life insurance canada, july 2017 · and three canadian life and health insurers rank among the top...

LIFE INSURANCECANADA, JULY 2017

LIFE INSURANCE, CANADA - JULY 2017 2

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OVERVIEW

The market for life insurance has enjoyed continued growth in recent years with more than 70 life insurance companies providing insurance protection to Canadians. Canadians own more than $4.3 trillion in life insurance protection, annual premium revenues exceed $100 billion and three Canadian life and health insurers rank among the top 15 of the world’s largest life insurers.

Canadians buy life insurance on an “individual” basis through an agent or an advisor and also on a group basis, typically through their employer. Consumers choose the amount of life insurance they hold based on a number of factors: marital status, desired level of income to support dependents, outstanding mortgages, etc. So there is a high degree of correlation in the distribution of life insurance protection and demographics (such as age, marital status and income level).

This Report aims to get a consumer perspective of life insurance with regard to ownership, choice of company, reasons for purchasing/not purchasing and attitudes towards life insurance. The results are also analysed by those who purchase through employers (group) and individual insurance.

Regional classifications

• Prairie Provinces: Alberta, Saskatchewan and Manitoba.• Atlantic Provinces: New Brunswick, Newfoundland/Labrador, Nova Scotia and Prince Edward Island.Income

• Throughout the Report, income data refers to annual household income.

Glossary

Annuities

In exchange for a single lump-sum investment, an insurer makes guaranteed regular income payments to an investor that contain both interest and a return of principal. Annuity payments can continue for the lifetime(s) of one or two people, or for a chosen period of time.

These payments are generally not subject to the same level of taxation as other sources of retirement income and, depending on the type of annuity, may be protected from creditors in the event of insolvency or lawsuit. There are many different permutations of annuities and they can be combined to create a matrix of benefits tailored to a client’s particular objectives.

Decumulation

Decumulation is the winding down of financial assets to finance retirement.

Segregated Funds (Seg. Funds)

Segregated (or Seg.) funds are an investment product sold by life insurance companies. They are individual insurance contracts that invest in one or more underlying assets such as a mutual fund.

Unlike mutual funds, segregated funds provide a guarantee to protect part of the money invested (75-100%). Even if the underlying fund loses money, individuals are guaranteed to get back some or all of their principal investment provided they hold the investment for a certain length of time (usually 10 years). An additional fee is required to have this insurance protection.

Tax-Free Savings Account (TFSA)

TFSA is a savings vehicle whereby income earned within a TFSA will not be taxed in any way throughout an individual’s lifetime. In addition, there are no restrictions on the timing or amount of withdrawals from a TFSA, and the money withdrawn can be used for any purpose. They were introduced by the Conservative government in 2009 to provide another tax-advantaged saving vehicle.



Term life insurance

Term life insurance or term assurance is life insurance which provides coverage at a fixed rate of payments for a limited period of time (ie the term of the policy).

Universal life insurance

Universal life insurance is a policy that provides permanent life insurance coverage with a tax-sheltered investment account. Under universal life insurance, consumers manage the investment risk and the insurer assumes the risk related to death.

Whole life insurance/Permanent life insurance

Whole life insurance is a policy that provides coverage for the whole duration of the policyholder’s life. Whole life insurance is the traditional form of permanent insurance, where the insurer takes on both the risk related to death and the underlying investment risk.

http://en.wikipedia.org/wiki/Life_insurance



REPORT CONTENT

Overview Regional classifications Income Glossary

Executive Summary The issues

Figure 1: Ownership of life insurance, May 2017 Figure 2: Reasons for not having life insurance, May 2017

Sun Life and Manulife are the leading providers of individual life insurance Figure 3: Choice of provider for individual life insurance, May 2017

Younger consumers more likely to prefer buying from bank insurance subsidiaries and credit unions Figure 4: Attitudes related to company preferences, May 2017

Most consumers are not currently interested in digital purchase of life insurance Figure 5: Attitudes related to channel preference, May 2017

The opportunities Figure 6: Reasons for not having life insurance (select), Asian Canadians vs overall population, May 2017 Figure 7: Importance of factors motivating life insurance purchase, by income, May 2017

What it means

Market Factors – What You Need to Know Canada’s population is ageing Increased diversity means greater considerations for life/health insurance companies Adapting to the new solvency standard Impact of new tax legislation in effect in 2017 FinTech and life insurance (InsurTech)

Market Factors Canada’s population is ageing

Figure 8: Population aged 0-14 and 65+, as of July 1, 1995-2035* Figure 9: Canadian population, by age, 2016

Regulation: adapting to the new solvency standard Impact of new tax legislation in effect in 2017 FinTech and life insurance (InsurTech)

Key Players – What You Need to Know Cookhouse lab launches in Toronto Manulife launches new Lab of Forward Thinking location in Singapore New venture launchpad Diagram announces close of $25 million fund Desjardins sells insurance brokerage unit Micro-Duration Life Insurance Singapore-based FitSense takes knowing your customer to a new level Industry Developments and Innovations Cookhouse Lab launches in Toronto Manulife launches new Lab of Forward Thinking location in Singapore New venture launchpad Diagram announces close of $25 million fund Micro-duration life insurance Singapore-based FitSense takes knowing your customer to a new level Ladder launches in California Humania Assurance launches HuGO



eSignLive and APEXA offer digital onboarding and e-contracting solution Desjardins sells insurance brokerage unit Sun Life makes changes to streamline life insurance application process Canadian robo-advisor launches digital life insurance service Manulife drops nicotine testing in bid to speed up insurance application process Manulife and Sun Life to insure those who are HIV-positive Canadian life insurance industry commits to limits on use of genetic test results

