8
Life insurance
Canadians buy life insurance for many reasons, but mainly to
provide financial protection for their families in the event they
die prematurely. Proceeds from a life insurance policy are used
to replace income, pay debts, or create or add to an estate.
How life insurance is purchased
Canadians mainly buy life insurance on an "Individual" basis
through an agent or an advisor. Simpler products sold by direct
mail or on-line marketing, while increasing, still only account for
1% of individual premiums.
Life insurance is also acquired on a "Group" basis through an
employer or as members of an association, and is priced on the
risk characteristics of the group as a whole, rather than of the
individual consumer.
Life insurance protection by insured household and
income level
Consumers choose the amount of life insurance they hold based
on a number of factors: marital status, desired level of income
to support dependents, outstanding mortgages, etc. There is
a high degree of correlation in the distribution of life insurance
protection and demographics (such as age and income level).
Individual 78%
Group 22%
2015 life insurance
premiums
$18.5B
Canadians
owned
life insurance
coverage
22M
$4.3T
-
$100K
$200K
$300K
$400K
$500K
$600K
Average protection per insured household
Median age
Median household income
35
37
39
41
43
45
47
49
NL PEI NS NB QC ON MB SK AB BC CA
$388,000
Average protection per
insured household,
which approximates five
times the household
income
