Over 90% of Canadians are dangerously under-insured: Survey
PolicyAdvisor.com research finds enormous life insurance shortfall among Canadians with financial dependents
Toronto, Canada: New research from Canadian online insurance brokerage PolicyAdvisor.com finds that an overwhelming majority of Canadians with dependents are significantly underinsured and are in denial about the severity of the situation.
PolicyAdvisor.com’s inaugural State of the Nation: Canadian Life Insurance Trends 2019 report sought to determine consumer trends and attitudes about life insurance ownership, needs, knowledge, and digital appetite by polling Canadians that need life insurance.
While most surveys poll all Canadians as respondents for generalised findings, PolicyAdvisor’com’s survey uniquely focused on those who most need life insurance coverage: Canadians that have family members as financial dependents.
“The findings were eye-opening, to say the least,” said Jiten Puri, founder and CEO of PolicyAdvisor.com. “We had some general expectations about what we would learn, but some of the hard numbers paint a starker picture about financial unpreparedness than we had anticipated.”
Life insurance ownership
The most surprising result was the extent to which Canadians are underinsured. 49% of Canadians with dependents surveyed have never purchased life insurance before.
Of those indicating they have a life insurance policy, 40% are only covered through a work or group benefits plan. This is problematic for multiple reasons.
“While a life insurance policy through one’s employer is better than none at all, in most cases the coverage is minimal, and maybe equivalent to only one or two years of the policyholder’s salary,” said Puri. “The bigger issue is that if the insured person leaves their workplace or association, they lose this insurance coverage. And they’ve also lost time; individual coverage is less expensive in one’s younger years. While a group policy is a nice top-up, it should not be the primary source of one’s coverage.”
The Financial Consumer Agency of Canada suggests that life insurance should cover between seven and ten years of the policy holder’s annual salary, which is in line with many industry practitioners’ recommendation of ten years of annual income coverage. Yet 91% of Canadians with dependents have coverage below this recommendation, with well over half of respondents (54%) having coverage of only two years or less of their annual salaries. A mere 22% had five years’ worth of coverage. Only nine percent of those surveyed fall within the insurance experts’ recommended range.
Life insurance needs and knowledge
All told, the average Canadian with financial dependents self-reports a life insurance shortfall of approximately $256,000 in the event of their death but have not done anything to bridge that shortfall.
Puri believes the problem stems from both a lack of education and an abundance of denial; although only one-tenth of respondents are actually adequately insured, 43% reported they are confident they have sufficient coverage. The lack of life insurance literacy is evident with only 35% of respondents claiming they understand what is included in their own life insurance policy and only 22% acknowledging they review their life insurance needs annually. Without clear resources or tools to help them determine their needs, Canadians are in a lurch.
The only silver lining in all this – Canadians are seeking greater access to online tools to research and purchase life insurance. 70% of Canadians surveyed suggested that they would use digital platforms to research and/or purchase life insurance online.
The survey was conducted via SurveyMonkey’s Canadian panel in September 2019 and included 500+ qualified respondents indicating they had financial dependents. For more survey results, visit PolicyAdvisor.com/magazine.
PolicyAdvisor.com is an innovative Canadian online insurance broker providing a digital solution to an archaic industry, combining modern technology, intuitive design and real-world expertise to make insurance buying simpler, straightforward and stress-free.
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