Are your clients underestimating how much life insurance coverage they will need? New figures show the amount varies considerably depending on circumstances.
There’s a chasm between the amount of life and health insurance Canadians think they need and what they actually require, according to a BMO study.
Canadians feel they need an average of $265,607 in life insurance coverage paid out upon their death to ensure that funeral expenses and debt are covered and that their dependents are supported financially.
“Canadians by and large are underinsured,” said Steve Carter, senior vice president for product management and development at BMO Insurance. “I think every insurance advisor knows there’s always a pretty big gap between what Canadians really need to cover themselves against financial risk associated with death and critical illness.”
The amount of insurance Canadians think they need also varies depending on one's personal situation. According to the study:
According to the study, 65 per cent of Canadians believe that developing a critical illness or becoming disabled as a result of an accident would have a significant financial impact on their or their family's standard of living. Further, more than half (55 per cent) believe it would take fewer than six months for them to start feeling financially strained if they became seriously ill or were disabled; more than a third (38 per cent) would feel financially strained in fewer than three months.
“It represents a significant opportunity for brokers,” said Carter. “It ties in with the fact that Canadians by and large are underinsured. Not enough of them have life insurance, not enough have disability insurance and clearly not enough have critical illness coverage. The opportunity is there. The question is how do you reach the Canadian consumer and engage them to have a conversation around insurance. That’s the challenge.”
Canadians feel they need an average of $265,607 in life insurance coverage paid out upon their death to ensure that funeral expenses and debt are covered and that their dependents are supported financially.
“Canadians by and large are underinsured,” said Steve Carter, senior vice president for product management and development at BMO Insurance. “I think every insurance advisor knows there’s always a pretty big gap between what Canadians really need to cover themselves against financial risk associated with death and critical illness.”
The amount of insurance Canadians think they need also varies depending on one's personal situation. According to the study:
- Those who are married/common law with children said they need an average of $320,974
- Those who are married/common law without children said they need an average of $290,962
- Single individuals (without children) said they need an average of $186,629
- Those who are single with children said they need an average of $106,517
According to the study, 65 per cent of Canadians believe that developing a critical illness or becoming disabled as a result of an accident would have a significant financial impact on their or their family's standard of living. Further, more than half (55 per cent) believe it would take fewer than six months for them to start feeling financially strained if they became seriously ill or were disabled; more than a third (38 per cent) would feel financially strained in fewer than three months.
“It represents a significant opportunity for brokers,” said Carter. “It ties in with the fact that Canadians by and large are underinsured. Not enough of them have life insurance, not enough have disability insurance and clearly not enough have critical illness coverage. The opportunity is there. The question is how do you reach the Canadian consumer and engage them to have a conversation around insurance. That’s the challenge.”