Key Players – Marketing Campaigns Select campaigns from Mintel Comperemedia

Figure 10: Scotia term life insurance direct mail campaign, April 2017 Figure 11: CIBC guaranteed acceptance life insurance mail campaign, May 2017 Figure 12: Manulife engineers Canada sponsored term life direct mail campaign, April 2017

Other marketing campaigns Around three in five Canadians have life insurance Multiple benefits drive life insurance ownership Sun Life and Manulife are the leading providers of individual/group life insurance Younger consumers more likely to buy from bank insurance subsidiaries and credit unions Most consumers are not interested in digital purchase of life insurance

Ownership Around three in five Canadians have life insurance

Figure 13: Ownership of life insurance, May 2017 Figure 14: Differences in ownership of life insurance, by income, May 2017 Figure 15: Differences in ownership of life insurance, by age, May 2017

Canadians buy more individual insurance compared to group Figure 16: Individual and group life insurance purchase, May 2017 Figure 17: Type of insurance owned, by group and direct purchase, May 2017

Reasons for Having Life Insurance Multiple benefits drive life insurance ownership

Figure 18: Importance of factors motivating life insurance purchase, May 2017 Figure 19: Importance of factors motivating life insurance purchase, by age, May 2017 Figure 20: Importance of factors motivating life insurance purchase, by income, May 2017

Reasons for not Having Life Insurance No dependents and cost are the top reasons for not having life insurance

Figure 21: Reasons for not having life insurance, May 2017 Figure 22: Reasons for not having life insurance (select), Asian Canadians vs overall population, May 2017 Figure 23: Reasons for not having life insurance (select), over-55s vs overall population, May 2017

Choice of Provider Sun Life and Manulife are the leading providers of individual life insurance

Figure 24: Choice of provider for individual life insurance, May 2017 Figure 25: Choice of life insurance provider (select), by age, May 2017

Younger consumers more likely to prefer buying from bank insurance subsidiaries and credit unions Figure 26: Attitudes related to company preferences (% agree), May 2017 Figure 27: Agreement with statements on choice of provider (% agree), by age, May 2017

Sun Life, Manulife and Great-West Life dominate the group life insurance market Figure 28: Choice of provider for group life insurance, May 2017 Figure 29: Choice of provider for group life insurance (select), by age, May 2017

Purchase Preferences Most consumers are not currently interested in digital purchase of life insurance

Figure 30: Attitudes related to channel preference, May 2017 Around one in four 18-34s research life insurance online before purchase



Figure 31: Attitudes related to the insurance purchase decision, May 2017 Figure 32: General attitudes about life insurance (% agree), by age, May 2017

Most consumers are not apprehensive about medical questions Figure 33: Attitudes related to medical testing during the application process, May 2017

Appendix – Data Sources and Abbreviations Data sources Abbreviations and terms



DATABOOK CONTENT

Standard demographics you can expect to see tracked in our Databooks:

• Gender • Age • Gender/age combined • Generation • Race/Hispanic origin • Geographic region • Geographic area (urban, suburban, rural) • Household income • Age/income combined • Employment status • Education level • Presence and number of children in the household • Household size • Marital status • Home ownership status • Social media usage • Mobile device ownership

Consumer Research

Consumer section: Ownership of life insurance

Ownership of life insuranceOwnership of life insurance, by demographics

Consumer section: Individual vs. group purchase

Individual vs. group purchaseIndividual vs. group purchase custom group - netsIndividual vs. group purchase - term life insurance, by demographicsIndividual vs. group purchase - whole life/permanent life, by demographicsIndividual vs. group purchase - universal life, by demographicsIndividual vs. group purchase - unknown life insurance, by demographics

Consumer section: Reasons for not having life insurance

Reasons for not having life insuranceReasons for not having life insurance, by demographics

Consumer section: Choice of provider

Choice of providerChoice of provider, by demographicsChoice of provider for group life insurance - arranged through an employer onlyChoice of provider for group life insurance - arranged through an employer only, by demographicsChoice of provider for group life insurance - arranged for it directly with insurer



Choice of provider for group life insurance - arranged for it directly with insurer, by demographicsProvider of life insurance, by life insurance product ownership

Consumer section: Purchase Triggers

Purchase triggersPurchase triggers, by demographics

Consumer section: Attitudes towards apps and loyalty programs

Attitudes towards apps and loyalty programsAttitudes towards apps and loyalty programs, by demographics

Demographics by demographics

Demographics by demographics

© 2017 Mintel Group Ltd. All rights reserved.Confidential to Mintel.

Published by Mintel Group Ltdwww.mintel.comemail: [email protected]

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life insurance canada, july 2017 · and three canadian life and health insurers rank among the top...

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