LIMRA has released its 2019 Canadian Life Insurance Ownership Study – Individual Life Insurance Report, which confirms how transformative the COVID-19 pandemic has been for the industry.
According to the report, Canadians who purchased life insurance only through in-person sales made up 80% of all owners, up from 8% in the 2013 edition of the study. The preference was especially pronounced among older segments of the Canadian population, with 89% of respondents aged 65 and older saying that they purchased individual life insurance exclusively in person.
“The COVID-19 pandemic will almost certainly change the preferences of Canadian consumers regarding in-person sales,” said Jim Scanlon, senior research director for LIMRA. “The industry can expect to see consumers come to accept alternative distribution channels, due to their lack of person-to-person contact.”
That inflection point was confirmed in April last year, when LIMRA reported that online life insurance applications among North American carriers rose in March 2020 following the onset of the pandemic. For their part, insurers enhanced their digital product offerings by increasing coverage for simplified insurance, enhancing their capabilities to process e-applications and e-policies, and expanding support for non-medical underwriting, among others.
In its 2019 statistics for Canada, LIMRA found that 44% of Canadian households owned individual life insurance in 2019, a mild uptick from 43% in 2013. In absolute terms, 7 million household were found to own individual life, representing an increase of 1.2 million households since 2013.
Over half of Canadians under the age of 35 – approximately 4 million individuals – said they were “likely” or “very likely” to buy life insurance in the next 12 months. Across all Canadians, one third said they were likely to buy insurance in the next year, suggesting a demand pool of six million working-age consumers as of the 2019 survey.
“Families cut back on coverage during times of financial stress, but are certain to be more interested in having coverage for all household members during this time of concern over the COVID-19 pandemic,” Scanlon said.
That assertion is supported by a recent PolicyAdvisor Survey, which found that while 77% of Canadians said they’d forgo discretionary holiday expenses like eating out and entertainment, only 13% said they’d cut back on their life insurance premiums. In that same survey, nearly two thirds agreed that life insurance is one of the most important types of coverage to have during the pandemic (64%) and that it’s more important to them now than before COVID-19 (63%).
LIMRA found a slight gender gap in Canadian life insurance ownership in 2019, with 34% of men owning individual life insurance compared to 31% of women. How, amounts of coverage were nearly equal for both men and women at $100,000.
“In the current environment, when anxiety over the pandemic is ever present, it is a good time to emphasize the ‘peace of mind’ that life insurance provides,” Scanlon said.