Canada's life insurance industry is generating respectable financial results. Look closer, and the foundation is eroding1, say Scott Ife, Paul Mlodzik, Abena Ntakrah
That's the central tension at the heart of a recent panel discussion at the 2025 Canadian Reinsurance Conference, where representatives from Manulife, RGA, and LIMRA and LOMA Canada sat down to map the country's life insurance coverage gap — and what the industry must do before the window closes.
The Numbers Don't Lie
Term policy sales tell the story plainly: term policies dropped from 397,000 in 2019 to 340,000 in 2024, while 56% of 2024 premium sales were participating (whole life) policies, indicating a shift toward higher-end products. The market is concentrating upward — premium revenue holds, but breadth is shrinking.
The gap isn't evenly distributed. Underinsured rates are especially prevalent among younger generations, with Gen Z showing a 44% need gap, more than double that of Baby Boomers. Gender analysis reveals clear, though less prominent, disparities, with women having a 32% insurance need gap compared to 28% for men.
And the macro context is accelerating the problem, not alleviating it. Rising housing costs are loading more mortgage debt onto younger households — precisely the cohort least likely to hold term insurance. At the other end of the age spectrum, Canadian seniors already at risk of outliving their own retirement savings also risk leaving loved ones unprotected.
Perhaps most revealing: the crowdsourced fundraising site GoFundMe recorded its highest annual payout total in 2024, reflecting the critical need for financial protection despite declining insurance ownership. Canadians are self-insuring through crowdfunding. That's not a market signal — it's an indictment.
Why the Gap Persists
The authors identify a convergence of structural, demographic, and perceptual forces conspiring against coverage penetration.
On the industry side, the retreat upmarket has been systematic. A shift in focus toward high-net-worth clients has led to an emphasis on larger and more sophisticated policies — coupled with a decline in the number of insurance advisors — resulting in reduced attention to the mass market and term policies. A lack of young advisors is particularly troubling as many industry veterans near retirement age.
Demographic headwinds compound the issue. Post-pandemic shifts in consumer priorities and financial strains have further exacerbated the issue, with higher cost of living fueling competing priorities for after-tax dollars and making insurance seem less urgent. Add the gig economy surge — a 44% increase in digital gig workers in Canada in 2024 — and you have a large and fast-growing cohort without employer-sponsored coverage and no obvious point of entry into the insurance system.
Trust is also broken. Only 32% of Canadians trust their insurer, according to Statistica Canada. Complex product language and jargon-heavy communication aren't just off-putting — they're actively suppressing adoption.
Five Levers the Industry Must Pull
The authors lay out a five-part framework for closing the gap, each representing a different node of the value chain.
Education first. Simplifying insurance language, correcting cost misperceptions, and emphasizing concrete benefits — income replacement, debt protection, legacy planning — must be the starting point. Awareness is the precondition for everything else.
Digital engagement, done right. In LIMRA's Insurance Barometer Study, 46% of respondents indicated they would research life insurance online, but ultimately buy in person. This is the hybrid model: digital discovery, human close. Companies embedding immediate contact support within online tools are already seeing results.
Targeted product innovation. The mass market won't be served by products designed for high-net-worth clients. The authors call for "bite-sized" entry-level products for underserved markets, such as new Canadians and gig economy workers — design-for-accessibility, not design-for-premium.
Advisor pipeline. Recruitment from underserved communities, career promotion through job fairs and community events, and targeted training programs are essential to replenishing an aging advisor base.
Industry-wide collaboration. The authors argue for partnerships with financial planners, engagement with "finfluencers" in the investment and banking sectors, and coordinated efforts to rebuild trust across the ecosystem.
The Burning Platform
The urgency is not hypothetical. More than 1.2 million mortgages renewed in 2025 — a natural trigger event for term insurance conversations that the industry has a narrow window to capitalize on.
The authors close with a structural truth that every advisor should internalize: "awareness of need without advice does not result in action; awareness with advice does result in action." Insurance remains, fundamentally, a sold-not-bought product. Digital awareness campaigns matter — but they don't close. Advisors do.
Key Takeaways for Advisors
1 The mass market is underserved and open. The retreat of the industry toward high-net-worth clients has left a large, addressable market without a conversation partner. First-mover advantage exists for advisors willing to work in it.
2 Mortgage renewals are your 2025 pipeline. Over 1.2 million renewals this year create a natural entry point for term insurance conversations. The event is already happening — show up for it.
3 Gen Z and gig workers are your next generation of clients. Their need gap is documented and large. Products and communication styles need to meet them where they are — digital-first, jargon-free, and affordable on entry.
4 Trust is the product before the product. Only 32% of Canadians trust their insurer. Advisors who lead with education, simplicity, and genuine needs analysis will differentiate in a low-trust environment.
5 The hybrid model works. Clients research online, but they buy with guidance. Positioning yourself as the human in a digital-first discovery journey is a durable competitive advantage.
Footnote:
1 Insurance Thought Leadership. Scott Ife. Paul Mlodzik. Abena Ntakrah ”Underinsured in Canada | Insurance Thought Leadership." 23 October 2025.
Copyright © AdvisorAnalyst
