A growing number of younger Canadians are buying life insurance coverage online as the novel coronavirus pandemic spurs worries about economic uncertainty and puts a spotlight on potential health risks.
Since the onset of COVID-19 in early March, Sun Life Financial has seen its online life insurance sales grow by more than 40 per cent compared to the same period last year. The increase in demand for its online product – called Sun Life Go – has largely been driven by clients under age 40, with sales climbing by more than 50 per cent among this younger demographic.
TD Insurance has seen similar spikes in interest among 30- to 40-year-old clients who purchase policies digitally, with sales up by more than 50 per cent year over year. Sales have also jumped by 30 per cent for clients under age 30 – a group traditionally less likely to buy life insurance.
“With more time at home – people have now begun to pay closer attention to their monthly costs, which includes insurance premiums,” said TD Insurance chief executive officer Raymond Chun in an interview. “At the same time, they are able to see if they have gaps in coverage – especially when it comes to their health and protecting their family.”
A life insurance policy provides a lump-sum payment upon the death of an individual. Term life insurance pays a death benefit if the insured person dies within a specific period – usually within 10 to 20 years of the issue of the policy. Permanent life insurance is set up for the lifetime of an individual.
Premiums are typically higher for permanent life, but it appeals to some buyers because there is a set price tag for the duration of the contract that does not increase with age.
A set premium for life was one reason Robert Grilli, a 26-year-old business development manager at ProServeIT from Mississauga, signed up for a $200,000 permanent life insurance policy last month.
Despite not having dependants or owning a home, Mr. Grilli began to research life insurance policies before COVID-19. After setting up a TD discount brokerage account, and an investment account with robo-adviser Wealthsimple, insurance was the next “flavour of the month” on his financial planning list, he says. With more time during isolation, he was able to process a life insurance application over the phone.
“I wanted to know how I could set myself up for success when thinking about the long game,” said Mr. Grilli. “I didn’t want to risk my health status unexpectedly shifting after the age of 30 and possibly being stuck with a higher premium.”
About a quarter of Canadians who did not have life insurance before the pandemic have either purchased policies or are considering it, according to a recent survey by PolicyMe, an Toronto-based online life insurance brokerage.
Among Canadians who have recently considered purchasing life insurance, 67 per cent said it was because of COVID-19-related concerns such as job loss, a re-evaluation of personal finances and an increased awareness around “threats” to life.
Less than 10 per cent of Canadians who purchased or considered life insurance said they did it as a precaution in case they became ill with COVID-19, while just 4 per cent were worried they would not be eligible for life insurance if they contracted the virus.
Traditional life insurance applications can be lengthy, include a medical exam and typically take weeks to be approved. Now, through online and digital applications, Canadians can compare price quotes from several providers in under 10 minutes. Policies can be approved without any face-to-face interaction with a sales rep or medical examinations – and medical underwriting requirements have become more relaxed for younger applicants.
Many Canadian insurers have begun to loosen internal underwriting guidelines to no longer require blood and urine testing for lower-risk applicants. In many cases, for clients under the age of 40, approvals can be done on the spot for up to $1-million without a medical exam.
Andrew Ostro, CEO of PolicyMe, says the pandemic hasn’t changed the need for life insurance, but it’s highlighted the need for more education.
“Many Canadians incorrectly assume life insurance is expensive, or are unaware of the kind of coverage that is suitable for their needs,” adds Mr. Ostro. “COVID-19 has begun to shift those attitudes.”
As a result, since early March, PolicyMe has seen its sales grow by 140 per cent.
“Those who need life insurance now almost certainly needed it before,” says Mr. Ostro. “The difference is that people are becoming more aware of that need – and they’re acting on it.”
Jason Heath, a certified financial planner at Objective Financial Partners in Toronto, has seen an increase in life insurance interest among his under-30 clientele, especially people who have recently become unemployed and have lost group benefits.
Despite easier underwriting requirements, Mr. Heath says life insurance may not always be the most important option for the younger generation. Disability or critical-illness insurance that provides for loss of income in cases of certain accidents or sickness can be more beneficial.
“For someone who doesn’t have any dependants, or someone who is self-employed with no group benefits, the ability to cover their monthly expenses during a time when they may be disabled or ill may be much more important than life insurance,” he said.
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