Canada’s Life Insurance Industry at a Crossroads: Can It Reach the Underinsured?
The Canadian life insurance market faces a critical juncture. While premium revenue is up, the number of individual life insurance policies sold continues a worrying downward trend. Data from LIMRA reveals a significant decline: 733,941 policies were sold in 2010, compared to just 635,067 in 2024. This isn’t simply a matter of fewer policies; it represents a growing gap in coverage for Canadians.
The Shrinking Policy Count, Rising Premiums
Between 2010 and 2024, the rate of life insurance policies sold per 1,000 Canadians dropped from 21.7 to 15.3. Simultaneously, Canada’s population grew from 33.8 million to 41.5 million (Statistics Canada). Interestingly, while policy numbers fall, the value of new annualized premiums is *increasing*. In 2024, these premiums reached $2.0 billion, a 7% jump from the $1.9 billion recorded in 2023. This suggests insurers are focusing on higher-value policies, potentially leaving the middle class underserved.
Did you know? The discrepancy between declining policy numbers and rising premium revenue highlights a shift in the industry’s focus towards wealthier clientele.
A Growing Coverage Gap
Industry experts acknowledge the problem. A recent opinion piece published on Portail de l’assurance, co-authored by Scott Ife (Manuvie), Paul Mlodzik (LIMRA & LOMA), and Abena Ntakrah (RGA), pinpointed a widening insurance coverage gap among Canadians. LIMRA’s 2023 Canadian Insurance Barometer Study paints a stark picture: 10% of insured Canadian adults (2.7 million people) need more coverage, and a concerning 21% (5.7 million people) have no life insurance despite needing it.
The Flight from the Middle Class
Serge Therrien, President and Editor of Éditions du Journal de l’assurance, argues the industry has deliberately moved away from the family and middle-class markets over the past decade. “Why? Because it’s a market where premiums are higher,” he explains. This strategic shift towards high-net-worth individuals and businesses has left a significant portion of the population vulnerable.
Pro Tip: If you’re a financial advisor, consider revisiting strategies to make life insurance accessible to middle-income families. Highlighting affordability and long-term financial security can be key.
The Advisor Shortage and Coaching Gap
Several factors contribute to this trend. A key issue is a shortage of financial security advisors in Canada, coupled with a lack of adequate coaching and training. Annie Veillette, a leader in financial services talent development (formerly with Canada Life), emphasizes that the *need* for insurance remains strong, driven by factors like blended families and rising housing debt. However, connecting with potential clients is becoming increasingly difficult.
Wealth Management as a Profit Driver
The growth of wealth management and asset management activities within the “Big Four” insurers – Manuvie, Sun Life, Great-West Lifeco (Canada Life), and iA Groupe financier – is also playing a role. These activities now account for roughly 30-35% of their profits, according to Morningstar DBRS. While this provides a stable revenue stream, it potentially diverts resources and attention from traditional life insurance sales.
However, Morningstar DBRS predicts a potential slowdown in this growth, as investors shift towards more secure, lower-fee fixed-income funds. This could force insurers to re-evaluate their strategies and potentially reinvest in core life insurance offerings.
Signs of a Potential Reversal?
Recent data offers a glimmer of hope. LIMRA reported 513,921 individual life insurance policies sold in Canada between January 1st and September 30th, 2025 – a 9% increase. The MIB Group also recorded record-high insurance application activity in 2025. However, whether these are isolated spikes or the beginning of a sustained turnaround remains to be seen.
The Future of Distribution: Innovation and Accessibility
The question now is whether the Canadian insurance industry can overcome its reliance on affluent clients and reach a broader audience. Innovation in distribution channels, such as digital platforms and simplified product offerings, will be crucial. Focusing on financial literacy and demonstrating the value of life insurance to everyday Canadians will also be essential.
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FAQ
Q: Why are life insurance sales declining in Canada?
A: Several factors contribute, including a shortage of advisors, a shift in industry focus towards wealthier clients, and increasing competition from other financial products.
Q: What is the coverage gap in Canadian life insurance?
A: Approximately 21% of Canadian adults need life insurance but don’t have it, and another 10% have insufficient coverage.
Q: Is life insurance becoming unaffordable for the average Canadian?
A: While premiums are rising overall, there are still affordable options available. Working with a financial advisor can help identify the right policy for your needs and budget.
Q: What is the role of wealth management in the decline of life insurance sales?
A: Wealth management activities generate significant profits for insurers, potentially diverting resources from traditional life insurance sales.
Want to learn more about protecting your financial future? Explore our other articles on financial planning and insurance.
