Younger clients raising families would often benefit from term life insurance in addition to workplace plans.Drazen Zigic/iStockPhoto / Getty Images
With inflation squeezing budgets, one line on the ledger that shouldn’t be cut – especially for those raising families – is life insurance.
Yet, recent studies suggest this important risk mitigator is being left on many clients’ to-do lists.
“There’s a general acceptance that life insurance is a need and an important product,” says Paul Savage, head of individual insurance for Canada at Manulife Financial Corp. “But when you’re putting it up against groceries and those more immediate pressures, life insurance can take a back seat.”
Younger clients raising families often need term life insurance more than they realize, says Rod Tyler, financial advisor with the Tyler Group Financial Services at Peak Investment Services Inc. in Regina.
“Many [younger Canadians] will have life insurance through their employer, or coverage with their mortgage provider,” he says. “So, it can be a real eye-opener for them when you walk them through the limitations of those [policies].”
The 2025 Blue Cross Life Insurance Survey found that about half of the 2,000 Canadians surveyed wouldn’t be able to maintain their current lifestyle for more than a year if one income earner passed away.
Overall, 61 per cent said they have life insurance coverage, but almost half have coverage through an employer, which typically has a benefit of one or two years’ salary, says Tim Mawhinney, president and chief executive officer of Blue Cross Life Insurance Co. of Canada.
“That is often not enough to support a longer period of needs, on its own.”
Weighing the costs
Although most survey participants said they understand the risk of not having coverage (64 per cent), the top reason for being uninsured was costly premiums, followed by other financial priorities.
“Most Canadians overestimate the cost of life insurance by three times,” Mr. Mawhinney says, pointing to a 2023 study from LIMRA (Life Insurance Marketing and Research Association).
Mr. Savage notes that premiums have actually fallen recently.
“When you look at inflation for most things, [prices have] gone up year after year, but term insurance has gone in the other direction,” he says.
For example, the premium cost of a 10-year term policy for $500,000 for a 35-year-old non-smoker is 11 per cent lower today than in 2023, he says.
The industry has reduced premium costs, recognizing insurance can be the odd expense out in tight budgets, he says. To do that, insurers have leaned on innovative technologies such as artificial intelligence.
“That’s been a big innovation for the underwriting and application process,” Mr. Savage says.
AI can review and summarize applications, medical records and other relevant data to approve individuals more quickly and without a human underwriter in most cases, he says.
The only time an actual underwriter is used is for applications not approved by AI to ensure algorithmic biases are not unfairly denying an applicant.
As well, better analytics tools allow most applications and underwriting to be performed without routine medical tests.
“We made changes a few years ago and estimate that we’ve saved our clients from having to provide more than 2,000 litres of urine samples,” Mr. Savage says, noting that has also reduced insurers’ costs and, in turn, premiums.
Innovation has also come on the product side, says Darren Devine, financial planner and president of Devine & Associates Financial Services Inc. at Sun Life Financial Distributors (Canada) Inc. in Guelph, Ont.
He points to a new term life offering from Sun Life called Evolve, which allows the insured to purchase additional coverage, “with very limited new underwriting at certain milestones.”
Those milestones include getting married, purchasing a home or the birth of a child. Notably, it offers a more affordable entry point for younger families, with a lower premium.
In the past, advisors might have recommended a guaranteed insurability rider tacked onto traditional term products, which allows the insured to extend the term and convert to permanent coverage without having to do more underwriting, he says.
However, the rider usually comes with a higher premium. (Evolve can also come with such a rider, providing even more options, according to an e-mail from Sun Life.)
Costly delays
Innovations aside, too many individuals still go without insurance or delay applying for coverage – potentially to their detriment, Mr. Savage says. “I have seen many times where someone wants insurance, thinks they will need it in the future, but delays getting it.”
Here, advisors can play a role in explaining the risk of procrastinating. Premiums often increase with age – and significantly when a client is over 40. Worse, clients risk experiencing a serious health problem that may further increase the cost or leave them uninsurable.
Advisors can show young clients they can get “meaningful coverage in place for a low amount,” Mr. Savage says. For example, $250,000 of coverage for a healthy 30-year-old man costs about $15 a month.