PolicyAdvisor’s latest research finds that only 48% of Canadians feel their insurance coverage adequately protects their families from the financial impact of COVID-19 should they become ill or pass away from the virus.

Our State of the Nation: Life Insurance Trends 2021 report takes the temperature on Canadians’ attitude towards spending, saving, job security, and life insurance in a near post-pandemic economy. 

More insights from State of the Nation: Life Insurance Trends 2021

• Over half of Canadians surveyed (59%) are concerned about inflation’s effect on the cost of living and rising interest rates. 
• Job security concerns worry many Canadians (14%) facing a stalled economy. 
• Canadians plan on spending less on entertainment (51%), travel (43%), and clothing (42%). 
• The least expendable budget item for surveyed Canadians is life and health insurance. Eighty percent (80%) will maintain their current level of insurance protection throughout the ongoing health crisis, or even purchase more.
• Over half (52%) of Canadians feel uncertain as to whether they have adequate financial protection for themselves or their loved ones should they be stricken with a COVID-related sickness or death.
• The perceived expense of life insurance is a primary barrier for 45% of those that haven’t purchased life insurance.

Stay tuned for more in-depth analysis and breakdowns of each insurance trend in 2022. Browse the report below or download the full resolution version for free.

The COVID-19 pandemic has far-reaching effects on all aspects of our lives, including personal finances.

According to a survey of 2000 Canadians conducted by MNP Consulting in 2021, over 30% are on the verge of insolvency. With a wave of layoffs and furloughs, this figure has most likely increased in recent weeks. In fact, almost 1 million Canadians applied for Employment Insurance as of the beginning of April 2020 (Global News).

In times like these, Canadians are increasingly anxious about their financial future. This is a normal feeling. Many of us will need to take new and unfamiliar steps to manage our financial situations.

But there is positive news – the Canadian government announced several different relief measures for individuals, families and businesses affected by COVID-19. Keep these services and programs top of mind as you work out your financial plans in the coming months and prepare as you best you can for an uncertain year ahead.

Government Relief Initiatives

We have compiled a summary of relief measures the Canadian and Ontario governments are offering to individuals. Details of various measures are given here.

Please note that this information is not static: As the plans are fleshed out and more measures are announced, we will keep updating this list. For the most up-to-date information, you need to visit Canada’s COVID-19 Economic Response Plan website.

Individuals

Families

• Emergency Care Benefits of up to $900 biweekly for 15 weeks for qualifying workers and parents
• Canada Child Benefit (CCB): An extra $300 per child through CCB for 2019-20
• $200-250 for school supplies and online learning per child, as a one-time grant (Ontario-specific)
• $40-60 per day for parents of school-age children with special needs (Ontario specific)
• The filing date for Income Tax returns is deferred to June 1, 2020. Tax balances due are deferred to August 31, 2020, without any penalty
• A one-time special payment for low- and modest- income families through the Goods and Services tax credit
• Mortgage support: Case-by-case assistance, including no penalty mortgage deferral (see below)
• Credit cards: Reduction in rates, case-by-case assistance (see below)
• Renters: Freeze on evictions in most provinces

Those sick, quarantined, or in directed self-isolation

• No medical certificate required to access Employment Insurance (EI) sickness benefits

Those facing unemployment

• The Canada Emergency Response Benefit: a taxable benefit of $2,000 a month for up to 4 months to workers who have lost their income (see below)

Shelters

• $50 million for women’s and sexual assault centers 
• $157.5 million to support people experiencing housing insecurity and homelessness

Indigenous Communities

• $305M for a new Indigenous Community Support Fund

Seniors

• A reduction in minimum withdrawals from Registered Retirement Income Funds (RRIFs) by 25% for 2020, to mitigate portfolio value decline
• Practical services: $9 million to support Canadian seniors, including grocery and medication delivery through local organizations

Students and Recent Graduates

• Student loans: To support those with student loans during COVID-19, payments will be suspended without interest accruing to borrowers until September 30th, 2020 (read more)

Youth

• $7.5 million in funding to Kids Help Phone, a service which offers 24/7 mental health counselling over phone calls, text and live chat to Canadian youth

Canada Emergency Response Benefits – CERB

If you have had to stop working or lost your job because of COVID-19, you should apply for the Canada Emergency Response Benefit (CERB), whether or not you are eligible for Employment Insurance (EI). 

