Canadian Life Insurance Coverage Gaps and Recommendations

Author: Manulife Financial
Published: 2009/04/16 - Updated: 2026/02/02
Publication Type: Informative
Category Topic: Insurance - Related Publications

Page Content: Synopsis - Introduction - Main - Insights, Updates

Synopsis: This report presents findings from a Manulife Financial survey examining life insurance adequacy among Canadian households, revealing that half of all Canadians question whether they have purchased appropriate coverage levels. The information proves particularly valuable for families with primary income earners, people with disabilities who may face additional financial vulnerabilities, and seniors planning estate protection. Based on data from 612 Canadians aged 25-45, the research identifies a critical knowledge gap: only 26 percent correctly identified the industry-recommended benchmark of 10 times annual income for adequate coverage, while 54 percent substantially underestimated their insurance needs. The survey also highlights widespread unfamiliarity with critical illness and disability insurance products that provide essential financial protection for individuals who may face health challenges or work interruptions - Disabled World (DW).

Introduction

According to a recent survey by Manulife Financial, no matter how much life insurance Canadians own, half of us aren't confident we bought the right amount. In addition, more than half (54 percent) underestimated the amount of insurance they need. Only 26 percent knew that 10 times your annual income is the recommended benchmark.(1) This means many Canadian families could face financial hardship if something happens to their primary income earner. This becomes even more relevant in today's economy, where many Canadians have seen their financial cushion depleted as their investment portfolio declined.

"One reason Canadians aren't properly insured is because they don't always know what type to buy or how much coverage they need. There are so many insurance products on the market today it can be confusing, and the whole process of buying insurance can be frustrating and intimidating," says Paul Smith, Vice-President of Insurance Marketing and Product Development for Manulife Financial.

Main Content

Manulife recently revised Insure Right - a program designed to help Canadians get the right insurance to protect themselves and their families. The basic principle of Insure Right is that there are five steps to having the right amount of insurance.

"The first step," says Smith "is to find the right adviser. An independent financial adviser can use Insure Right with you to assess your needs and determine not only what kind of insurance, but how much you need."

The Insure Right program also includes an interactive video to help consumers understand their need for life insurance, as well as critical illness and disability insurance. Based on the survey, most Canadians are not at all or only somewhat familiar with critical illness and disability insurance.(2)

Another key component of the Insure Right program is an online calculator that answers an important question consumers often ask, "How much coverage is enough for me" According to Smith, Insure Right helps consumers determine the right type and right amount of coverage at a price they can afford.

"It lets them make informed decisions so they can feel confident that their family is properly protected in today's economy and into the future."

1,2: The survey was conducted by Research House National Telephone Omnibus Survey, between December 11 - 18, 2008 with a national random sample of 612 Canadians between 25 - 45 years of age. The results have a margin of error of +/- 3.96%, 19 times out of 20.

Manulife Financial

Manulife Financial is a leading Canadian-based financial services group serving millions of customers in 19 countries and territories worldwide. Operating as Manulife Financial in Canada and Asia, and primarily through John Hancock in the United States, the Company offers clients a diverse range of financial protection products and wealth management services through its extensive network of employees, agents and distribution partners.

Insights, Analysis, and Developments

Editorial Note: While insurance needs vary significantly based on individual circumstances, debt loads, and dependent obligations, the survey's findings point to a troubling pattern of under-insurance that leaves Canadian families exposed to financial crisis during already difficult times. The gap between actual coverage and recommended levels becomes particularly concerning for households supporting family members with disabilities, where medical expenses and caregiving costs can quickly deplete savings. Rather than viewing insurance as a fixed purchase, financial advisers increasingly recommend periodic reviews that account for changing life circumstances, inflation, and evolving family needs - a practice that could help bridge the confidence gap identified in this research and provide genuine security rather than false assurance - Disabled World (DW).

Attribution/Source(s): This quality-reviewed publication was selected for publishing by the editors of Disabled World (DW) due to its relevance to the disability community. Originally authored by Manulife Financial and published on 2009/04/16, this content may have been edited for style, clarity, or brevity.