More Canadians have life insurance coverage than ever before, according to the most recent Canadian Life Insurance Ownership Study—Household Trends Report from LIMRA, a research organization focussing on the insurance, retirement and financial services industries.
According to the report, which monitors long-term patterns in life insurance ownership, adequacy of coverage and consumers’ attitudes about life insurance, the number of Canadian households with life insurance has grown to 12.6 million – an increase of 3.4 million over the past six years.
This is encouraging news considering insurance is not the most popular topic discussed among experts in the personal finance industry. In fact, LowestRates.ca columnist Ellen Roseman said in her most recent monthly column that she considers it to be a significant industry blindspot.
“Life insurance is very complicated,” David Chilton, author of The Wealthy Barber, told Roseman. “Even actuaries can’t explain it.”
The latest figures from LIMRA also show an improvement from earlier this year, when we reported that most Canadians are actually underinsured when it comes to life insurance. Some reasons for this is because people feel that life insurance is complicated; too expensive; they don’t trust the industry; and they think they can just rely on the coverage provided by group plans.
LIMRA reports that one in four Canadian households own both individual and group life insurance products. Since 2013, the number of households that own individual life insurance grew 41%, and those that own group life insurance grew by 35%. The top reasons Canadians gave for owning life insurance were: burial/final expenses, that it’s necessary to have, and in order to transfer wealth.
The study indicates Canadian consumers have difficulty making decisions when purchasing life insurance, including making the choice between term or permanent life insurance products, the right company to purchase from, and determining the right amount of coverage.
Term life insurance is a contract that guarantees coverage for a set amount of years. Unless it’s renewed, you will lose your coverage. It provides just as much protection as a permanent policy, but it’s the cheaper option of the two.
While the premiums for permanent life insurance cost more, permanent policies offer coverage that lasts your whole life. They also feature an investment component, which you can leverage while you’re still alive.
Currently, two out of three households (68%) have either group or individual life insurance, according to the latest LIMRA numbers.
Almost half (49%) of all households have group coverage, while just under half (44%) have individual coverage.
“This is consistent with the economic recovery in Canada over the past six years,” says Jim Scanlon, senior research director at LIMRA.
“Employers are in a better financial position to offer benefits, more Canadians are employed and eligible to receive benefits.”