The benefit is available from March 15 to October 3, 2020. If you became eligible for EI on or after March 15, you need to apply for CERB and it will not affect your EI benefits eligibility when the benefit ends in October.

The benefit is processed in 4-week periods. Depending on your situation, you can re-apply every 4 weeks, for a maximum of 16 weeks (4 periods).

You can apply through one of two methods:

• Online, through the Canadian Revenue Agency’s (CRA) My Account portal
• Offline, through an automated phone service (1-800-959-2019 or 1-800-959-2041)

Your payments will be credited through direct deposit to your bank account (most Canadian banks have updated their web portals to make this easier to set up) or by cheque.

For more details, including specific eligibility criteria, please visit the CRA’s website.

Who to contact?

• Benefits and financial help for children and families are handled by the Ministry of Children, Community and Social Services. They can be contacted at 1-888-789-4199. (Ontario specific – other provinces may vary)
• To apply for CERB, you need to log in to your CRA account or create one if you have not accessed it online before. The CRA also maintains a helpline where you can speak to an agent: 1-800-959-8281
• EI: Depending on your eligibility, you can apply for EI benefits such as maternity, parental and caregiving benefits. For EI, you need to apply online.

Personal Finance

Credit cards

Most of Canada’s major banks announced they are temporarily reducing credit card interest rates to provide relief to customers during the COVID-19 pandemic.

Bank of Montreal (BMO) and Scotiabank

• Temporarily reducing rates to 10.99% for personal and small business customer receiving payment deferrals

National Bank

• Reducing annual interest rates to 10.99% for clients receiving three-month payment deferrals and temporary increases in credit limits on a case-by-case basis

CIBC

• Lowering interest rates to 10.99% on personal credit cards for users who request to skip a payment

RBC

• After an advisor completes a financial review, customers can be eligible for a 50% credit of their interest charges for a specific period of time

Desjardins

• Temporarily reducing interest rates to 10.99% for all personal members and clients with a Desjardins credit card and who are deferring payments 

While some of these changes are automatic, in many cases you are required to call your financial institution or credit card company and request they apply these measures to your account.

Banks generally charge interest fees between 15-22% on credit cards, so this is a significant decrease. The caveat is that these deferrals do not provide debt relief and interest will continue to accrue during the deferral period.

The federal government is also exploring providing low-interest credit options to Canadians, though nothing concrete has been announced thus far.

Student Loans

The National Student Loans Service Centre (NSLSC) announced payments will be suspended without interest accruing to borrowers until September 30th, 2020 to support those with student loans during COVID-19. This is an automatic process; you do not have to apply for a deferral. You may optionally continue to make payments through your NSLSC account.

However, this is applicable to only loans issued by federal and provincial government institutions. If your student line of credit was issued by a private institution, such as one of Canada’s major banks, you will need to contact them to find out what relief measures they may offer.

Support for Renters

This varies from province to province. On March 17, the Ontario government announced that no new eviction notices will be issued until “further notice” and the enforcement of scheduled evictions will be postponed. While renters are still required to pay rent during this period, they should inform their landlord and work with them to come up with a practical arrangement if they cannot make payments at this time.

Under Ontario’s Residential Tenancies Act, landlords cannot charge fees or penalties for late rent payments.

Mortgage Support

The federal government, through the Canada Mortgage and Housing Corporation (CHMC), is permitting lenders to allow immediate payment deferral on mortgages covered by CMHC’s mortgage loan insurance.

All homeowners currently in good financial standing with their mortgage lender can apply for mortgage relief from their lender if they have been impacted by COVID-19. This will be processed on a case-by-case basis. Mortgage deferral is not equivalent to mortgage forgiveness. Interest will accrue on any mortgage payments that are deferred, and payments will need to resume once the deferral period is complete. Even if a mortgage isn’t insured through CHMC, homeowners should contact their lender to find out their options.

