Uncovering underserved insurance markets

Life insurance usage increases to 45% for Canadians between the ages of 35 and 44 and hits peak ownership at 51% for those between the ages of 45 and 54. The level of insurance policy ownership then begins to drop off for people older than 54.

The research also found a substantial difference in life insurance usage among groups of Canadians with specific cultural backgrounds. Canadians whose cultural origins are from North America, the British Isles and Western Europe are 10 percentage points more likely to own life insurance than Canadians whose families come from the Middle East and East or Southeast Asia.

The fact that life insurance is least popular with the youngest Canadians is not surprising, according to Jim Ruta, president of AdvisorCraft Media and Consulting in Toronto and a video columnist for IE. Millennials generally aren’t considered to have many assets, and the average advisor, who is in his or her 50s, usually are looking for clients with substantial assets. As well, there is a distinct generation gap between a millennial and that middle-aged average advisor.

Fewer major expenses

Advisors have a perception of millennials as being cash-poor individuals in their 20s living in their parents’ basements, Ruta suggests. However, he contends, many millennials actually have the resources to put toward an insurance policy because that age group has fewer major expenses.

“[Millennials] are unprotected because advisors are not going after them. We have to prepare millennials properly for the future. I think they’re way more open to [life insurance] than some of my colleagues think,” he says.

The dearth of millennial advisors in the industry also is an issue, Ruta says, and greater efforts must be made to recruit younger individuals: “Millennials can talk to [their peers] and get things going to get people started on a program.”

The research also suggests that life insurance is a bigger priority for Canadians with children: insured Canadians are twice as likely to own a registered education savings plan (RESP) than the rest of the population.

This finding should motivate insurance advisors to have important conversations with their clients who are parents, says Brandon Bertelsen, research director at Credo.

“People who have children [and] have RESPs also are likely to be cautious and seek other options to protect themselves in the future,” he says.

In addition to millennials and parents, another group that may benefit from a discussion with you about insurance is individuals with roots in regions such as the Middle East and East or Southeast Asia.

People from these backgrounds have different views of planning for the future, according to Sean Long, who provides life insurance sales training with London, Ont.-based Helena Smeenk Pritchard & Associates, also known as Insurance Know-How!

The client of Western descent, Long says, tends to be attracted to instant gratification and low cost. Term insurance suits this particular mentality, and insurance companies “will do massive things to promote term insurance,” Long says.

On the other hand, individuals of Eastern origin are culturally more inclined to have a longer-term view of their financial security, Long says, and they are more likely to be interested in whole life insurance if you position the product properly.

“Any time I sit with a [client of Asian descent], I know it’s going to be an hour and a half to two hours,” says Long. “[This demographic] requires a complex explanation; they want to see value vs cost. And when you show them value vs cost, they make the purchase.”

The study also picked Canadians’ brains on the topic of their relationship with a financial advisor who has provided them with life insurance vs an advisor who focuses on investments.

Canadians with life insurance are more likely to say their advisor is trustworthy, knowledgeable and honest, in contrast to uninsured Canadians.

Personal relationships

Insurance advisors have very personal relationships with their clients, notes Ruta: “Nobody knows more about an individual than a good life insurance advisor.”

Insurance advisors are skilled at drawing out responses to difficult questions surrounding the legacy that clients want to leave behind following their death, he explains.

More than 8,000 Canadians were asked about their use of life insurance and the value they place on their insurance advisors for this edition of the Financial Comfort Zone Study.

The ongoing survey is meant to gain insight into the relationships among financial advice, financial well-being and overall life satisfaction in Canadian society. Canadians are polled on a monthly basis, and the number of survey participants will grow to 12,000 within 12 months.

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