the premium from a cut rather than from willpower. Pull your last three months of statements, find one recurring charge you’d forget existed if it vanished, and cancel it the same day you buy the policy. The swap is neutral to your budget and adds a few hundred thousand dollars of protection behind it.
It also pairs naturally with whatever you’re already doing in a savings account. Insurance covers the catastrophic version of a bad year. Cash covers the ordinary version, the busted transmission and the three weeks between jobs. They’re not substitutes, and a thin emergency fund is a reason to buy cheap term coverage sooner rather than a reason to skip it.
How to shop without getting talked into something bigger
Term life is the boring product, which is exactly why it’s cheap. You pick a length (20 or 30 years is standard), a face amount, and you pay a level premium until the term runs out. There’s no cash value, no investment component, and no reason for anyone to sell it hard.
That last part matters, because when you call about term life you will often hear about permanent policies instead. Whole life and universal life serve real purposes for a narrow set of situations, mostly estate planning and certain business arrangements. They also cost several times more per dollar of death benefit. If your goal is replacing your income for the years your family depends on it, term does that job.
Get quotes from at least three carriers, or use an independent broker who runs them all at once. Prices for identical coverage vary more than people expect, because each insurer prices health conditions differently. Bankrate and NerdWallet both publish free comparison tools, and the National Association of Insurance Commissioners lets you check a company’s complaint record before you sign anything.
If a medical exam is the thing stopping you, ask about accelerated underwriting. Plenty of carriers now approve healthy applicants under a certain age and coverage amount based on records and data alone, sometimes within days.
If the number still doesn’t work
Buy less. A $250,000 policy is not the “right” answer for a family with a $400,000 mortgage, but it beats nothing by $250,000. A 15-year term costs less than a 30-year term and might cover the exact window that matters, which is usually the years your kids are dependent or the mortgage is outstanding.
You can also check supplemental group coverage at open enrollment this fall. It’s usually cheaper than the individual market for smokers and people with health conditions, though it still disappears when the job does.
The one thing worth avoiding is another year of the $1,200 guess. Pull a quote, look at the real number, and then decide. That takes about ten minutes and it’s the only part of this that has to happen today.
