Insurance Advice: People in Canada are Severly Under-Insured

If you live anywhere in Canada you know that we are lucky enough to live in one of the riches and best countries in the world, yet many Canadians do not do sufficient financial planning or get insurance advice. Even with the recent economic down-turn, the unemployment rate in Canada was much better than in America, and our banks weathered the crisis better than any other country in the world. Canadians still have one of the highest average standards of living in the entire world. Even with economic uncertainty still out there, Canada shows signs of a strong and stable economy and the ability to become a resource supplier to the world. The future looks bright for Canada and Canadians coast to coast.

With all this prosperity and a promising future, you would think that financial planning, risk planning and life insurance advice would be a priority for the average person in Canada. But, when it comes to life insurance planning, Canadians are drastically under-insured.

People in Canada are not getting good Life Insurance Advice

Canada has a low average ownership of life insurance

The LIMRA, North America’s premier research organization for the life insurance industry, reports life and health insurance ownership statistics for Canada. The 2009 report showed Canada as having a very low average ownership of life insurance compared to The US at only 55%. Some provinces are much higher, with Quebec having the highest level of life insurance ownership at 63%, followed by Ontario at 59%. Alberta was on of the lowest average life insurance ownership provinces at only 50%.

Maybe the uninsured Canadians don’t really need personal life insurance because life insurance coverage through their group benefits plans at work.. If we were to combine all Canadians who owned personal life insurance with those that have some life insurance through work, only 76 per cent of Canadians would have any form of life insurance coverage. That means almost one in four people in Canada are walking around with no life insurance at all. Many of these “uninsured” Canadians have families who rely on their incomes to provide a comfortable standard of living. They need to get qualified life insurance advice, now!

The life insurance funding gap

The average sized life insurance policy in Canada is about $275,000. With a population in Canada of 34.1 million people, and with 24% of the population having no life insurance, how many people would need to buy at least the average sized life insurance policy to fill this gap in Canada’s personal risk protection portfolio?

Let’s limit the number of Canadians to those between the ages of 15 – 64 (working aged Canadians). This is 64% of the population. That means 5.24 million Canadians in their working years are without life insurance coverage (34.1 million Canadians – 64% of these – 24% of remainder). This works out to $1,441 Billion of life insurance coverage that should be put in place to protect Canadians who are without risk protection.

Why the lack of coverage – are people in Canada cheap?

People in Canada are not cheap! They are not willing to risks their family’s future to save a few dollars a month in life insurance premiums. From personal experience, when sitting down with clients in Canada (and I’ve worked in Alberta, Saskatchewan and Ontario selling life insurance), I find them to be very willing to get insurance advice and spend their hard earned money on personal risk protection plans that make sense. The fault really lies with the Life Insurance Industry in Canada.

There are a number of factors contributing to the general lack of life insurance advice in Canada.

• The average age of insurance advisors in the province is now 57 years old. Many of these agents have built a solid books of business and are living off their existing client base. There is no motivation to continue to find new clients and make new sale because these aging life insurance brokers are heading into their retirement years.
• Not enough new advisors are entering the business, and there is a general lack of support when they start. Upwards of 85% of new life insurance brokers/agents entering the industry fail within the first 5 years.
• Many successful life insurance brokers in Canada are focused on the high net-worth clients, spending their time and money wooing these clients. Far fewer life insurance brokers/advisors are serving average, middle income Canadians.
• Banks in Canada have started to sell insurance through call centres or insurance kiosks, offering creditor/mortgage insurance or cheap term life insurance. Banks generally offer no in-depth insurance advice or permanent life insurance solutions. People dealing with banks for life insurance coverage are usually also under-insured for their needs.

It comes down to a lack of advisors across Canada. There just aren’t enough insurance advisors in Canada, having enough quality conversations with average Canadians, discussing their insurance and risk management needs. It will become more difficult to find qualified insurance advice as the group of aging life insurance brokers begin to exit the industry and release their existing clients. A qualified life insurance broker with experience will become very hard to find. Even today, there are not many life insurance advisors who are willing to take on middle income clients with limited budgets for life insurance.

Life Guard Insurance can get you professional insurance advice

At Life Guard Insurance we believe in protecting you from any and all risks that life can throw at you. Protecting your family and yourself from risk is our first job, and if budget allows, we build in long-term cash values and equity into your plan. We are focused on providing solutions to all Canadians, from the middle income family to the wealthy executive and business owner. If you are interested in life and health insurance advice we can connect you with one of our many experienced life insurance brokers across Canada.

For a free, no obligation review of your insurance portfolio, please contact us. We will help you get life insurance advice to protect your family.

The article was written by +Mitch Reynolds. If you found this article interesting or it made you think, please feel free to share your comments below. Liking us on Facebook, giving us a +1 on Google or Tweeting this article about Canadians needing more life insurance advice would be very much appreciated.

Related posts:

1. Buying Life Insurance? Get Good, Honest Advice from an Insurance Broker in Canada

One Response to “Insurance Advice: People in Canada are Severly Under-Insured”