The following announcements have been made by some of Canada’s largest mortgage lenders:

BMO

• Up to a 6-month payment deferral on a case-by-case basis

Scotiabank

• Mortgage payment deferrals are available for customers experiencing hardship

National Bank

• Deferral of mortgage payment without accruing additional interest for 2 months. You will need to continue paying administrative charges and mortgage insurance premiums

CIBC

• Up to a 6-month payment deferral for mortgages on a case-by-case basis

RBC

• You may skip up to two monthly payments. For longer term relief, applications will be evaluated by financial advisors

Other Loans (Personal, Line of Credit, Auto Loan)

Most banks have announced they are offering “opportunities for relief” for these products.

Some banks, such as RBC, offer the option to immediately defer payments of principal and income for a period of up to six months depending on their needs. Depending on whether it is a fixed or variable interest product, deferred interest will be added to the outstanding loan balance, but interest may or may not be charged on the deferred portion. Contact your individual lender for up-to-date info, as the measures vary greatly across institutions.  

The effects of these measures on credit scores, if any, is still not known.

General Tips

Other General Tips for getting through this difficult time:

• Offers via email and text require extra scrutiny. Calls and messages offering free relief from the CRA, creditors, or any other agency may be fraudulent or part of a phishing scheme aimed at acquiring your personal information. Contact the CRA, your bank, telephone service provider or any other utility directly to verify any offers or check on your account status.
• Proceed with caution when exploring unsecured personal loans, payday loans, and other high interest sources of credit. These lenders offer huge amounts of credit with immediate availability. However, these should be considered only as a last resort when one has exhausted all other options for loans or credit; these products have multiple hidden charges, escalating late payment fees, and extremely high, cumulative interest rates.
• The Ontario Works Program can help you with the cost of food and housing if you are in temporary financial need. This includes Emergency Assistance for those facing financial crisis due to COVID-19 or other emergency situations (such as floods, fire, etc).

COVID-19 and Financial Protection

Getting life insurance quotes and other living benefits during this time can still be straightforward with a digital broker. We’ve created some resources to help you navigate the insurance world during this current situation.

Canadians are underinsured.

Our first State of the Nation: Canadian Life Insurance Trends 2019 seeks to determine consumer trends and attitudes about life insurance planning across the country, and it   uncovers several stunning findings about the lack of financial protection amongst Canadians in 2019.

Unlike most life insurance surveys that poll all Canadians as respondents, our study sought feedback only from those Canadians who actually need Life Insurance. Thus the results you see below are based on answers from those Canadians that have financial dependents (i.e. family members that depend on their income for settling debts such as mortgage and credit cards, or for support in paying for education, living expenses, and more).

The results – presented below – are eye-opening, with hard numbers revealing startling truths about the state of  Canadians’ financial protection and key takeaways around the national state of life insurance ownership, needs, knowledge, and appetite for change.

Canada: An uninsured nation?

Of those who have financially dependent family members, 16% do not have any life insurance coverage. But almost as problematic is the fact that 33% of respondents have coverage solely through their employer or group. This means 49% of Canadians with dependents have never purchased life insurance themselves.

While a life insurance policy through one’s employer or group affiliation is better than none at all, it can be problematic for a couple of reasons. Firstly, in most cases employer-provided coverage is minimal: a typical group benefit life insurance policy is equivalent to only one or two years of the policyholder’s salary. The bigger issue is that if the insured leaves the particular job, group, or association through which they have the policy, they mostly lose this insurance coverage. 

They also lose time; individual coverage is less expensive in one’s earlier years when there are fewer potential complications to medical underwriting. While a group policy is a nice top-up, it should not be the primary source of one’s coverage.

How did you acquire life insurance coverage?

The biggest surprise was the extent to which Canadians are underinsured: The Financial Consumer Agency of Canada suggests that life insurance should cover between seven and ten years of the holder’s annual income, which is in line with many industry practitioners’ recommendation of ten years of annual income coverage. Yet, well over half of the study’s respondents (54%) have coverage equal to only two years or less of their annual salaries. A mere 22% had between two and five years’ worth of coverage.

Only nine percent of those surveyed are solidly within the recommended range.

Overall, this means 77% of Canadians are dramatically under-insured, with policies that will only cover their obligations for at most five years, a full two years less than the minimum recommendation.

