Do-it-yourself (DIY) investors – those who do not work with financial advisors – are less likely than Canadians overall to have life and health insurance, according to recent research conducted by Mississauga, Ont.-based Credo Consulting Inc. This is the case even though DIY investors say they regard child care, health care and elder care as important financial considerations.

“People know they should have insurance, but they often don’t do anything about it,” says Sara Gilbert, founder of Montreal-based Strategist Business Development.

“That’s where the financial advisor’s role kicks in: helping people understand the importance of insurance, and the impact of not having it.”

Among Canadians surveyed by Credo: 63% of DIY investors surveyed reported having life insurance, compared with 69% of the general population of survey participants; 54% of DIYers surveyed had health insurance, compared with 57% of the general population; 43% of DIYers surveyed reported having dental insurance, compared with 47% of the general population.

At the same time, DIY investors surveyed gave higher ratings to financial concerns such as child care, health care and elder care in terms of importance vs the general population of survey participants.

This are some the findings of the most recent edition of the ongoing Financial Comfort Zone Study, a national consumer survey conducted by Credo in partnership with Montreal-based TC Media’s investment group. (TC Media publishes Investment Executive [IE].)

The results of this survey suggest that a gap exists between overall insurance needs and insurance ownership within the DIY investor’s group, says Brandon Bertelsen, research director at Credo.

“Without access to the traditional advice channel, DIY investors don’t have someone who can guide them through determining their goals and priorities, and show them where insurance can fit into an overall financial plan,” Bertelsen says.

Among Canadians surveyed by Credo, 64% of participants who were DIY investors were male, compared with 48% in the survey’s general population group.

DIY investors who were surveyed also tended to be better educated, more financially literate and have higher incomes than the general survey population.

As well, the DIY group were much more likely to own individual stocks and ETFs vs Canadians overall.

“DIY investors could very well be doing everything right in terms of investments, but still [may] not have any good idea of the risk they’re exposing themselves to by not being properly insured,” says Bertelsen.

David Juvet, vice president of financial services with Ideal Insurance Brokers Inc. in Toronto, agrees: “Unexpected events can completely obliterate things like a nice little investment plan.”

One possible reason for the gap in insurance need vs insurance coverage among DIY investors is that insurance doesn’t offer the same emotional appeal as investments do, suggests Jim Ruta, president of AdvisorCraft Media and Consulting in Toronto and a video columnist for IE.

“For some, investments are about risk and challenge, and ‘Am I smarter than the other guy?'” Ruta says. “Insurance doesn’t have that.”

And, unlike investments, insurance primarily offers protection against the shocks and setbacks of life, and allows an individual to plan for the well-being of others after his or her demise.

“There’s no question that morbidity and mortality are not popular topics,” Juvet says. “People don’t spend time talking to friends, colleagues and relatives about how much life insurance they own or asking them, ‘Do you own critical illness insurance?'”

That’s why, despite the great leaps made in recent years in the delivery of digital advice, insurance remains a product that typically needs to be sold to clients, Ruta says.

“Life insurance is one of the few products you can buy only when you don’t have an immediate need for it,” says Ruta, “because when you need it [because you’ve fallen ill], you can’t get it anymore – no one will sell it to you.”

Digital advice alone can’t help clients give consideration to all the what-ifs that may arise in life, says Susan Creasy, an insurance advisor and owner of Susan Creasy Financial Inc. in Kingston, Ont.

“There’s lots of online analysis available that can help you come up with estimates and projections,” Creasy says, “but there’s nobody there to play a bit of devil’s advocate for you.”

The best method to help your clients understand the importance of insurance to a financial plan, and to take action on best intentions, is to cite case studies – real-life scenarios in which a well-considered insurance plan saved another client, Gilbert says.

“If you have a story in which you delivered a cheque to someone or a story in which a client said, ‘No’ and [then] what happened, use those [stories],” Gilbert says. “People relate to stories.”

Juvet says he finds the best way to reach clients is to let them in on how he includes insurance products as part of his and his family’s comprehensive financial plan.

“You can have lots of knowledge; you can have lots of illustrations,” Juvet says.

“But, when it comes down to it, clients are going to ask, ‘Why should I bother doing this at all?’ Well, I’m living the example; I’m sitting right in front of them.”

The online Financial Comfort Zone Study has polled 18,000 Canadians thus far. The survey is meant to gain insight into the relationships among financial advice, financial well-being and overall life satisfaction in Canadian society. Canadians are polled monthly, and the number of survey participants will increase each month.

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