Canadian Life and Health Insurance Facts, 2014 Edition

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Part 3 A t the end of 2013, Canadians owned $4.1 trillion of life insurance. This represents an increase of 3.5 per cent or $136 billion over the amount owned at the end of 2012 and is more than one and a half times the amount owned a decade ago. Since 2003, life insurance ownership has grown at an average annual rate of 5 per cent. At the end of 2013, the industry administered more than 13.8 million individual life insurance policies in Canada in addition to group life insurance contracts, covering over 36 million certificate holders. Through ownership of some form of life insurance – with individual policies, group plans or both – more than 21 million Canadians currently provide their dependants with financial protection in the event of their deaths. (Life insurance ownership by region in Canada is shown on page 7.) Ownership by type of insurance While the ownership of all types of life insurance continues to increase, growth in individual insurance in force has consistently exceeded that of group insurance since the early 1980s. In fact, the average annual growth rates over the last decade were 6 per cent for individual life insurance and 3.8 per cent for group life insurance. At the end of 2013, the split in total ownership was 58 per cent individual insurance, 42 per cent group insurance. Ten years ago, individual insurance accounted for 53 per cent of the total. Individual life insurance Although many variations and combinations have been developed, individual life insurance can be classified as one of two basic types of coverage: permanent or term. Of the total amount of individual life insurance coverage in force at the end of 2013, 42 per cent was permanent, cash value insurance and 58 per cent was term insurance, including the term portion of combination plans. This is almost a reversal of the 2003 situation when term insurance accounted for 46 per cent of total life insurance coverage. Permanent insurance offers more than death protection. As a by-product of the level premium system, or other premium patterns that exceed the actual cost of protection in the early years, these policies build cash values that can help families meet financial emergencies, pay for specific savings or provide retirement income. The policyholder who surrenders or gives up the protection of the life insurance policy is entitled to its cash value. Whole life insurance has been the traditional form of permanent insurance, but in recent years universal life insurance has become more popular. At the end of 2013, protection offered through permanent life insurance policies was split with slightly more Year-end Individual Group Total 1960 $ 32,128 $ 14,739 $ 46,867 1970 62,845 55,977 118,822 1980 177,915 253,279 431,194 1990 559,893 597,502 1,157,395 2000 1,068,471 1,019,446 2,087,917 2005 1,516,287 1,266,184 2,782,471 2006 1,623,876 1,331,659 2,955,535 2007 1,733,133 1,414,887 3,148,020 2008 1,845,782 1,510,154 3,355,936 2009 1,944,269 1,547,722 3,491,991 2010 2,053,840 1,572,720 3,626,560 2011 2,157,720 1,633,015 3,790,735 2012 2,268,916 1,654,470 3,923,386 2013 2,370,425 1,689,450 4,059,875 Sources: OSFI, CLHIA Life insurance coverage Figures since 2000 have been restated to include business of life insurance companies and fraternal benefit societies. Earlier years include data for life insurance companies only Life Insurance Owned by Type of Insurance (millions) 6 ❖ By year-end 2013, Canadians owned: Individual life insurance $2,370 billion Group life insurance 1,690 billion Total life insurance $4,060 billion ❖ More than 21 million Canadians own life insurance for the future financial security of their families. ❖ Average amounts owned were $189,600 for insured individuals and $373,400 for insured households. In Detail Life Insurance Ownership

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