As household budgets tighten, many Canadians are forgoing life insurance, raising concerns about a widening protection gap across the country.
A new study from PolicyMe, conducted with Angus Reid, showed that nearly two in three uninsured Canadians (65%) said they are unlikely to buy coverage in the next five years. One in four respondents (25%) said they are not confident or are unsure their families would be financially secure if they died unexpectedly.
The report, Unprepared: The 2025 Life Insurance Gap Report, was released in September to coincide with Life Insurance Awareness Month. It highlights affordability challenges, medical requirements and mistrust of insurers as barriers keeping families unprotected, particularly younger Canadians and those with children.
Coverage gaps and affordability pressures
The survey found that 42% of Canadians do not have life insurance or are unsure if they are covered. Of those who do, the majority hold group benefits through an employer (37%), while fewer have individual term life (15%), mortgage life (8%) or other forms (2%).
Affordability is a central factor. More than one in three uninsured Canadians (34%) said coverage is too expensive, and 42% of those individuals reported having children at home. A further 10% said high living costs had delayed their plans to buy insurance.
Despite costs generally rising about 8% for each year of age, 65% of uninsured Canadians said they do not expect to purchase life insurance within the next five years, according to the report.
The report also showed a strong divide between insured and uninsured households. Among those with life insurance, 80% expressed confidence their family would be financially secure if they died. In contrast, 25% of uninsured Canadians were not confident or unsure of their family’s outlook.
Regional variation was also notable -- British Columbia had the highest proportion of uninsured or unsure residents at 50%, while Atlantic Canada respondents reported the lowest confidence in financial security at 23%.
Barriers beyond cost
Medical testing was also cited as a deterrent. More than one in four respondents (26%) said medical requirements made them less likely to buy coverage. Among those considering purchase in the next five years, 37% said medical tests caused hesitation.
Mistrust of insurers remains another challenge. One in five Canadians (21%) believe that insurers pay out half or fewer of life insurance claims, despite industry data showing claim payout rates of about 99% in Canada.
PolicyMe chief executive officer Andrew Ostro said the findings underscore the disconnect between consumer perceptions and industry realities. He noted that while insurance is meant to provide peace of mind, many Canadians still view traditional products as unaffordable or complex.
PolicyMe said it aims to reduce those barriers by offering digital applications, simplified medical questions, and lower-cost options tailored to Canadian families.
