Although application activity and total insurance coverage figures suggest the Canadian life insurance industry is doing well, additional research, done both in Canada and globally, suggests that those numbers could be better if the industry were to address the hesitancy to buy life insurance – particularly among younger consumers.
New research from LIMRA and Capgemini, included in the report, From life insurance to insurance for living: Rethinking relevance for the under 40s, found that the share of life insurance in individual investment portfolios has decreased by 23 per cent over the past 15 years, while the share of equities has gone up by 31 per cent.
“There’s no shortage of large financial institutions investing in marketing and getting in front of clients, but I think you see a lot more of that savings and investing message come out more so than the protection side,” says Daniele Farinaccia, senior vice president, distribution and channel management with Sun Life, told the Insurance Portal in an interview. “For someone to truly have their financial needs (met), you have to balance both of them.”
LIMRA adds that limited financial literacy is also leading many consumers to opt for bank deposits to secure their financial future 59 per cent of the time and emergency reserves to secure their financial future 45 per cent of the time. Inflation-adjusted health and wellness spending, meanwhile, continues to grow by 33 per cent.
“The market analysis we conducted with Oxford Economics suggest that global life insurance premiums will grow at only 0.9 per cent CAGR (compound annual growth rate) through 2040, compared with 1.8 per cent CAGR between 2009 and 2024,” they write.
The problem
“It begins with the reality that younger consumers here are facing a totally different economic landscape than previous generations,” says Bryan Hodgens, head of research with LIMRA. “They’re delaying marriage. They’re becoming parents later in life. Home ownership has been delayed.”
In addition, he points out that the younger generation is coming out of their education years with significantly more debt. “Most are looking at home ownership and realizing they can’t afford it. They’re coming into their working years looking at the fact that they’re probably going to be balancing savings and investing with other purchases. They’re looking at the fact that they don’t have a pension.”
Some Canadians hesitate to buy
According to a study of 1,507 Canadians conducted by PolicyMe and Angus Reid in August 2025, meanwhile, nearly half didn’t have life insurance. Of the 42 per cent who said this, 23 per cent had children living at home; 65 per cent said they were unlikely to buy life insurance in the next five years.
“To see that many people with kids responding that they don’t have life insurance coverage is very notable and surprising,” says PolicyMe’s CEO and co-founder, Andrew Ostro. “I think a lot of people look at life insurance as a discretionary product or something that isn’t necessarily required.”
Medical tests were also said to cause hesitation among 37 per cent of respondents considering buying life insurance in the next five years, 34 per cent said life insurance is too expensive and 27 per cent said they didn’t need it at all.
The research from LIMRA and Capgemini confirms that a lot of consumers under the age of 40 are delaying or skipping the traditional triggers for purchasing life insurance: 63 per cent of 6,176 respondents surveyed in April and May 2025 said they have no immediate marriage plans while 84 per cent of both single and married people said they had no immediate plans to have a child.
Interestingly, however, the PolicyMe research found that Canadians between 18 and 34 years of age, 34 per cent of them, were still the most likely age group to consider purchasing life insurance, compared to 22 per cent of those between 35 and 54 and just four per cent of those over age 55 who said the same.
Trust is also a factor noted in that research: Despite the fact that the industry paid more than $18.6-billion in life insurance benefits in 2024, this according to the latest Canadian Life & Health Insurance Association (CLHIA) industry factbook (broken down the industry paid $8.9-billion in death benefits and $9.7-billion to living policyholders as disability benefits, cash surrenders or dividends), 21 per cent of those surveyed by PolicyMe believe that life insurance companies pay out claims 50 per cent of the time or less.
Other findings from LIMRA’s under 40 study, meanwhile include:
- 44 per cent of employees under 40 want group coverage which moves with them when they change jobs. Only 19 per cent of the global sampling of 200 insurers surveyed currently offered such provisions.
- 59 per cent of under 40s want direct digital engagement. Just 31 per cent of insurers surveyed offer the platforms to enable that.
- 77 per cent of consumers expect comprehensive, data-driven recommendations. Only 16 per cent of insurers were able to provide this at scale, largely due to outdated legacy systems.
- 67 per cent want digital access with dedicated advisor support. Only 16 per cent of insurers offered integrated capabilities.
“Historically, we haven’t exactly made it easy,” Farinaccia says, describing the need to meet an advisor face-to-face, fill out paper applications, collect samples and wait for underwriting.
At Manulife, similarly, Paul Savage, head of individual insurance with Manulife Canada says traditionally the buying experience hasn’t been great: “We as an industry need to change that. We’ve been working hard to make the process more seamless.” The effort, he adds, has included reducing the number of questions and other requirements at the underwriting stage.
Additionally, it’s likely insurance is one-dimensional to some consumers who may have experience with rising premiums and/or being declined by home, auto or health insures at the point of claim.
“I do think there’s a baseline that they’re using. They’re probably comparing it to auto and health,” Hodgens says of the misconceptions survey respondents generally had about costs. (More on this in a moment.)
LIMRA’s suggested solutions to the problem of adoption hesitancy
- Launch flexible, modular solutions based on simplified underwriting.
- Embed living benefits into retail and group offerings with features that adapt to evolving life stages.
- Design portable benefits.
