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10 People buy life insurance for many reasons, but mainly to provide financial protection for their families in the event they themselves should die prematurely. A person creates an estate, or adds to one, with a life insurance policy. The future of this estate is protected as long as the policy is maintained over the years. During 2014, Canadians purchased $318 billion of life insurance, $23.5 billion less than the previous year. Total sales of life insurance products decreased 7.4 per cent during the year, with a 0.3 per cent decline in individual policies and a 23.7 per cent fall in group contract sales. Group sales include the transfer of group plans to new carriers, which is treated as a new purchase in industry statistics. (Life insurance purchases by region in Canada are shown on page 11.) Individual life insurance Of the 2014 total, 70 per cent of new life insurance protection purchased in Canada was bought on an individual basis – that is, by personal or family decision, usually through a life insurance agent. Purchases of individual life insurance totalled nearly $221.5 billion. During the year, about 692,300 individual life insurance policies were sold, averaging $319,900 each. Today new individual policies are about 63 per cent larger in size than those sold 10 years ago, when they averaged $196,800 each. According to LIMRA's report on Canadian Individual Life Insurance Sales (Fourth Quarter, 2014), less than half (43 per cent) of the new individual life insurance policies bought in Canada were some form of permanent life insurance, either wholly or in part. The remainder were in the form of term policies that, because of their relatively larger size, accounted for about three-quarters of the total dollar amount of individual life insurance coverage purchased. Ten years ago, term products accounted for just under half of new policies and two-thirds of insured amounts. Universal life insurance is a form of permanent insurance that combines life insurance protection with an investment account, used to determine cash values for the policy. Accounting for about 18 per cent of new policies, universal life products generated just under one-quarter (22 per cent) of the total annualized premiums for new individual policies and accounted for 14 per cent of the total individual life insurance coverage purchased, according to the previously mentioned LIMRA report. Life Insurance Purchases by Type of Insurance (millions) Year Individual Group Total 1960 $ 4,576 $ 1,553 $ 6,129 1970 9,024 5,223 14,247 1980 37,764 26,036 63,800 1990 97,937 58,755 156,692 2000 133,895 109,648 243,543 2005 172,595 75,554 248,149 2006 189,220 88,595 277,815 2007 191,129 90,644 281,773 2008 195,749 111,811 307,560 2009 207,428 105,923 313,351 2010 216,354 115,429 331,783 2011 219,254 116,234 335,488 2012 229,685 93,937 323,622 2013 222,129 119,305 341,434 2014 221,480 96,480 317,960 Sources: OSFI, CLHIA Life insurance coverage Figures since 2000 report on the business of life insurance companies and fraternal benefit societies. Earlier years include data for life insurance companies only Life Insurance Purchases