In the battle to convince Canadians to purchase insurance, life, critical illness and disability aren't created equally.
Advisors are doing a good job of pushing life insurance into the consciousness of Canadians, but critical illness coverage is struggling to gain a foothold.
“You’re seeing fairly low penetration of critical illness insurance because at the end of day your average Canadian has only so much disposable income to put into insurance,” said Steve Carter, senior vice president for product management and development at BMO Insurance. “Life insurance – that is the most significant financial impact and so people are going to put their dollars first towards the life insurance policy. The second event might be a disability that’s going to affect ability to work and make an income so that tends to be number two. The third would be something like critical illness policy.”
A BMO survey found the penetration of life insurance is fairly high at about 72 per cent, but disability insurance stood at 37 per cent and critical illness was at 16 per cent.
“There are gaps in the kinds of life or health insurance that Canadians should be looking at,” said Carter. “The penetration of disability and critical illness insurance is pretty low.”
The familiar refrain from clients of expense (38 per cent), their good health (27 per cent) and adequate work coverage (26 per cent) are the top barriers for brokers.
“If you become critically ill and those expenses aren’t necessarily covered by disability insurance, that are not covered by government healthcare so it’s a financial risk that a year or two you’re going through that getting well experience but if you don’t have money in the bank that can present a pretty significant financial hardship,” said Carter.
In the end the solution is teaching Canadians the importance of critical illness insurance. “Education is the key,” said Carter. “Critical illness insurance has been around for 25 years in Canada but it’s just not as familiar as life insurance.”
But a lot of Canadians don’t tend to think about the financial consequences of a critical illness. “So some of the things that an insurance advisor would get into would be expenses, like covering lost income if you are not able to work for a certain period of time,” said Carter.
“You’re seeing fairly low penetration of critical illness insurance because at the end of day your average Canadian has only so much disposable income to put into insurance,” said Steve Carter, senior vice president for product management and development at BMO Insurance. “Life insurance – that is the most significant financial impact and so people are going to put their dollars first towards the life insurance policy. The second event might be a disability that’s going to affect ability to work and make an income so that tends to be number two. The third would be something like critical illness policy.”
A BMO survey found the penetration of life insurance is fairly high at about 72 per cent, but disability insurance stood at 37 per cent and critical illness was at 16 per cent.
“There are gaps in the kinds of life or health insurance that Canadians should be looking at,” said Carter. “The penetration of disability and critical illness insurance is pretty low.”
The familiar refrain from clients of expense (38 per cent), their good health (27 per cent) and adequate work coverage (26 per cent) are the top barriers for brokers.
“If you become critically ill and those expenses aren’t necessarily covered by disability insurance, that are not covered by government healthcare so it’s a financial risk that a year or two you’re going through that getting well experience but if you don’t have money in the bank that can present a pretty significant financial hardship,” said Carter.
In the end the solution is teaching Canadians the importance of critical illness insurance. “Education is the key,” said Carter. “Critical illness insurance has been around for 25 years in Canada but it’s just not as familiar as life insurance.”
But a lot of Canadians don’t tend to think about the financial consequences of a critical illness. “So some of the things that an insurance advisor would get into would be expenses, like covering lost income if you are not able to work for a certain period of time,” said Carter.
