According to LIMRA's estimates on individual life insurance sales, the number of term life insurance policies sold in 2023 grew by 11.8 per cent compared to 2022. In contrast, the number of whole life insurance policies sold increased by 3.6 per cent in 2023 compared to the previous year. During this same period, the number of universal life insurance policies sold decreased by 8.2 per cent.
The data used in the following charts were prepared exclusively for the Insurance Journal by LIMRA, as part of the term life insurance feature in the July 2024 edition.
A persistent decline
Despite a surge in term and whole life insurance sales in 2023, the number of policies sold in Canada has been steadily declining since 2010. A recent article published by Insurance Portal highlighted the growing gap between the number of Canadians covered by individual life insurance and the overall population.
Insurance Portal quantified this gap by cross-referencing LIMRA data with Statistics Canada figures. From 2010 to 2023, the annual number of policies sold dropped from 733,941 to 667,752. During the same period, the Canadian population grew from 33.8 million to 39.5 million. There were 21.7 policies sold per 1,000 people in 2010, compared to only 16.9 in 2023. If the per capita penetration rate had remained constant since 2010, the industry would have sold 857,440 policies in 2023 instead of 667,752.
Rising premiums
Conversely, individual life insurance premiums have consistently increased over the past 13 years, with few exceptions. From $1.040 billion in 2010, individual life insurance sales in terms of premiums rose to $1.895 billion in 2023.
Whole life insurance drove this increase, generating $1.271 billion in 2023, up 10.2 per cent from $1.153 billion in 2022. Much more modestly, term life insurance premiums grew from $357.0 million to $375.5 million between 2022 and 2023, a 5.2 per cent increase.
In terms of premiums, universal life insurance sales declined by 14.2 per cent during this period, falling from $289.3 million in 2022 to $248.3 million in 2023.
Whole life insurance costlier
The average annual premium paid by individual life insurance policyholders has also increased. From $1,417 in 2010, the average premium per individual life insurance policy rose to $2,838 in 2023.
At $6,966 in 2023, the average annual whole life insurance premium surpasses the overall average annual premium. The average whole life insurance premium increased by 6.3 per cent compared to $6,544 in 2022.
The average annual universal life insurance premium ranks second at $2,295 in 2023, a decline of 6.5 per cent from $2,455 in 2022. The average annual term life insurance premium fell by 5.9 per cent, dropping from $1,058 in 2022 to $996 in 2023.
Competing needs
"The average premium per policy has increased by about 22 per cent since 2013" – Matthew Rubino
Matthew Rubino, head of LIMRA's life insurance sales reports and the data set prepared for the Insurance Journal, explains that over the past decade, “the average premium per policy has increased by about 22 per cent since 2013, when adjusted for inflation. A lot of this has likely comes from a greater focus on whole life sales during this period.” Rubino adds that in 2013, about 47 per cent of premiums came from whole life insurance policies, while by the end of 2023, this share had risen to 68 per cent.
Regarding the decline in the number of policies, Rubino also observes this trend in the United States. He attributes it to several factors. “Consumers have competing financial priorities. Our data suggest they are more worried about saving for retirement, covering basic living expenses, long-term care services and financial emergencies, which deter them from buying coverage,” explains Rubino.
Discouraged from buying insurance
Rubino notes that young adults are delaying life events such as marriage, adopting or having children, and purchasing homes. “They are more likely to have student loans, face high mortgage rates, and struggle with inflation, which is cutting into their disposable income. This likely deters them from buying life insurance,” he believes.
Lack of knowledge also plays a role, according to Rubino. His analysis suggests that people overestimate the cost of life insurance.
He observes that Canadians are not confident in what or how much coverage they need and don’t know where to turn to get credible information. “Just 4 in 10 Canadians report working with a financial professional. Our research suggests that people who say they need coverage and work with an advisor are more likely to complete a purchase,” concludes Rubino.
This article is a Magazine Supplement of the July issue of the Insurance Journal.
