Insurance Curator NEW YORK — Recent data from the 2025 workplace benefits open enrollment season shows a significant shift in insurance purchasing behavior, as Gen Z and Millennial employees are opting into supplemental life insurance at rates higher than previous generations at the same career stages.
The trend, highlighted in reports from industry analysts at LIMRA and major benefit providers, indicates that younger workers are increasingly prioritizing financial "safety nets" amid ongoing economic volatility. Unlike basic life insurance, which is typically provided by employers at no cost to the employee, supplemental life insurance requires workers to pay premiums for additional coverage through payroll deductions.
“We are seeing a fundamental shift in how the younger workforce views mortality and financial preparedness,” said David Levenson, president and CEO of LIMRA and LOMA. “For Gen Z and Millennials, the pandemic and subsequent inflationary pressures have underscored the fragility of financial stability. They aren't just taking the free basic coverage; they are actively choosing to pay for more.”
A Generation-Led Surge
According to the 2024 Insurance Barometer Study, conducted jointly by LIMRA and Life Happens, nearly half of Gen Z (48%) and Millennials (49%) reported an intent to purchase life insurance within the next 12 months. This intent has translated into action during the 2025 open enrollment cycles, with supplemental participation rates among workers under age 40 rising by an estimated 12% compared to three years ago.
For many younger workers, the decision to opt for supplemental coverage is driven by a desire for portability and higher death benefits. Basic employer-sponsored plans often offer a flat sum or one year’s salary—an amount many financial planners argue is insufficient for those with young families or significant student loan debt.
“The 1x salary coverage is no longer the benchmark for a generation facing high housing costs and debt,” said Sarah Foster, a benefits consultant based in Chicago. “Younger employees are now more likely to use digital enrollment tools to calculate their actual need, which often leads them to select 3x to 5x their annual earnings in supplemental coverage.”
Economic Drivers and the "Need Gap"
The surge in participation comes despite a persistent "need gap" identified in the industry. The 2024 data suggests that while participation is up, many younger consumers still underestimate the cost of coverage while simultaneously fearing they lack enough protection.
MetLife’s 22nd Annual U.S. Employee Benefit Trends Study found that Gen Z is the most likely demographic to report feeling "financially fragile." This anxiety is a primary catalyst for the uptick in voluntary benefits. Of the Gen Z employees surveyed, 54% cited "peace of mind" as the primary reason for electing supplemental life insurance, outpacing "family milestones" which traditionally drove insurance sales for older generations.
“The narrative that young people feel invincible is being replaced by a narrative of pragmatism,” said Todd Katz, executive vice president of Group Benefits at MetLife. “They are looking for ways to mitigate risk in a world that feels increasingly unpredictable.”
Digital Integration and Ease of Enrollment
The 2025 enrollment cycle has also benefited from the maturation of Human Capital Management (HCM) platforms. Companies like Workday and ADP have integrated "decision support" tools that use AI to show employees how supplemental life insurance premiums impact their take-home pay in real-time.
For a 25-year-old non-smoker, supplemental life insurance is often available at "group rates" that are significantly lower than individual policies purchased on the open market. Industry data shows that Gen Z employees are three times more likely than Baby Boomers to complete their benefit enrollment on a mobile device, where these simplified, "one-click" supplemental options are prominently featured.
“Frictionless enrollment is a major factor,” Foster said. “When a 24-year-old sees that they can add $200,000 in coverage for the price of a streaming subscription per month, the conversion rate is much higher than it was in the era of paper forms.”
Impact of the "Sandwich Generation" and Student Debt
The shift is also attributed to the unique financial burdens faced by Millennials, many of whom are now part of the "sandwich generation"—supporting both aging parents and young children. Furthermore, the legal reality of student loans has played a role; while federal loans are often discharged upon death, private student loans may not be, leaving co-signers, often parents, liable for the debt.
“Younger workers are increasingly aware that their debt doesn't necessarily disappear,” said Kevin Mayeux, CEO of the National Association of Insurance and Financial Advisors (NAIFA). “Supplemental life insurance is being used as a specific tool to ring-fence student loan obligations and ensure that their parents or partners aren't left with a six-figure bill.”
Employer Response and Future Outlook
In response to this demand, employers are expanding their voluntary benefit menus for 2025. Many organizations have increased the "guaranteed issue" limits—the amount of coverage an employee can buy without undergoing a medical exam.
“Employers are using these benefits as a retention tool,” Mayeux added. “By offering robust supplemental options, they are signaling to younger workers that they understand their specific financial pressures.”
However, industry experts caution that while participation is rising, education remains a hurdle. A significant portion of the workforce still overestimates the cost of life insurance by as much as three-fold. As the 2025 enrollment window closes for many firms, insurers are expected to focus on "off-cycle" education to maintain this momentum.
For now, the data suggests that the younger workforce is no longer viewing life insurance as a "set it and forget it" benefit for the end of a career, but as an essential component of a modern financial portfolio.
“This is a demographic that values transparency and self-service,” Levenson said. “The 2025 trends show that when you provide them with the tools to protect their future, they are more than willing to invest in it.”