According to a recent study, 44% of Canadian households own individual life insurance, compared to a majority of households (55%) in 2006, but up slightly from the 43% of Canadians who owned it in 2013.
LIMRA began collecting data on life insurance ownership among Canadians in 1982. The 2019 Canadian Life Insurance Ownership Study — Individual Life Insurance Report provides updates on historical trends and profiles of the life insurance market in Canada.
While the individual life ownership rate has declined since 2006, the number of households that own individual life has increased. Currently, 7 million households own individual life, suggesting growth of 1.2 million households (21%) since 2013.
More than half of Canadians under the age of 35 say they are “likely” or “very likely” to buy life insurance in the next 12 months. That means roughly 4 million Canadians under age 35 are in the market for individual coverage. For all Canadians, 1 in 3 say they are likely to buy life insurance in the next year, which suggests market demand of roughly 6 million working-age consumers.
“While the data from this study were collected in 2019, the information can be useful in developing market strategies in the age of COVID-19,” said Jim Scanlon, senior research director for LIMRA. “Families cut back on coverage during times of financial stress, but are certain to be more interested in having coverage for all household members during this time of concern over the COVID-19 pandemic.”
Slightly more men than women in Canada own individual life insurance (34% versus 31%). When it comes to amounts, however, men’s and women’s coverage levels are nearly equal, at $100,000 for individual life.
How Canadians Want to Buy Life Insurance
Canadians clearly prefer to purchase individual life through in-person sales. The percentage of owners who purchased only through in-person sales rose to 80% over the past six years, an increase of 8% from 2013 study period.
By contrast, in the United States, even prior to the pandemic just 41% preferred to purchase life insurance in-person.
“The COVID-19 pandemic will almost certainly change the preferences of Canadian consumers regarding in-person sales. The industry can expect to see consumers come to accept alternative distribution channels, due to their lack of person-to-person contact,” says Scanlon.
A consumer’s age plays an important role in their distribution preference. Those aged 65 and older are the most likely to prefer in-person sales only; 9 in 10 members of this age group purchase individual life only through in-person sales.
In all, the data on distribution preferences clearly indicate the in-person sales process is the strong preference of all age groups. Yet, the willingness of mature consumers to use alternative methods, combined with effects of the COVID-19 pandemic, are likely to push more consumers away from in-person sales and open up more opportunities for alternative distribution methods.
“In the current environment, when anxiety over the pandemic is ever present, it is a good time to emphasize the ‘peace of mind’ that life insurance provides,” says Scanlon. “This can be an especially effective message among existing policyholders, who should be reviewing their coverage adequacy at this time.”