Younger consumers expect lifestyle-focused insurance solutions that put them in control of their money.whitebalance.space/iStockPhoto / Getty Images
It’s no surprise young adults aren’t spending money on what they dismiss as “death insurance” – something to think about far into the future. Instead, recent research shows many are delaying or forgoing the major milestones that led them to consider life insurance, such as getting married, buying a home and having kids.
Yet, life insurance remains a crucial and underrated component of our economy and our financial system. In 2024, GlobalData estimated that Canada’s life insurance industry reported a 4.7 per cent increase in gross written premiums, reaching $67.4-billion. That represents a massive amount of coverage meant to safeguard Canadians and fund investment in the economy. And now, it’s at risk.
Growth of almost 5 per cent doesn’t sound too dire, but it’s been boosted by high interest rates, which make it more appealing to buy annuities and high-investment life insurance policies for tax advantages. In the short term, rate cuts will likely weaken demand for those policies. In the longer term, the industry is concentrated among those aged 65 and over, whose policies correspond to 40 per cent of the total value of assets managed on behalf of policyholders.
Over the coming years, that group will represent a less attractive customer base: there will be fewer of them, and they will be in worse financial condition as age takes a toll on their health. It isn’t at all clear that Gen X and millennials will step up to fill the gap left by their baby boomer parents and grandparents.
Some of the biggest insurance companies in the world recognize they need to evolve. It’s not a question of coming up with a new app or helpful chatbot; the product itself needs to change to be more appealing to younger consumers. And it’s not easy to change products rapidly that sit atop more than trillions of accumulated assets. That kind of money breeds an inherent conservatism because there’s simply so much at stake.
Outdated offerings
Capgemini SE’s 2026 World Life Insurance Report found that 78 per cent of consumers under 40 recognize the importance of life insurance, yet not everyone is eager to wade into a world of products with outdated value propositions.
Life insurance has roots in ancient societies in which the loss of a provider – a soldier, labourer or farmer – could devastate their families. But what was once revolutionary now represents a massive gap between what today’s digital-native consumers want and the traditional insurance offerings currently on the table.
For example, most of us are introduced to life insurance in our first jobs. It’s a set-it-and-forget-it perk in employee compensation packages. That thinking corresponds to a more predictable world. Younger consumers don’t see the value of paying for something that only provides benefits after death. For consumers whose formative years included the pandemic, products such as critical illness or disability insurance that cover costs in case of illness feel more relevant.
Younger consumers expect lifestyle-focused solutions that put them in control of their money. They’re already banking exclusively through an app, seeking financial advice from ChatGPT, and have subscriptions for health and wellness.
Life insurance providers can become part of that ecosystem, with new people-centric products that deliver value throughout their lives – not just death – and evolve in lockstep with the consumer’s life stages.
Part of this holistic approach could include wellness options such as preventive disease screening and annual checkups, along with support for critical health issues and illnesses. Similarly, instead of pricy premiums sitting in an account for decades, consumers could access up to 75 per cent for investments to grow their wealth more quickly. At a later stage in life, they could withdraw cash to purchase a home.
One example comes from Manulife Financial Corp.’s John Hancock Vitality program, which recently revealed that almost 80 per cent of members now report stable or improved health. Many cited tangible lifestyle and financial gains, demonstrating how “living benefits” can reshape the value of life insurance.
An insurance product is ultimately a contract to pay out when something goes wrong. Consumers are increasingly thinking beyond the catastrophes of life – death, serious injury or fire – and want to insure the challenges of life. That could be having a child, looking after their health, or just paying their bills every month. It’s a new mindset for many, but there is too much at stake for insurers not to move with the times.
Kartik Ramakrishnan is chief executive officer of Capgemini SE’s financial services strategic business unit.