Helping to fill the insurance gap for young Canadian self-starters

The world of business has evolved significantly over the past two decades.

Not too long ago, starting a small business meant going to a bank and applying for a large loan to rent and refurbish a commercial space, buy equipment and supplies, stock up on inventory, and hire employees for a fledgling business that, with luck, will have enough customers and foot traffic to be profitable in a couple of years.

But today, the barriers to entrepreneurship have gotten much lower. Thanks to an evolution in technology and the rise of the platform economy, it’s now far easier for a young person with an innovative product or idea to bring it to life.

“When we think of millennials and Gen Z, they're not as tied as previous generations to the idea of being employed at large organizations,” said Michael Aziz, chief distribution officer at Canada Protection Plan, a Foresters Financial company. Aziz was previously the Co-president at Canada Protection Plan, which became a Foresters Financial company after the two announced that they were combining forces last year.

“The young adults of today grew up in the world of Mark Zuckerberg’s, young entrepreneurs who were able to launch successful businesses without the large upfront investment,” Aziz said. “They just needed an idea, and a way to make it happen like an app or online presence.”

The post-Gen X crowd, Aziz said, are also more inclined to carve out their own paths in life. That means a greater proportion of young adults are walking away from the traditional 9-to-5 careers, and are launching businesses that either give them more freedom or let them do things they believe in. But as they make these bold leaps, they may be overlooking the need for a crucial safety net.

“Through the use of group plans, employers provide significant financial benefits for their workers,” Aziz said. “Employees can get life insurance equivalent to two or three times their salary, and they may also get short- or long-term disability insurance. Critical illness could be part of their portfolio of benefits as well. But young adults who start their own business don’t get that traditional employer-sponsored coverage.”

Some people who chase the opportunity of entrepreneurship may also be overlooking other unique risks. In general, employees have to think about how to provide for their families and keep up with financial obligations and expenses in case they fall ill, get injured, or pass away.

But someone who is a self-employed business owner will generally have a wider circle of influence and, therefore, a greater scope of responsibility. If they have to step away from their business because of a medical issue or accident, they’ll have to consider not just how to feed their family and pay for their household expenses, but also how to cover their ongoing business expenses.

“The problem is that they may not be aware of these risks until it’s too late, or a friend tells them about it,” Aziz said. “They may be thinking about the risks that come from having to find their own clients or building their own business. But as financial professionals, we must educate them and tell them they have to protect themselves against some of the other risks.”

For anyone not paying attention, the statistics around health conditions in Canada can be shocking. Studies about cancer have shown that one in two Canadians will be diagnosed with cancer in their lifetime. Certain cancers also have a 95% survival rate where the patient will live for at least five years after they’re diagnosed, during which their quality of life will be drastically altered.

Beyond lack of awareness, Gen Y and Gen Z Canadians may be reluctant to get life insurance coverage because of the perceived cost. But as Aziz points out, consumers can get different amounts of coverage to match their budget, with the ability to build a portfolio of different policies to cover all of their liabilities.

“You can buy term policies, such as a Term 10, Term 20 or Term 30 time horizon, or you can buy permanent coverage, which will cover you forever,” he said. “You can also build a ladder of protection by insuring a portion of your risks with a T10 policy, and have other risk buckets covered with T20, T30, T75, or permanent policies.”

While some who have a record of health concerns might have trouble getting coverage with many insurers, Aziz said Canada Protection Plan has no-medical insurance products where those hard-to-insure cases may still get up to half a million dollars in coverage. No-medical coverage can also be very appealing to millennials and Gen Z consumers focused on speed and convenience.

And because Foresters is a fraternal company, people who own policies from Foresters or Canada Protection Plan are entitled to other member benefits aside from life and health insurance coverage, which they don’t have to wait until the future to use.

“You can apply for a grant of up to $2,000 to organize a volunteer or fun family activity in your community,” Aziz said. “You can also request a Foresters Care Grant, where you can get $200 annually to give back to your community or help a cause you care about. Members also get access to LawAssure, a complimentary online document preparation service that gives Foresters’ members access to customizable wills, powers of attorney, and healthcare directives from the comfort of their own homes.”

Aziz encourages all consumers to approach a trusted financial advisor to get life and health coverage and ask how they can get coverage from Foresters Financial or Canada Protection Plan.

“There are many different aspects to consider when you get insurance. People can certainly do their own research, but we would certainly encourage them to find a professional who can do a needs analysis, assess their budget, and help develop a portfolio of insurance with that information,” he said. “Today, you have advisors willing to help you in person, or through Zoom or Teams. Everyone has access, so now we don’t have excuses.”