- Effectively communicate the key role life insurance plays throughout the client’s lifetime (not only at death).
- Create frictionless, multi-channel platforms.
- Personalize benefits communication.
- Equip agents with data-driven and AI-powered tools.
In Canada, meanwhile, Farinaccia says holistic planning is more important than ever for meeting the needs of these clients. He also advocates for a continued focus on financial literacy – make information available – and simplify the narrative by making landing pages, documentation and marketing collateral clear and articulate about the different insurance products available.
“When people have digested the information, we need to make sure that advisors are accessible to then answer questions,” he adds. To that end, the company is building a model where those surfing its website can click to connect with a live advisor. “We’re trying to build a model where we can answer your questions in real time.”
Hodgens echoes the call for holistic financial planning to reach younger clients. “That’s going to have more of an impact going forward,” he says. “Anything that the industry could do to improve physical, mental, financial health with their clients and move that through into their product and marketing, I think that’s going to help engage this group, as well.”
Finally, social media, he says, is another space insurers are realizing that they need to occupy. He says the association’s research shows that 80 per cent of those under 40 use social media to learn more about financial matters.
Distribution
According to the LIMRA research, 47 per cent of insurers are planning to innovate their distribution models for greater market reach.
At Sun Life, the company is increasing the number of applications it processes in real time. It is investing in its mobile technology. It is also making an effort to use base common language. “How do you be transparent and simple in how you explain what we do?” Farinaccia asks.
As part of its distribution effort, the company’s advisors are also often out in the community at events. “Coupled with our model around hybrid advice, that digital click-a-button to talk to someone, is really what’s going to allow us to continue building trust.” He adds that brand is also an important factor in the equation.
At PolicyMe, Ostro says the company’s in-house advisors are simply compensated based on the number of sales they make and not at all based on the premiums they’re bringing in. “That does a couple of things,” he says. “It prevents over-insuring. There’s absolutely no incentive for us to provide someone with more coverage than they need. There’s no incentive to sell to a high net worth individual versus someone in the lower income bracket. They’re treated the same for us.”
He says the model has forced the company to be very, very efficient. “If we’re going to sell small, $10/month policies, $100,000 in coverage to individuals, we’d better be extremely efficient, otherwise the economics don’t make sense.”
Changing compensation models
LIMRA also recommends the industry pilot new commission models to reduce channel conflicts, expand reach, “and inspire the right behaviours among agents.”
Where the majority of the industry receives large commissions up front and significantly smaller commissions for servicing the policy while it remains in force, Farinaccia says Sun Life years ago decided to lower upfront commissions and increase trailing or service commissions. “It’s a model, I can say from a Sun Life perspective, that has worked very well for us,” he says. “We’re not just making people happy at point of sale, we’re making them happy in an ongoing (capacity) as well.”
Product innovation
As discussed, living benefits are very much in demand from younger clients. “While 78 per cent of the under 40s we surveyed want living benefits and 73 per cent of insurers offer them, adoption remains low because these benefits are presented as clunky add-ons rather than as part of the core value proposition,” LIMRA’s report states. “To boost adoption, living benefits should be at the heart of life insurance offerings, supported by persuasive messaging, appropriate pricing and data-driven underwriting.”
The global survey further says 71 per cent of those surveyed want dynamic coverage that evolves as their circumstances change. The report also says 82 per cent of under-40 employees value living benefits but only 49 per cent of the insurers surveyed offer them as riders.
Sun Life says it is heavily invested in bundling products. “We’re trying to make products a bit more flexible than we did historically,” Farinaccia says.
Hodgens, meanwhile, agrees that living benefits aren’t new, but there remains a lack of knowledge and awareness about these features. “We’ve got to do a better job of making sure that they’re aware of it.”
He adds the new products need to address multiple financial concerns at once. “I’d stress the idea that this generation, in particular, is looking for something more than just a death benefit,” he says of the research findings. “I think this idea of combination products, in particular, really resonates with this market. But these products seem complicated to them. We have to make them simple and we have to deliver them in a way that’s different.”
A question of cost
A quick poll of the executives’ opinions about why consumers so frequently misjudge the price of life insurance also yields some insight, starting with the fact that pricing, traditionally, is generally not transparent.
“If you think about any other category of products, people have a good sense. They see the prices,” Savage says. (Comparatively speaking, insurance pricing can be very secretive.) “For advisors, you have to make sure: Is it a real problem or just a perceived problem? Most people overestimate the cost of insurance, some quite significantly.”
Hodgens, meanwhile, citing earlier LIMRA research, puts figures to the phenomenon, saying consumers generally overestimate the cost of life insurance by 10 to 12 times. “Young adults, consumers will have auto and health insurance. They’re actually using that as a baseline. They just don’t get a lot of feeling for what life insurance may cost,” he says.
Ostro says the push to sell permanent policies, which are generally more expensive, thus carrying higher commissions, can also lead to misconceptions about price. “It creates a very false perception,” he says. “For a lot of people, term insurance is a lot cheaper than you would think.”
Price misconceptions, they say, can also be helped by an advisor’s financial literacy efforts.
“People go in with a price-first view,” Farinaccia says. “I think the misconception comes from lack of information or where people get their information from.”