How much of your annual income would your life insurance cover?

Key life insurance ownership takeaways

• 49% of Canadians with dependents have never purchased life insurance
• 54% of the same group have only covered 2 years or less of their salary should they pass
• 91% of Canadians are dramatically under-insured

Life insurance needs: Canadians not honest with themselves

Just how significant is this life insurance shortfall? When asked for hard numbers, the average shortfall among respondents was $256,000. What is even more startling is that this is a self-acknowledged shortfall that respondents know exists but they haven’t started bridging it yet. 

There are several potential reasons for a shortfall like this to exist. First, many may not realize how underinsured they really are, until they are asked the question. When asked how often they reviewed their life insurance coverage, less than a quarter (22%) of respondents indicated they did so annually (the recommended frequency). 

Twenty-eight percent said they review life insurance coverage either every two or three years, but more than a third (36%) say they have never reviewed their life insurance coverage and needs. All in, almost 80% of Canadians fail to sufficiently review their life insurance coverage.

Suggested reading

• How much life insurance do I need?
• When should I buy life insurance?
• What are the biggest life insurance companies in Canada?

How often do you review your life insurance coverage?

And, despite more than three quarters of Canadians being significantly under-insured, nearly half of respondents (43%) say they are confident that they have adequate life insurance, with 57%knowing about or unsure of the adequacy of their coverage.

How confident are you in the adequacy of your life insurance coverage?

This shows a definite disconnect between the perception and reality of the country’s financial protection. Canadians are either misinformed, or simply don’t understand what their life insurance needs are. Traditional advisors and brokers don’t make it easy to educate ones’ self in regards to the ins and outs of life insurance. 

Regardless, it’s clear Canadians require more education when it comes to making life insurance decisions – and luckily PolicyAdvisor.com is dedicated to giving them the answers they seek.

Key life insurance needs takeaways

• The average self-acknowledged life insurance shortfall for Canadians with financial dependents is $256,000
• Almost 80% of Canadians fail to adequately review their life insurance coverage.
• Fifty-seven percent don’t know or acknowledge they don’t have enough life insurance coverage.

Life insurance literacy – not a thing yet

Only 35% of Canadians claim they understand how their life insurance policy works “very well,” versus the balance who only understand their coverage “somewhat” or not at all.

Do you understand how your life insurance policy works?

In light of this knowledge deficit, Canadians offered many reasons for not obtaining additional life insurance, with almost half indicating cost and 20% the aforementioned lack-of-understanding as a barrier.

This further underscores the need for better education and transparency around life insurance. There is a clear misconception that life insurance policies are unaffordable and complicated. This is unfortunate, as there are potentially many ways Canadians can provide themselves with financial protection within their budget with straightforward terms and coverage.

Other reasons for not obtaining additional insurance included procrastination (29%) and lack of a trusted advisor (10%).

Why have you not purchased life insurance?

Key life insurance knowledge takeaways

• Sixty-five percent of those surveyed don’t totally understand how insurance works
• Almost half of those surveyed think life insurance is prohibitively expensive
• Twenty percent of those surveyed put off purchasing life insurance because they think it is too complicated

Appetite for digital disruption

Thanks to an evolving digital landscape and a tech-savvy population, Canadians are able to better educate themselves about their insurance needs. However, while they are happy to seek information online, they are slower on the uptake when it comes to purchasing life insurance digitally.

This is gradually improving. Although 29% of respondents said they prefer a traditionally fulfilled in-person process with an advisor, 60% indicated a preference for an online process with  some support to complete the transaction. The main takeaway? Over 70% of Canadians crave an online component to their life insurance buying journey. 

How would you prefer to purchase life insurance?

While globally, digital fulfillment for life insurance is quite common, this is still new territory for Canadians. Despite some hesitations, we see a definite appetite amongst Canadians to add life insurance coverage, if supported through online pathways, and PolicyAdvisor.com is here to help guide them through their life insurance buying journey. One life insurance purchase at a time.

Download the report below, or check it out and pass it along using Slide Share.

The survey was conducted via Survey Monkey’s Canadian panel in September 2019 and included 500+ qualified respondents. All graphs rounded to the nearest percentage point.