Canadian families are not taking steps to protect themselves against the financial impact associated with a serious illness, even though they’re aware of the severe impact an illness could have on their lives, according to a recent survey commissioned by Winnipeg-based Great-West Life Assurance Co. (GWL), Toronto-based Canada Life Assurance Co. and London, Ont.-based London Life Insurance Co.
The survey results highlight an opportunity for insurance agents to educate their clients on strategies for protecting their finances against this risk.
In the survey of almost 1,800 working adults between the ages of 18 and 65, 57% said they believe the financial impact of suffering a critical illness (CI) on either themselves or their partners would be very serious.
Canadians’ top concerns associated with facing a CI include loss of income, an inability to meet living expenses and difficulty paying medical bills, with more than half of survey respondents citing these as key worries. Other concerns include the possibility of needing to delay retirement and the risk of losing their home.
The most common ways that Canadians say they would cope financially if they became critically ill is to cut back on expenditures, at 59%, and use savings, at 55%. Others expect to take more drastic measures: 42% say they or their partners would need to delay retirement, 30% say they would need to take on debt and 29% say they would need to downsize their home.
“Overall, Canadians feel uneasy when considering the impact of a CI and have some understanding of the risk, but lack awareness of and preparedness for the financial implications,” says Kelly Swanson, assistant vice president, insurance marketing at Great-West Life, in a statement.
The survey reveals a gap in Canadians’ knowledge with respect to CI insurance. Although 58% of survey participants said they have heard of CI insurance, few appear to be familiar with the role CI insurance can play in helping them manage costs in the event of a serious illness. Less than one-third of survey participants said they view CI insurance as a tool that could help them cover living expenses and mortgage payments in the event of a serious illness.
In addition, only 20% of survey participants said they are aware that CI insurance claims are paid out as a lump sum, with many Canadians under the impression that claims are paid out as a monthly benefit to replace a portion of their employment income.
The survey results suggest advisors can play a key role in educating Canadians on CI insurance. Of those surveyed, 31% said they would turn to their financial advisor or insurance broker for information if they were to consider purchasing a CI insurance policy. Approximately one-third said they would turn to an insurance company they work with and 27% would turn to the Internet.