Critical Gap in Creditor Life Insurance Coverage Among Canadian Homeowners: CAFII Study

Toronto, ON (Mar. 20, 2024) – New research conducted by LIMRA on behalf of the Canadian Association of Financial Institutions in Insurance (CAFII), sheds light on the insurance landscape among Canadian homeowners. The study’s primary objective was to reveal the prevalence of insurance products, with a particular focus on Credit Protection Insurance (CPI), among homeowners. The results have raised significant concerns about the financial security of numerous Canadian families.

The report set out to address pivotal questions regarding the insurance environment among Canadian homeowners. It sought to ascertain whether individuals with lower incomes prioritize credit protection insurance (CPI) over others and whether CPI plays a significant role in the market for homeowners. The study surveyed 1,175 Canadian homeowners, placing a specific emphasis on those with mortgages or home equity lines of credit (HELOCs).

This comprehensive survey explored various aspects, including insurance ownership, financial attitudes, coverage, and demographic factors.

1. Uninsured or Underinsured Homeowners: The study found a concerning trend among Canadian homeowners: a significant 80% lack sufficient insurance coverage, being either uninsured or underinsured with CPI or traditional life insurance. This shortfall in coverage leaves many families inadequately protected against unforeseen life events. Underinsured is defined by FCAC as Canadians with insurance coverage of less than 7-10 times their income.
2. Income Disparities: Low-income homeowners are significantly more likely to be uninsured compared to those in higher income brackets. Of those who are insured, 75% of low-income homeowners are underinsured, meaning they lack sufficient coverage to protect their financial well-being.
3. Role of Credit Protection Insurance (CPI): Despite the alarming rate of underinsurance, only 55% of all homeowners with credit own some form of CPI. This discrepancy is even more pronounced among low-income homeowners who have notably less CPI coverage compared to their high-income counterparts. This suggests a substantial knowledge gap, in understanding and accessing CPI, highlighting the need for increased awareness and education about this form of insurance.
4. Importance of CPI for Homeowners: While 80% of homeowners are underinsured or uninsured, among low-income homeowners with credit, 24% have no Insurance and another 10% rely solely on CPI for their insurance needs, which is significantly more than other income groups and highlights the importance of this form of protection for financially vulnerable households.
5. “At Risk” Homeowners: A significant portion of Canadian homeowners, 38%, fall into the category of “at risk.” These are homeowners with credit, who are uninsured or underinsured, and have survivors such as partners or dependents. This group is particularly vulnerable to financial hardship in the event of unexpected life events.

Given the stark findings of this report, LIMRA offers the following recommendations:

• Educational Initiatives: Collaborate with regulators, government, and community groups to increase awareness about insurance and credit protection, addressing the knowledge gap among 45% of all Canadian homeowners in the sample who feel financially uninformed.
• Priority Access: Credit Protection Insurance (CPI) serves as a crucial safety net, addressing the protection shortfall for 78% of Canadian homeowners with credit who are underinsured or uninsured. CPI is essential in securing their financial stability.
• Consider Survivorship: Consider survivorship (having a partner and/or dependents) as a critical reason for CPI to ensure that those with financial dependents have access to this vital protection. This is especially crucial for the 61% of homeowners with credit who are traditionally underinsured or uninsured and have survivors who would be at risk of losing the home they live in.

With 80% of Canadian homeowners lacking sufficient insurance coverage, it’s imperative to educate them about insurance and credit protection.

CAFII Executive Director, Keith Martin, emphasized the report’s significance, stating, “The findings of this report underscore the urgent need for Canadians to assess their insurance needs and coverage. We must ensure that all Canadians, regardless of income, have access to affordable insurance solutions that protect their financial well-being.”

This study commissioned by CAFII highlights the need for urgent action to improve the financial security of Canadian homeowners. “By addressing these issues, we can ensure that more Canadian families have access to the protection they need in times of adversity” stated Keith Martin.

For more details and to access the complete report, please visit CAFII’s website:

About CAFII

The Canadian Association of Financial Institutions in Insurance is a not-for-profit industry association dedicated to the development of an open and flexible insurance marketplace. CAFII believes that consumers are best served when they have meaningful choice in the purchase of insurance products and services. CAFII’s 15 members include the insurance arms of Canada’s major financial institutions–BMO Insurance, CIBC Insurance, Desjardins Insurance, National Bank Insurance, RBC Insurance, Scotia Insurance, and TD Insurance, along with major industry players Assurant Canada, The Canada Life Assurance Company, Canadian Tire Bank, Chubb Life Insurance Company of Canada, CUMIS Services Incorporated, Manulife (The Manufacturers Life Insurance Company), and Securian Canada. For more information, please visit www.cafii.com.

About LIMRA^®

Serving the industry since 1916, LIMRA offers industry knowledge, insights, connections, and solutions to help more than 700 member organizations navigate change with confidence. Learn more at www.limra.com.

SOURCE: Canadian Association of Financial Institutions in Insurance (CAFII)

Tags: Canadian Association of Financial Institutions in Insurance (CAFII), LIMRA, protection gap