Unprepared: The 2025 Life Insurance Gap Report
As the cost of living rises, Canadians are cutting back on essential protections like life insurance. A new report from PolicyMe, in partnership with Angus Reid, reveals that nearly two in three uninsured Canadians (65%) say they are unlikely to get life insurance in the next five years, and that one in four Canadians (25%) are not confident or are unsure their families would be financially secure if they passed away unexpectedly.
Unprepared: The 2025 Life Insurance Gap Report finds a growing protection gap, particularly among young Canadians and families with children. The study points to affordability concerns, medical requirements, and mistrust of the industry as the barriers that leave households unprotected.
What are Canadians saying about life insurance?
The survey highlights the gap between how Canadians view life insurance and the actions they’re taking. While many recognize the importance of protecting their families, concerns about affordability, complexity, and trust in insurers are shaping decisions (or keeping people from making them at all).
“Life insurance is supposed to provide peace of mind, yet our findings show that too many Canadians either don’t have coverage or don’t trust the industry” – Andrew Ostro, CEO and Co-founder of PolicyMe
Coverage gaps are widespread
Despite life insurance being one of the simplest ways to protect loved ones, a large share of Canadians either lack coverage or don’t know if they have it.
- Almost half of Canadians (42%) don’t have life insurance or aren’t sure if they do.
- More than half (58%) of Canadians have life insurance, most commonly through their employer (37%), followed by term life (15%), mortgage life (8%), and other forms (2%).
- Nearly half (49%) of Canadian parents say they don’t plan to purchase life insurance within the next five years.
- Almost half (42%) of parents say it is too expensive, 12% say they have not thought about it, and 8% say they do not need it.
- Among those without insurance or unsure, nearly one in four (23%) have children living at home.
- British Columbia has the highest share of residents without coverage or who are unsure at 50%, and is also one of the least confident provinces, with 22% not confident that their family would be financially secure if they passed away unexpectedly – highlighting how low coverage goes hand in hand with low confidence.
For most Canadian families, their group life insurance generally isn't enough coverage. If you have a family, mortgage, or debt, a group policy that pays out one to two times your salary likely won’t fully protect them if you pass. And if you leave your job or are let go, your group life insurance usually ends.
Affordability and living costs are driving delays
Price is the single biggest barrier, with affordability concerns stopping many from taking the next step. For families already stretched thin, life insurance often feels like one more expense they can’t manage.
- More than one in three Canadians without coverage (34%) say it’s too expensive, and 42% of those have children in the household.
- One in ten (10%) say high living costs have delayed their plans, including 22% with children.
- More than one in four Canadians (27%) believe they don’t need life insurance.
Term life insurance is often far cheaper than people expect. For a healthy non-smoker in their 30s, a 20-year term life policy with $500,000 coverage can cost about $20-$30 per month.
Families are worried about financial security
Many Canadians worry their families wouldn’t be financially secure if something happened to them.
- One in four Canadians (25%) is not confident or is unsure that their families would be financially secure if they passed away unexpectedly.
- In contrast, the majority of Canadians who currently have life insurance (80%) feel confident in their family’s financial security.
- By province, Atlantic Canada residents are the least confident at 23%.
Life insurance is one of the simplest ways to make sure your family can stay on track financially if something happens to you. The right policy can help cover daily living costs, pay down the mortgage, and protect long-term goals like education; giving families peace of mind that their future won’t be derailed.
Most Canadians don't plan to buy coverage any time soon
Delays now mean higher costs later, but many Canadians still plan to wait. Did you know that prices for life insurance generally increase by an average of 8% each year you get older? Despite that, the survey found that:
- Nearly two in three uninsured Canadians (65%) say they are unlikely to get life insurance in the next five years.
- Younger Canadians (18–34) are the most likely age group to consider purchasing at 34%, compared to 22% of those aged 35–54 and only 4% of those aged over 55.
Buying life insurance earlier can save you thousands over the life of a policy, since premiums will typically increase every year you age. Locking in coverage while you’re young and healthy means paying less now and keeping that lower rate for the entire term.
Medical tests are a barrier
For a quarter of Canadians, the idea of doing a medical exam is enough to stop them from applying.
- Over one in four Canadians (26%) say that the medical tests required for life insurance make them less likely to purchase it.
- Among those who are likely to buy in the next five years, more than one in three (37%) say medical tests make them hesitate.
Around 60% of PolicyMe customers are approved for coverage without ever needing a medical exam. By simplifying the process and removing this barrier for most applicants, getting life insurance is faster, easier, and far less intimidating.
Canadians doubt insurers pay out claims
Despite near-universal payout rates, Canadians remain sceptical about whether insurers will deliver.
- One in five Canadians (21%) believes life insurance companies pay out 50% or less of their claims, when in reality, companies are hitting a 99% claim payout rate in Canada
- Nearly half (49%) believe insurers pay out more than 51% of claims.
The idea that insurers rarely pay out is a myth. Some Canadians may underestimate life insurance, but the numbers don’t lie. Nearly every claim is paid, giving families real financial protection.
Bottom line: Canadians need simpler, more affordable coverage
- Too many families are unprotected, with cost, medical exams, and mistrust holding them back from getting life insurance.
- Canadians who do have coverage feel significantly more confident in their family’s financial security compared to those without.
- With digital applications, no unnecessary medical exams, and affordable rates, PolicyMe makes it easier for families to get the protection they need with term life insurance.
“This report makes it clear that many Canadians still find traditional insurance difficult to navigate. At PolicyMe, we’re focused on removing those barriers with affordable, accessible coverage that families can actually understand and feel confident in.” – Andrew Ostro, CEO and Co-founder of PolicyMe
