Is the Life Insurance Industry Failing Canadian Consumers?

The Insurance & Investment Journal’s article, “Underinsurance is a real risk for Canadians who rely on group insurance – LIMRA” (November/December 2013) provides highlights of LIMRA’s 2013 Canadian Life Insurance Ownership Study.

While it would be beneficial to see LIMRA’s research and analysis, the highlights provided do not paint a very pretty picture, and suggest to me that we (the Canadian life insurance industry) are failing Canadian consumers.  With some comparative data dating back to 1982, here are some selected findings:

  • Number of households that own individual life has dropped from 59% in 1982 to 43% in 2013
  • 41% have term only; 46% have permanent only; 13% have term and permanent.  (NOTE – I was trained (and still believe) that families should have term insurance for temporary needs and permanent insurance for permanent needs.)
  • 32% of Canadian households have no life insurance whatsoever, compared to 22% in 1982
  • 37% of Canadian households rely totally on group insurance for their life insurance needs (1-2x salary), compared to 28% in 2009
  • Of those who bought life insurance, only 37% bought it for income replacement purposes.  57% bought it for final expenses (NOTE – yes, the small face amount, simplified/guaranteed-issue coverage)

And, when someone does want to buy fully underwritten coverage, don’t we continue to make it a less-than-desirable experience (another subject for another day)?Priority Planning Pyramid

What scares me the most is that the top two reasons for not buying life insurance are:  (1) low priority, and (2) the perception that is not affordable.  (NOTE – My early sales training was based on the Priority Planning Pyramid where protection elements are at the very foundation of a financial plan.  Have things changed?  I don’t think so.)

Overall, not a very flattering picture!  So where do we go from here?  A good starting point would be our industry (fraternal, mutual and stock companies alike) committing to a continuous, long term plan of educating Canadians on the value of life insurance.   The last thing we want is for the 2018 Canadian Life Insurance Ownership Study to show a continuation of current trends.

Share your comments!

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2 comments on “Is the Life Insurance Industry Failing Canadian Consumers?
  1. Rob Baboth says:

    Great article Mike…..Life Insurance is still an opportunity

  2. Less than 50% of household in the US have life insurance. Most consumers in the middle market simply do not have the resources to fund their retirement needs; life insurers will need to focus on those in a position to invest in retirement products. Meanwhile, many consumers are looking for comprehensive retirement plans that reflect their family, employment, and real-estate status and aspirations—issues that require much more than insurance products.

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