When you’re mapping out your financial plan, there are certain bedrock accounts and products you likely always consider. You’ve got to have that emergency savings fundpreferably in a high-yield savings account. And retirement accounts — no financial plan is complete without them. You take advantage of your 401(k) employer match and contribute to a Roth IRA, too. Oh, and life insurance. You need a life insurance package as part of any quality financial plan.
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Wait, what? If that last bit came as a “record scratch” moment of confusion for you, you’d hardly be alone. In a survey conducted by GOBankingRates and New York Life that focused on Americans’ attitudes and approaches toward personal finance, the team found that a substantial number of respondents didn’t consider insurance essential to their own financial planning — much to the consternation of financial advisors.
These experts disagree with the more laissez-faire approach that too many people take toward putting life insurance in their financial plan — indeed, they say it’s a core part of any good plan.
On a scale of 1-10, respondents were asked to rank how intensely they prioritized insurance in their personal plans based on how much they identified with the statement “Insurance (e.g., life, disability) is a necessary component of any financial plan” at number one — down to “Insurance (e.g., life, disability) is not connected to my overall financial plan” at 10.
Only 23.5% of overall respondents agreed as strongly as possible that insurance was a necessary component of any financial plan, with 12.6% saying that it doesn’t factor into their financial plans. Splitting the difference at number 5, 12.1% of respondents suggested that they kinda-sorta knew they should prioritize it. Why are the numbers of people who understand the importance of life insurance so relatively low?
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Melissa Murphy Pavone, founder of Mindful Financial Partnershas a theory — that people are conditioned to think they get enough coverage at work. While acknowledging that these plans can be a great start, she said they generally don’t offer enough coverage. Pavone explains to her clients that employer-provided life insurance usually provides only one to two times their salary, which likely won’t cover their family’s full financial needs.
She’s quick to add that coverage can change if you switch jobs, or if an illness or injury keeps you from working.
“I frame it this way: Your family’s financial security shouldn’t be tied to your employment status,” she said. “I highly suggest a separately owned policy. And it’s important to review and update it as your life changes.”
One notable finding from the survey is how consistently lukewarm respondents across age groups were about prioritizing life insurance. While you might expect people over 65 to score it higher, only 26.9% ranked it as essential — not far ahead of the youngest group, the 18- to 24-year-olds, at 23.9%. Interestingly, the 25-to-34 group lagged behind both, with just 17.6% rating insurance as a necessary part of a financial plan. Of course, people over 65 are less likely to need life insurance than younger adults with families to support — but that only makes the low prioritization among younger respondents more concerning.
Those who are still in their working years and failing to consider life insurance in their financial planning are missing out on the opportunity to take a stronger hand in designing their family’s financial future — and gain some much-needed peace of mind in the process.
According to Chad Gammon, CFP, owner of Custom Fit Financialprotecting future generations is key to any good financial plan. With adequate life insurance, you’ll ensure that your family won’t be burdened by debts while maintaining their cost of living. You can also use life insurance to set up your children for success down the line by ensuring that their college funds won’t be impacted. Life insurance can also make a difference in your surviving spouse or partner being able to retire without having to dip into their own funds to make ends meet.
For Gideon Alper, founder and family planning attorney at Alper Lawlife insurance should be treated as a personal asset — not some add-on perk.
“In a well-structured financial plan, it does three things: replaces lost income, protects against long-term liabilities like mortgages or education costs, and ensures your estate passes cleanly — without leaving your family scrambling,” he said.
Part of why Gammon and other advisors emphasize insurance is because financial plans are rarely one-size-fits-all. There are different types of life insurance to suit different needs.
“First, I typically look at term life insurance,” he said. “This is cost effective for a specific period (like 20-30 years). Later in your life, you may not need life insurance.”
As Alper assists his own clients in finding the right policy, he advises them to look beyond the payout number alone. There are some core questions he invites them to consider: “What’s the term? Are there living benefits? Can you convert it later if your health changes? For parents especially, the goal isn’t just to ‘have life insurance’ — it’s to make sure their children’s futures aren’t financially derailed if something happens.”
Looking to build a legacy? Check out our Life to Legacy guide for expert advice and smart moves you can make today.
GOBankingRates and New York Life Insurance surveyed 1,009 Americans aged 18 and older from across the country between March 19 and March 25, 2025, asking twenty-one different questions: (1) What is your current employment status?; (2) Which of the following category or categories best describes your race or ethnicity? (If more than one category applies, please select all that apply); (3) What are the source(s) of income for your household? (Please select all that apply); (4) Please choose the approximate level of investible assets for your household; (5) Using the scale below, how do you feel about the following statement: “I often take the opportunity to discuss my knowledge of financial products or services with others”; (6) Using the scale below, how do you feel about the following statement: “I regularly read financial news or financial publications”; (7) Using the scale below, how do you feel about the following statement: “Thinking about my future sometimes keeps me up at night”; (8) Using the scale below, how do you feel about the following statement: “I have enough money to live the way I would like to”; (9) Using the scale below, how do you feel about the following statement: “I believe that The American dream is within reach for people like me”; (10) Using the scale below, how do you feel about the following statement: “Stories in the media sometimes make me nervous about my financial future”; (11) Using the scale below, how do you feel about the following statement: “I can’t really take risks in my life because I don’t have a safety net if things go wrong”; (12) Thinking about the nation’s economy, how would you rate economic conditions today?; (13) A year from now, do you think that during the next twelve months we’ll have good times financially, or bad times, or what?; (14) Compared to 6 months ago, how has your level of uncertainty changed regarding the following societal and economic issues?; (15) Do you own any of the following products? (Please select all that apply); (16) Do you currently have a financial plan?; (17) On a 1 to 10 scale, where 1 means not at all confident and 10 means completely confident, how confident are you that you will meet your financial goals?; (18) What kind of financial professional have you worked with? (Please select all that apply); (19) Using the slider below, please indicate which statement best describes you.; (20) Using the slider below, please indicate which statement best describes you.; and (21) Using the slider below, please indicate which statement best describes you. In order to take the survey the respondents had to pass two screener questions (S1)
Who is the primary financial decision-maker in your household? with the answer being they were at least involved in the households financial decision making and (S2) Which range best describes your total annual household income before taxes? with an answer above $50K. GOBankingRates used PureSpectrum’s survey platform to conduct the poll.
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This article originally appeared on GOBankingRates.com: Study: Nearly Half of Americans Don’t Consider Insurance in Financial Planning — but Most Financial Advisors Disagree
