The Psychology Behind Underinsurance
Ever told yourself you were finally going to look into life insurance… and then somehow never got around to it? You’re not alone. Lots of people fully intend to get coverage but don’t take the next step. It’s not laziness or lack of responsibility—there are real, predictable patterns in human psychology that make this decision harder than it seems.
When we understand these patterns, we can approach life insurance with more clarity and confidence. Here are three common tendencies that often hold people back:
Cost misperception – Many people assume life insurance is far more expensive than it actually is. In fact, 72% of Americans overestimate the cost of coverage. When something feels financially out of reach, it’s easy to avoid exploring it further—even when more affordable options might be available.
Optimism bias – This bias leads us to believe that we’re less likely than others to face serious situations like illness, injury, or loss. When we feel “it won’t happen to me,” it becomes easier to postpone decisions that prepare us for what-if scenarios, including purchasing life insurance.
Normalcy bias – This is the belief that life will continue as it always has. Because things have been fine so far, we unconsciously assume they’ll stay that way. It’s why someone might skip buying insurance—they’ve never needed it before, so it doesn’t feel urgent, even though unexpected events can happen to anyone.
Recognizing these mental habits is the first step toward overcoming them. A small action—like requesting a quote, researching policy options, or simply starting a conversation—can make the process feel much more manageable.
Your future self may be grateful you took that step today.
