Commonwealth_ More and more Canadians are choosing not to purchase life insurance, citing it as the most significant disincentive. In a recent survey polled by insurance firm PolicyMe in partnership with Angus Reid, 42 percent of Canadians are life-insurance-free or do not know if they have any, and 49 percent reported that they never wish to purchase one within five years.
The research finds that this is not a trend among Canadians without dependants. Even parents are going without coverage, evidence of how prevalent the cost problem is. 42 per cent of families, compared to 34 per cent of singles, cited life insurance as too costly.
Canadian life insurance premiums vary widely depending on the policy type, length of coverage, and applicant. The cost of the premiums is between $15 and $300 monthly. For instance, the rates are such that a 40-year-old female who is not a smoker to get $500,000 coverage on a 20-year term policy will pay about $33 monthly, while a similar-aged male will pay about $45. Even with these relatively modest amounts, most families already hard-pressed by rising living expenses consider life insurance to be a luxury or an expenditure they cannot sustain.
The survey identified several potential explanations for the reluctance to purchase protection. One in three Canadians without insurance answered that it is too expensive. Additionally, 10 per cent of those questioned remorsefully said that the cost of living has compelled them to put their plans for insurance on hold. Another 27 per cent claimed they do not see life insurance as something they need. Nearly two out of three of the uninsured—65 percent—said they would not buy it in the next five years.
Although affordability is the biggest hindrance, other issues come into the picture. Mandatory medical tests to qualify for coverage frighten some Canadians, as the process appears daunting or inconsiderate. Some rank life insurance below other aspects of personal concern, especially when evaluating mortgages, day-care payments, and other daily costs.
As a means of bridging the cost issue, getting to know the distinction between term life and whole life insurance is one area to have an influence. Term life insurance insures an individual for a certain number of years, e.g., 10, 20, or 30. Term policy premiums are normally quite inexpensive compared to whole life policy premiums, placing protection within the reaches of families looking to afford insurance. Term policies, however, are not carried beyond the term once it has expired. Payment is not made to beneficiaries if the insured outlives the term.
Whole life insurance carries protection throughout an individual’s life and contains investment and accumulation of cash value features. These added benefits seem attractive, but premiums are usually several times higher than for term policies. This places whole life insurance outside the cost range for a significant number of budget-stressed families.
Experts agree that, while term life covers less than whole life, it is a decent coverage—particularly for families otherwise without any. A lower policy can be an umbrella, and the coverage can be added later in life when money is available. Group life coverage policies are also available from some companies. These typically provide a partial benefit but are a beneficial addition to private policies.
Overall, the findings reveal a definite affordability gap that is leaving a significant percentage of Canadians uncovered, even in households with children who stand to gain most from being covered. As daily expenses continue to increase along with economic hardship, life insurance remains a secondary concern compared to daily expenses. But for those who have dependents to provide for, having less expensive options such as term life insurance can be an educated decision to achieve economic security.
