New research from PolicyAdvisor.com released this week finds that an overwhelming number of Canadians with dependents are significantly underinsured and are in denial about the severity of the situation.

The company’s inaugural State of the Nation: Canadian Life Insurance Trends 2019 report, a survey of over 500 Canadians with dependents, found that 49 per cent of those surveyed have never purchased life insurance before. Of those who say they do have a life insurance policy, 40 per cent are only covered through a work or group benefits plan.

 “We had some general expectations about what we would learn, but some of the hard numbers paint a starker picture about financial unpreparedness than we had anticipated,” says the company’s founder and CEO, Jiten Puri. “While a life insurance policy through one’s employer is better than none at all, in most cases, the coverage is minimal, and maybe equivalent to only one or two years of the policyholder’s salary.”

Puri adds that the Financial Consumer Agency of Canada suggests that life insurance should cover between seven and ten years of the policy holder’s annual salary. The survey found that 91 per cent of those with dependents had coverage below this recommendation: 54 per cent reported having coverage of only two years or less of their annual salaries and 22 per cent had five years’ worth of coverage. Only nine per cent of those surveyed had the recommended amount of insurance. Survey respondents self-report having a life insurance shortfall of approximately $256,000 in the event of their death.

Although only one-tenth are adequately insured, 43 per cent say they were confident they have sufficient coverage. At the same time, only 35 per cent say they understood what is included in their own life insurance policy and only 22 per cent say they review their life insurance needs annually.