A new study by insurance comparison platform MyChoice has shed light on significant gaps in life insurance coverage in the country.
The research aimed to assess the adequacy of life insurance for Canadian households by analyzing provincial data on household income and financial assets. MyChoice compared its recommended amount of life insurance coverage with the actual average coverage per household reported by the Canadian Life and Health Insurance Association (CLHIA).
The findings point to the issue of underinsurance in British Columbia, Ontario, Alberta, Quebec, and Newfoundland. It was found that households in British Columbia are underinsured by 27.5%, while the shortfall in Ontario is 23.6%. In Alberta, despite its higher average income, families are still underinsured by 19.4%.
Provinces such as Manitoba and Nova Scotia performed better, showing either minimal coverage gaps or slight over-insurance.
In British Columbia, where the cost of living is particularly steep, the study found that households should ideally have $704,700 in life insurance coverage, but the average policy only covers $511,000, leaving a significant gap of $193,700. In Ontario, the recommended coverage is $659,600, yet the average household is insured for just $504,000, resulting in a deficit of $155,600.
Here are the numbers across Canada:
|
Province |
Approximate |
Average protection |
Coverage gap % |
|---|---|---|---|
|
British |
704,700 |
511,000 |
27.5% |
|
Alberta |
703,400 |
567,000 |
19.4% |
|
Ontario |
659,600 |
504,000 |
23.6% |
|
Saskatchewan |
514,100 |
519,000 |
-1.0% |
|
Newfoundland |
487,500 |
363,000 |
25.5% |
|
Quebec |
449,600 |
391,000 |
13.0% |
|
Manitoba |
443,700 |
462,000 |
-4.1% |
|
Prince |
402,700 |
404,000 |
-0.3% |
|
New |
372,600 |
377,000 |
-1.2% |
|
Nova Scotia |
346,600 |
370,000 |
-6.8% |
Sources: MyChoice, CLHIA
MyChoice chief executive Aren Mirzaian highlighted the urgency of the issue, encouraging Canadians to regularly evaluate their life insurance policies.
“Many Canadian families are unaware that their current life insurance policies may not provide enough protection, especially with the rising costs of living and increasing mortgage debt,” Mirzaian said.
“It’s crucial to regularly reassess your coverage to ensure that your family is fully protected financially. Life insurance is not just about covering your mortgage – it’s about securing your family’s future and providing peace of mind during difficult times.”
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