Americans are confused about life insurance, according to data recently released by Northwestern Mutual.

A little more than half of American adults own permanent life insurance and more don't own it mainly because it is misunderstood, according to 2,010 people surveyed in the Northwestern Mutual 2015 Planning and Progress Study.

Only a minority of respondents (23 percent) know life insurance can be used to pay mortgages and debt, 15 percent know it can be used to pay estate taxes and 8 percent know it can be used as a source of cash flow in retirement, Northwestern says.

At the same time, 14 percent say they do not own life insurance because they don't know much about it or never thought about it, 43 percent say it is too expensive and 31 percent say it is a low priority compared with other expenses, the study says.

"At a time when so many Americans are wrestling with how to achieve long-term financial security, people are overlooking one of the most critical tools to meet that goal," says David Simbro, senior vice president of life and annuity products for Northwestern Mutual. "Unfortunately, too many people lack a full understanding of all the ways permanent life insurance can be used to provide financial security. They see it as a single utility product, when it can be used for an amazingly diverse range of needs.

“Permanent life insurance is an ideal way to manage risk, address uncertainties, and still add cash value and financial flexibility to a portfolio," he adds.