Life insurers face relevance crisis as 42% of consumers confused by policies

The life insurance industry has a problem that no amount of marketing can fix: the people who need its products don't understand them, can't afford them, or can't see why they matter. A new report from Capgemini and LIMRA, based on surveys of more than 6,100 consumers and nearly 200 insurance executives across three continents, lays bare the scale of the disconnect. While 47% of consumers say they're thinking about buying life insurance, more than 40% of those people feel confused or uncertain when they actually start looking. One in four walk away before completing a purchase.

The barriers are concrete and familiar. Technical jargon—the kind that makes a policy document feel like it was written in another language—stops 37% of potential buyers. Affordability concerns block another 35%, though research suggests many consumers overestimate what coverage actually costs. A quarter of people abandon the process because they simply don't see how life insurance connects to where they are in life. Younger people, those between 18 and 40, are especially likely to drop out. While 54% of them consider buying, 28% quit before finishing the transaction.

Once someone does buy a policy, the relationship often goes silent. Nearly 40% of policyholders report hearing almost nothing from their insurer after the sale closes. That absence matters. Half of the people who cancel their policies do so within the first three years—before the insurer has built anything resembling a lasting connection. The industry loses billions to these early exits, and the problem extends even to group coverage purchased through employers. More than half of employees with employer-provided life insurance say they've never actually checked whether their coverage fits their needs, leaving them with a false sense of security and potentially inadequate protection.

Consumers are not rejecting the idea of guidance. Quite the opposite. Two-thirds prefer working with a human advisor when making coverage decisions, and 85% want some form of advisor interaction at some point in their journey—to validate what they've researched, answer questions, or simply provide reassurance. Half of consumers say they'd be more likely to stay with an insurer that offers proactive support before, during, and after purchase. Yet fewer than a quarter of insurers can match consumers with advisors who share similar demographic characteristics, something consumers increasingly value as a sign that an advisor will actually understand their circumstances.

Artificially intelligent tools are entering the picture. Half of consumers plan to use generative AI to research and compare policies. But AI is not replacing human judgment; it's becoming a complement to it. The most successful insurers are orchestrating both—using AI to handle routine queries and comparisons while keeping advisors available for the moments when a consumer needs reassurance or personalized guidance.

The gap between the industry's best performers and everyone else is stark. Only 10% of life insurers qualify as best-in-class, yet these leaders have achieved 41% higher revenue growth over the past three years and maintain lapse rates 12% lower than their peers. They distinguish themselves through three concrete practices. First, they tailor advice to life stages, communicate in plain language, and proactively reach out around major milestones—using short-form content and relatable stories instead of dense policy language. Second, they modernize how advisors work, improving compensation, automating routine tasks, and giving advisors real-time data so they can serve customers better. Third, they unify customer data into a single view and deploy AI systems that can execute tasks independently, turning raw information into actionable insight.

The broader industry, meanwhile, remains fragmented. Only 18% of insurers have a unified strategy and customer journey roadmap. That absence of coordination means most consumers encounter inconsistency—clarity in one channel, confusion in another; engagement at the start, silence after. For an industry built on the premise of long-term relationships, the current model is burning through customers before those relationships have time to form. The top performers have shown that a different approach works. Whether the rest of the industry can follow remains an open question.