iStock

Single clients are more financially vulnerable than couples or families in times of crisis, and group benefit plans often fail to fill the gap. Adam Mamdani, vice-president and head of third-party distribution at RBC Insurance says it’s important for advisors to discuss risk and protection with unattached clients. 

“They bear a lot of that risk, versus a traditional working family where multiple people are contributing to the household,” Mamdani said. “With singles, the financial burden isn’t shared — there’s no one else to fall back on — so the risk is significantly higher.”  

Canada’s single population on the rise too — 4.4 million people lived alone in 2021, up from 1.7 million in 1981, according to Statistics Canada.  

Unlike families, where life insurance is often the go-to product, Mamdani said that advisors working with single clients should prioritize disability and critical illness insurance to safeguard their assets in case tragedy strikes. 

Employer-sponsored benefits can be insufficient, Mamdani said. “It’s really important that single people ... understand what’s in their group [benefits plan]. In many cases, a group plan does not adequately cover someone in the event of disability, and it requires that person to purchase a top-up and make sure they speak with an advisor to ensure they have adequate insurance.” 

Advisors should review their client’s existing coverage and recommend actions when needed. It’s even more important for business owners because most do not have group benefits.  

“For self-employed individuals, it’s extremely important to have coverage because they may not have access to any group benefits,” Mamdani said. “They’re solely relying on that income, and they need to ensure they’re protected. This is quite different from a family, where life insurance is a big part of the portfolio, as it helps replace income and cover expenses like a mortgage, children’s education and other debts.” 

When explaining critical illness coverage, Mamdani said he often compares income protection to putting a warranty on a cash machine.  

“If I had a machine in your apartment that printed $100 bills every day, would you protect that machine? That machine is us — we go out every day and earn income. If we’re not protecting ourselves, we’ve got bigger problems,” he said. 

Advisors must also explain the tax advantages of insurance to single clients, he added. Many benefits, including those from disability, critical illness and life insurance policies, are tax-free.  

Mamdani also said that advisors should focus on estate planning for single clients with multiple assets. Without a spouse, children or default heirs, a lack of planning can create legal complications and delays in asset distribution if clients don’t have a will.  

“More than half of Canadians don’t, and only 15% have a plan for how their money and belongings will be transferred,” Mamdani said, referring to an Ipsos study.