Seventy per cent of Canadian fathers have a life insurance policy, yet almost 40 don’t know how much it’s worth or how much their families will need, according to a recent RBC Insurance survey.
And with Father’s Day approaching, now may be the right time for advisors to broach the topic of life insurance with many of their clients.
“Dads view purchasing life insurance as the responsible thing to do. Their top reasons for purchasing a policy include income for their partner and children; paying off the mortgage; and financing their children’s education,” said Cathy Preston, vice president, Life and Health, RBC Insurance. “And it’s no surprise that our survey found that it’s the big life events, such as marriage and having children that trigger their investment in life insurance.”
Almost 40 per cent of men purchased or upgraded their policy when they got married and 76 per cent did so when they became a father.
While half of fathers estimate they hold policies worth between $100,000 and $500,000, many dads believe they need, on average, another $380,000 of coverage to feel secure.
“Life insurance is one of the simplest and most affordable ways to protect the financial future of families. It’s clear from the findings that far too many Canadians don’t know how much their life insurance policy is worth, nor how much they need,” said Preston.
As for the 30 per cent of fathers without a policy, almost half (44 per cent) say they have enough investments and other financial resources, or that their household income will ensure the family is protected.
RBC Insurance offers these tips to discuss with clients:
> Remind clients that life insurance works by providing beneficiaries with a tax-free benefit after the policy holder’s death. This money can help pay off loans and debts; maintain lifestyle and pay day-to-day expenses; pay for children’s education and cover expenses like funeral costs, while protecting retirement or rainy day savings.
> While major life events, such as getting married and having children, motivate people to buy life insurance, Canadians need to re-evaluate their needs as their family grows and changes.
> Life insurance should be tailored to suit an individual’s budget, lifestyle and needs at every stage of life — and offer the flexibility to make changes as needs evolve.
> Employer-provided plans can leave families unprotected because coverage amounts may be insufficient and may not continue if the individual leaves the job or becomes disabled.
The RBC Insurance Poll was conducted online via Ipsos Reid’s national I-Say Consumer Panel to 1,127 Canadians parents. Data collection was March 27 to April 5. The poll is accurate to within ±3.3 percentage points of the entire Canadian parent population.