A new report from the BMO Wealth Institute examining Canadians’ use of insurance to protect themselves and their families against the unexpected found that 51 per cent of Canadians are concerned about how their family would fare financially in the event of their death. This includes one in four (26 per cent) who report feeling very concerned.
But despite these anxieties, the report found that many Canadians are underinsured:
- Life insurance is the top type of insurance policy purchased by Canadians, yet fewer than half (43 per cent) said they already owned or will purchase life insurance in the next 12 months.
- Thirty-one per cent of Canadians said they do not have any of the following insurance policies: life, travel, accident, disability, critical illness or long-term care. This increased to 37 per cent for Boomers between the ages of 55 and 64.
- Only one-third of Canadians (31 per cent) were confident that their financial plan has addressed their insurance needs to mitigate risks.
"Life is unpredictable and Canadians are clearly anxious about what would happen to their family in the event of death or an unexpected illness or accident, so it's concerning that so few feel that their insurance needs are being met," said Chris Buttigieg, senior manager of wealth planning strategy at BMO Financial Group.
BMO also offered tips on the best insurance products for different life stages:
- Millennials: Life insurance protects what young people are working hard to build in terms of their personal and financial goals by laying down the foundation for the protection of future loved ones. Other types of insurance that Millennials should consider purchasing include critical illness insurance, accident insurance and travel insurance.
- Generation X: For Gen Xers who are settled into a career, critical illness and disability insurance become very important for individuals, and even more so with families, who are dependent on their ability to earn an income. Generation X should also consider life insurance and creditor insurance.
- Boomers: Long-term care insurance is particularly beneficial to those who have left the workforce; they cannot benefit from disability insurance if they are no longer earning an income. Permanent life insurance should also be considered for estate planning purposes.
- For those in retirement: Consider retirement income options that help protect and ensure a sustainable and steady source of retirement income. Travel insurance would be helpful to snowbirds in case they need to pay for the costs of emergency medical treatment while away from home. Permanent life insurance and medical insurance may also be beneficial to retired Canadians.