Understanding the Life Insurance Hesitation of Millennials and Gen Z in Canada

While over half of millennials and Gen Z know about life insurance, many still need a life insurance policy.

Living life to the fullest might be your mantra, but have you considered securing your tomorrow? Amidst the gadgets and glam, life insurance might seem distant. One thing is crystal clear in a world that revolves around uncertainties: the need for life insurance becomes essential, primarily in your younger years. You might think, “I’m young, fit, and invincible.” The difficulty is that debts are not mortal like you. If the unimaginable happens, your debts don’t vanish; they get passed on. Life insurance steps in as the responsible adult in the room, ensuring that your financial obligations don’t become a burden on your loved ones. But now is the moment to change course. The concern of Generation Z and millennials regarding life insurance is reasonable and comes from common worries discussed below

  1. Affordability Concerns: The cost of living is hitting us hard. Inflation rates have skyrocketed way beyond the 2% target, starting their rise in May 2020, fueled by the government’s hefty spending to combat the COVID-19 pandemic. Peaking at 8.1% in June 2022, inflation has somewhat reduced, but as of December 2023, it’s remaining above the target at 3.40%. Now, let’s discuss real numbers. In 2013, a home in Canada averaged $365,700, while the median after-tax income for Canadian families and individuals stood at $68,400. In 2023, the average home cost increased to $705,000, but the median family income just increased to $75,452. Over the past decade, home prices shot up by 92%, while incomes increased by 10.3%. The cost of living is costly, especially for Millennials and Gen Z. Many of you dream of owning a home someday, but the struggle is real. Balancing the dream of homeownership with saving for a down payment amid increasing rent, fuel, food, and entertainment costs makes life insurance an afterthought.
  2. Lack of proper knowledge: One big reason Millennials and Gen Z aren’t jumping on life insurance like the rest of the adults is a lack of knowledge. According to statistics, 25% of these young people are hampered by the need to properly understand their insurance alternatives and choose the one that best fits them. It’s a knowledge gap that’s costing them. Many of these young individuals need to know how much life insurance coverage they need. If you’re part of the Millennials and Gen Z crew, it’s time to get informed and secure coverage that aligns with your future needs. Don’t let the lack of understanding divert you and the financial protection you deserve.
  3. Competing Financial Priorities: Financial priorities for young individuals, tuition fees, travel dreams, and other temptations often take the spotlight, making life insurance seem less critical than it is. It may seem simple and satisfying to give in to the temptation of travelling and giving in to desirable cravings. But those very goals and objectives may be in danger if you don’t have life insurance. The risks presented by uncertainty can destroy the foundations of these ambitious ventures.
  4. Ignorance of the Importance of Life Insurance: Not knowing why life insurance matters is a gap that needs fixing. It’s more than just a detail; it’s about securing your future. It is time to bridge the gap and make informed choices by adopting the following steps:
  • Create an understanding of the role of life insurance.
  • Emphasize how it covers debts, secures your loved one’s financial future, and is a proactive tool for long-term financial well-being.
  • Recognize it not as an expense but as an investment, providing a solid foundation for a stable and secure future.
  • Break down the types of life insurance – term, whole, universal life insurance, etc. Understand each type’s purpose and benefits with relatable examples. This way, you can choose the insurance type that best fits your needs.

Life insurance statistics in Canada:

Almost half of Canadians, about 44%, don’t have life insurance. An overwhelming 80% believe it’s too expensive. 62% of those with life insurance get it through their jobs. If you’re a parent in Canada, there’s a high chance, around 77%, that you’ve got a life insurance policy. Last year, life and health insurers in Canada paid out over $312 million every day in benefits. That’s not chump change. It’s a significant effort to make life more affordable for Canadian families.

What is the need for Life Insurance at a young age?

You might be convinced that life insurance is unnecessary in your twenties. After all, you’re young, healthy, and perhaps single, with no one relying on your income. But let’s cut through the misconceptions and understand why getting life insurance in your 20s is important.

  1. Cost-Effective Assurance: Your age, gender, lifestyle, occupation, medical history, and current health dictate the cost of life insurance. Your insurance costs will be significantly lower if you’re young and healthy. Get it now, and you’re not just securing your future. You’re doing it at a bargain.
  2. Financial Safety Net: If anything unforeseen happens. Even a modest life insurance policy can ease the financial burden on those you leave behind. From funeral expenses to existing debts, it’s a safety net that ensures your loved ones don’t pay the price for your lack of preparation.
  3. Secure Future Coverage: Keep your future insurability in check. Lock in your life insurance while you’re young and healthy, avoiding the complications of pre-existing conditions that could make it challenging to get coverage as you age. It’s about securing your ability to get the protection you need when you need it most.
  4. Milestones Matter: Life’s milestones are the alarm bells for life insurance. Whether getting married, starting a family, buying a house, or entering into business partnerships, these are all significant life milestones that need financial planning. Life insurance isn’t just a policy; it’s your strategic response to life’s pivotal moments.
  • Marriage: Safeguard financial decisions as a couple and shield each other from potential financial devastation.
  • Parenthood: Ensure your child and family are provided well for in the event of the unexpected.
  • Homeownership: Protect your family’s financial stability by covering mortgage and other expenses.
  • Business Ventures: Life insurance provides the necessary funds for surviving partners to maintain the firm while they pursue their entrepreneurial dreams.

The Bottom Line

Life insurance is not just another bill. It’s your strategic, pocket-friendly way to protect yourself and those who matter most, regardless of what the future throws your way. It’s time to prioritize life insurance. Don’t let misconceptions about cost or workplace coverage hold you back. Life insurance isn’t just an expense; it’s a smart move to safeguard your loved ones from life’s unexpected twists, be they loans, funeral costs, or day-to-day needs.

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