Canadians buy life insurance for many reasons, but mainly to provide financial protection for their families in the event they die prematurely. Proceeds from a life insurance policy are used to replace income, pay debts, or create or add to an estate.
How life insurance is purchased
Canadians mainly buy life insurance on an "Individual" basis through an agent or advisor. Simpler products sold by direct mail or on-line marketing, while increasing, still only account for 1% of individual premiums.
Life insurance is also acquired on a "Group" basis through an employer or as members of an association, and is priced on the risk characteristics of the group as a whole, rather than of the individual consumer. In 2016, $20.3 B life insurance premiums were paid, %21 of that in group insurance.
Life insurance protection by insured household and income level
Average protection per insured household is $404,000 in 2016, approximating five times household income
Consumers choose the amount of life insurance they hold based on a number of factors: marital status, desired level of income to support dependents, outstanding mortgages, etc. As a result, life insurance protection closely reflects age and income levels.
Life insurance protection by product
At the end of 2016, Canadians owned $4.5 trillion of life insurance protection. There are two basic types of life insurance: permanent and term insurance, with variations on each to meet specific consumer needs.
Individual life insurance has grown faster than group in the past decade, accounting for 60% of the total, up from 54% in 2006. This is mostly driven by growth in individual term life insurance