Cost is the reason most Americans give for not owning life insurance, according to the 2015 Insurance Barometer Study, released by US-based research organisation, LIMRA, and non-profit organisation, Life Happens.

However, the study said 80% of consumers misjudge the price for term life insurance, with Millennials – people born between 1980 and the mid-2000s – overestimating the cost by 213%, and Generation X consumers – people born between 1965 and 1980 – overestimating the cost by 119%.

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While most consumers have a moderate understanding on how age and health factors can affect the cost of life insurance, many are unaware of other factors that can impact how much they pay for life insurance.

Todd A. Silverhart, corporate vice president and director of LIMRA Insurance Research, said: "Only about a third of consumers knew that their credit histories and driving records could affect how much they pay for life insurance, and less than half realized their hobbies and lifestyle could impact the cost of their life insurance policy."

"In addition to believing life insurance is too expensive, Silverhart said the research has shown that consumers are intimidated by the process of buying life insurance — with 4 in 10 don’t know how much they need or what to buy."

Silverhart said: "Having a better understanding about the factors that influence pricing might help consumers feel more confident and encourage them to pursue getting coverage they believe they need."

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The Barometer also found that information about those cost factors may not be reaching potential customers as effectively as previously believed.

It found that younger Americans are more likely to use the Internet to shop for insurance, and older Americans are more likely to purchase offline.

However, the age at when those purchase preferences begins to change occurs at 45 – about a decade later than had previously been thought. LIMRA said this finding could help shed new light on the most effective ways to engage specific age groups about life insurance.