Life insurance ownership has declined in Canada, but with many Canadians indicating that they need more insurance, the industry has an opportunity to bolster sales, a recent survey by LIMRA suggests.
The worldwide association of insurance and financial services companies has released key findings from the 2013 Canadian Life Insurance Ownership Study, which monitors long-term patterns in life insurance ownership, adequacy of coverage, and consumers’ attitudes about life insurance.
The study shows that only 68% of Canadian households have any life insurance at all, compared to 79% in 2006 – the last time LIMRA conducted this study.
“Since 2006, Canadians have lived through a recession resulting in less discretionary income for most people,” said Cheryl Retzloff, senior research director for LIMRA. “Given that environment, it’s not surprising to see overall life insurance ownership decline.”
Many Canadians recognize that they are underinsured, the survey shows. Married households with children under age 18 appear to be particularly vulnerable. Three quarters of respondents in this category said they would have difficulty with living expenses if a primary wage earner were to die.
The top factors holding consumers back from buying life insurance include a perception that it’s not affordable, and the fact that it’s considered a low priority.
Canadians prefer to buy life insurance face-to-face
Canadians will continue to depend on advisors for their life insurance needs, the study suggests. When asked how they would prefer to buy life insurance in the future, 76% of respondents said would prefer to buy it face-to-face, as opposed to buying from work, the Internet, or by direct mail or phone.
“Our research found that six million Canadians believe they need more life insurance and three quarters of those we surveyed would prefer to buy it face-to-face,” said Retzloff. “These findings should suggest a high potential for increased sales.”
While Canadian consumers may prefer personal contact, however, LIMRA’s Canadian Recruiting Trends data shows that 14% fewer sales professionals were recruited in 2012 compared to five years earlier (13,500 versus 15,600). This combination of fewer agents and slow adoption of non-face-to-face purchasing channels could pose challenges for Canadian insurance companies, LIMRA says.
Of the Canadian households that prefer to purchase life insurance through non-face-to-face methods, the Internet was the most popular, at 11%, followed by workplace (7%) and direct by phone or mail (6%).
Meanwhile, consumers in the U.S. appear to be considerably less dependent on advisors, with only 57% indicating that they prefer to buy life insurance face-to-face. Of the U.S. consumers polled, 18% said they prefer to buy it in the workplace, 16% said they prefer to buy it only, and 9% said they prefer to buy it direct.
This year’s Insurance Ownership Study surveyed more than 3,200 Canadian household financial decision makers. The results were weighted to represent all Canadian households.