New survey reveals that 49 per cent of Canadians have been sold expensive, complicated, and often unnecessary ’permanent’ life insurance policies – yet the vast majority only require ’term’ coverage
TORONTO, October 14, 2020 – According to new survey findings from PolicyMe, an online life insurance platform and advisor, 49 per cent of Canadians that bought life insurance through an advisor (i.e. not through their work) bought a permanent policy. This is despite the fact that permanent life insurance is a product that should typically only be considered by high-net-worth individuals and possibly by older Canadians (55+). The vast majority of Canadians simply require the more reasonably priced term life insurance, but many insurance holders have been sold the significantly more costly permanent life insurance coverage (most commonly sold as ’universal life’ or ’whole life’).
“There’s an elephant in the room when it comes to life insurance,” says Andrew Ostro, Co-Founder & CEO of PolicyMe. “Many Canadians seem to believe they need permanent coverage, but the reality is that permanent life insurance is a very specialized product that only meets the needs of a very small percentage of the population – most people are sufficiently covered with the more flexible and affordable term life insurance. It’s time that we see this for what it is: bad advice that’s costing Canadians millions.”
According to the survey, significant numbers of Canadians with life insurance purchased through an advisor – across all age groups – report having permanent life insurance: 40 per cent of those aged 18-34, 41 per cent of those aged 35-54, and 62 per cent of those aged 55+.
Not only are these Canadians holding policies they most likely don’t need, they’re also overwhelmingly sure that they’ve made a good decision, as 86 per cent of those with permanent life insurance are confident they have the right fit. However, what many policyholders don’t realize is that brokers typically receive 5-10x more commission by selling permanent coverage instead of term coverage – a major incentive to point customers in the direction of a product they don’t need.
There are a few major reasons that permanent life insurance should be avoided as a product.
There is a more honest and transparent approach to buying life insurance that is gaining traction: online advisors. While only two per cent of respondents purchased their previous policy online, a whopping 51 per cent now say they would buy life insurance through an online platform if they were buying it today.
While the majority of those willing to buy online next time are the younger generation (65 per cent of 18-34 years of age), a full 39 per cent of Canadians aged 55+ expressed a willingness to purchase in an online environment in the future, free of the sales tactics typical of traditional brokers.
PolicyMe is a rapidly growing insurtech startup making life insurance simpler and more affordable for everyone who needs it. PolicyMe's online platform provides a digital experience for customers to navigate the entire insurance buying process, helping Canadians get personalized advice, compare quotes and apply for life insurance in just a few clicks. The company was founded by Andrew Ostro, Laura McKay and Jeff McKay in 2018, and is based in Toronto, Canada.
These are the findings of a study/survey conducted by North PR from August 12 to August 16, 2020 with a representative sample of 1,001 online Canadians with life insurance who are members of the Angus Reid Forum. The survey was conducted in English and French.
The precision of Angus Reid Forum online polls is measured using a credibility interval. In this case, the poll is accurate to within +/- 3.1 percentage points, 19 times out of 20, had all Canadians been polled. All sample surveys and polls may be subject to other sources of error, including, but not limited to coverage error, and measurement error.
The Angus Reid Forum is Canada’s most well-known and trusted online public opinion community consisting of engaged residents across the country who answer surveys on topical issues that matter to all Canadians.