The oldest members of Generation Z have just turned 28, the age at which people traditionally, have or are close to purchasing their first life insurance policy. Gen Z, however, is bucking the norm. Their life and career trajectories defy historic milestones, and their methods for researching and purchasing insurance are vastly different.
For insurers in the typically slow-to-change life and health markets,
Policies don't match priorities
The good news for life and health insurers is that 68% of adults under 40 view life insurance as essential, according to the
To understand how this impacts Gen Z, we need to look at recent history. Older Gen Z members grew up in the shadow of the Great Financial Crisis in 2008 and watched its effects ripple through their households. This was followed by post-pandemic inflation in the 2020s, which continues to drive the cost of goods and services, including houses, to record highs.
As a result, milestones like homeownership and parenthood, which typically trigger first-time life insurance policy purchases, have shifted sharply to the right. Instead of buying their first home, many members of Gen Z are renting or living at home with their parents. Additionally, birthrates across the United States are dropping due to the rising costs of parenthood. The Capgemini survey quantifies these shifts, noting that 63% of people under 40 have no immediate plans to marry, while 84% have no immediate plans to have a child.
Experience gaps widen
Generation Z's views on customer experience are also fundamentally different from those of past generations. To find out how, INSTANDA interviewed
Life insurers struggle to deliver these types of standout customer experiences. Fifty-nine percent of people under 40 want digital engagement, but just 31% of life insurers offer the platforms to enable it, per the Capgemini report. The biggest barrier is rigid legacy technology. While 77% of younger people say they expect comprehensive, data-driven recommendations from life insurers, just 16% of companies can provide them at scale due to inflexible, outdated systems.
Adapting without rebuilding
From a product perspective, shifting traditional life insurance policies away from milestones and toward income protection will help capture the market. Members of Gen Z who may not be ready for home ownership or parenthood will resonate with the need for establishing a financial safety net. We expect to see innovative insurers design income protection products that can transition into more traditional life coverage when Gen Z chooses to buy a home or marry later in life.
From a customer experience perspective, life insurers must continue developing frictionless digital journeys that make policies easier to understand and purchase. Yet many insurers cannot do so because they are hamstrung by existing systems that lock them into traditional ways of operating.
Rising to the challenge will not require a costly system replacement. A more cost-effective, strategic path is implementing solutions that give insurers the agility to design, build and scale new products, evolve customer journeys faster and create transformative efficiencies. Tools like AI-driven no-code platforms give IT and business teams adaptability and the control to adjust coverage structures and buying journeys to meet this digitally native generation where they are now, while also providing the flexibility to anticipate their future needs.
Moving from stability to agility
The slow-to-evolve nature of life insurance has created stability for decades, but yesterday's strategies will no longer work in the future. As Gen Z matures, life insurers will need to continue providing traditional life products to older adults while shifting toward income protection solutions for younger customers. Those who build flexibility into their products and process ecosystems will gain an edge, while those who fail to do so will risk losing relevance—and policy volume—as demand continues to shift.
