EXCLUSIVE FEATURE
LIFE INSURANCE
Life insurance conversation starters The insurance generational gap is closing, but millennial and Gen Z customers are still at risk of being underinsured. Co-operators shares strategies for advisors to connect with younger clients
MILLENNIAL AND GEN Z Canadians have increased their insurance ownership in recent years as they hit key life milestones, such as owning homes and starting families. The 2023 Canadian Insurance Barometer Study, conducted by LIMRA and Life Happens, found that 57 percent of Canadian adults have life insurance coverage, a threepoint increase from 2019. T he COVID-19 pandemic was instrumental in bringing attention to the need for life insurance. Still, a significant generation gap remains, and new factors such as the cost-of-living crisis have impacted young Canadians’ ability to obtain adequate coverage. This gap presents an immense opportunity for the insurance industry, which must find ways to communicate effectively with these younger cohorts about their long-term needs. “The generational gap does seem to have been closing in the last few years,” said Paul Gobeil, vice president, individual insurance & wealth management and chief actuary, life at Co-operators. “It was larger five or so years ago, so we might attribute that to the pandemic and its impact on people’s psychology, but the gap’s still there.” Speaking to Insurance Business, Gobeil
34
emphasized that while millennials may now have ownership levels of life insurance similar to baby boomers or Gen Xers, they are often underinsured due to their stage of life, marked by purchasing homes or starting families. The 2023 Barometer appears to affirm this. In the study, 31 percent of Canadians (around 8.4 million adults) said they need more life insurance coverage. Four in 10 Canadians also admitted their families would face financial hardship within six months should the primary wage earner die unexpectedly.
The life insurance generational gap: barriers For millennials and Gen Z, the issue isn’t just about ownership but also about carriers and advisors recognizing these generations’ unique needs for life insurance. “Millennials would have the highest needs,” Gobeil said. “They’re at the age where they’re having kids, they’re buying homes. So, they’re more likely to be underinsured, and that’s a huge part of the gap.” Part of the challenge, he explained, is that the traditional triggers for purchasing life insurance – getting married, buying a home, having children – are happening later in life for millennials and Gen Z. “Those average ages are creeping up and
up, and those are the traditional and logical triggers for buying life insurance, so that’s going to make someone less likely to buy (at a younger age),” said Gobeil. Combined with the rising cost of living and stagnant wages, these factors create a perfect storm that deters younger generations from prioritizing life insurance. According to the 2023 Barometer Study, more than half of Canadians (53 percent) say they haven’t purchased the coverage they know they need because they believe it is too expensive, and one-third say it is because they have other financial priorities. The cost of life insurance plays a significant role in whether younger generations choose to invest in it. However, delaying a policy can also lead to substantial costs in the future, with rates doubling at age 45 versus age 25, depending on the product. Waiting can also jeopardize insurability, as health issues tend to increase with age, Gobeil pointed out. “The cost of waiting can be high,” he said. “But the flip side of that is there’s a huge benefit of starting early, even if it’s just with some coverage that could be added to later on.” But it’s not all doom and gloom. There are still significant opportunities for advisors to engage with younger clients. The key, according
www.insurancebusiness.ca
34-35 EF Co-operators - V2 SUBBED.indd 34
26/09/2024 5:47:07 am