Report Reveals Nearly Half of Canadians Skip Life Insurance

A recent survey has revealed that nearly half of Canadians are choosing not to purchase life insurance, primarily due to concerns over affordability. According to a report by insurance firm PolicyMe in collaboration with Angus Reid, approximately 42 per cent of Canadians either lack life insurance or are uncertain about their coverage status. Furthermore, 49 per cent have no intention of buying a policy within the next five years.

The findings underscore a significant trend among Canadian families, particularly those with children. Andrew Ostro, CEO of PolicyMe, noted that affordability remains the largest barrier. He stated, “Our recent report found that one in three Canadians without coverage (34 per cent) say it’s too expensive, and that jumps to 42 per cent among households with children.”

Life insurance premiums in Canada vary widely, ranging from approximately $15 to $300, depending on the policy specifics. For instance, a non-smoker seeking $500,000 in coverage for a 20-year term would pay about $33.27 monthly for a 40-year-old woman and $44.96 for a 40-year-old man.

The survey also revealed that 10 per cent of respondents cited high living costs as a factor delaying their insurance plans, while 27 per cent felt they did not need life insurance at all. Alarmingly, nearly 65 per cent of uninsured Canadians expressed doubt about obtaining life insurance over the next five years.

The perception of need plays a significant role in these decisions. Ostro pointed out that many Canadians do not view life insurance as essential. Additionally, 26 per cent of individuals expressed hesitance due to the medical tests required to qualify. Michael Aziz, Vice-President at Foresters Financial Canada, emphasized that individuals with health concerns might not realize they are still eligible for coverage.

The lack of life insurance could jeopardize the financial stability of families, according to Ostro. He noted, “Our survey found that one in four Canadians isn’t confident their families would be financially secure if they were to pass away unexpectedly.” This insecurity often reflects the reality of living paycheck to paycheck, managing high debt, and coping with rising living expenses.

Financial expert Jason Evans reinforced the critical importance of life insurance for families with dependents. He advised that purchasing life insurance while young and healthy is advisable, as developing serious health issues later may result in higher premiums or denial of coverage.

Trust issues also appear to influence decisions around life insurance. The PolicyMe survey indicated that about 21 per cent of Canadians believe insurers pay out only half of claims or less. In reality, the payout rate for life insurance policies in Canada is closer to 99 per cent. Ostro pointed out, “This disconnect highlights a trust problem. Insurers need to be more transparent about how often claims are paid.”

While rising living costs may delay insurance purchases, Ostro cautioned that premiums typically increase by about 8 per cent each year as individuals age. For families already under financial strain, this delay could lead to even higher costs in the future.

For those concerned about premium costs, understanding the differences between term life and whole life insurance is crucial. Term life insurance offers coverage for a specific period, such as 10, 20, or 30 years, while whole life insurance provides lifelong coverage. Although term life policies are generally more affordable, they lack the comprehensive features of whole life policies, which often come with significantly higher premiums.

Evans reassured that even modest coverage is better than none. “Starting with a small policy is better than having no coverage at all. Coverage can be increased later as finances improve,” he stated. Many employers also offer group life insurance, though it typically has limitations and may not suffice for all needs.

As Canadians navigate the complexities of life insurance, the insights from this survey highlight the importance of addressing affordability and trust issues. With the right information, individuals can make informed decisions that secure their families’ financial futures.