A recent survey by PolicyMe and Angus Reid reveals that a significant number of Canadians are forgoing life insurance largely due to perceptions of high costs. Approximately 42% of Canadians either lack life insurance or are uncertain about their coverage status. Alarmingly, nearly half, or 49%, have no plans to purchase any insurance in the next five years. This trend is more pronounced among families with children, with 42% citing affordability as a major concern. The cost of life insurance can vary widely, but for a typical 20-year term policy, monthly premiums may range from $15 to $300. For example, a healthy 40-year-old woman could pay around $33.27 for $500,000 coverage, while her male counterpart might pay approximately $44.96.
The survey identified multiple barriers to obtaining life insurance. About 34% of uninsured Canadians described the expense as prohibitive, while 10% blamed high living costs for postponing their insurance plans. Additionally, 27% stated they do not perceive a need for life insurance, and a notable 26% are deterred by the medical tests often required during the qualification process. As Michael Aziz, Vice-President at Foresters Financial Canada, noted, those with health issues may not be aware of their eligibility for coverage. Ostro added that this mindset poses a risk to financial stability, particularly for families already managing tight budgets or high debts.
The potential financial fallout from lacking life insurance is significant, according to the survey. One in four Canadians expressed doubts about their families’ financial stability in the event of their unexpected passing. Jason Evans, a certified financial planner, emphasized the critical importance of life insurance for families with dependents, advocating for early purchase while individuals are still young and healthy. This proactive approach can safeguard against potential health issues that could later render individuals ineligible for favorable premiums.
Public perception of insurance payouts is another hurdle; around 21% of Canadians believe that insurers only settle half of claims or fewer. This misconception contributes to a broader trust deficit in life insurance companies, with Ostro urging for increased transparency regarding claims handling. He noted that, in reality, the payout rate in Canada is approximately 99%. For families grappling with financial strains, abstaining from acquiring insurance may exacerbate their situation as premium costs tend to rise, averaging an 8% annual increase for those who postpone their applications.
The choice between term and whole life insurance further complicates the decision-making process. Term life insurance, which provides coverage for a specified period, is typically more affordable but may leave beneficiaries without a payout if the insured outlives the policy. Conversely, whole life insurance, which covers individuals for their entire life and includes investment components, comes with higher premiums. Ostro pointed out that while term insurance may not be comprehensive, it offers necessary protection at lower costs, and starting with a small policy could be beneficial for financial flexibility in the future.
Ultimately, the report indicates that despite barriers, Canadians must reconsider the value of life insurance in securing their families’ financial futures. Coverage doesn’t only protect dependents from financial hardship—it can also mitigate the anxiety of leaving loved ones in precarious situations. With options available even for those concerned about high costs and health issues, making informed decisions about life insurance now can lead to more secure outcomes down the line. Emphasizing education around life insurance offerings can further empower consumers to make better choices about their financial protection.
