Canadian millennials are now taking out life insurance more than ever. Here's why.

There was a time when things like buying a car, subscribing to a daily newspaper and getting life insurance coverage were a rite of passage into adulthood for many Canadians. 

And while they aren't exactly the milestones they may have been at one point, the impact of the COVID-19 pandemic has contributed to a spike in interest in at least one of those endeavors: life insurance. 

According to TD Insurance, the number of Canadians between the ages of 30 and 40 that have searched for life insurance information on the TD Insurance website has increased by 50% in 2020, compared with 2019. Meanwhile, online interest in life insurance among Canadians under age 30 has also spiked by more than 30% over the same timeframe. Among Canadians 40 years of age or older, interest was up more than 25%. 

Matthew Phillips-Brown, a Senior TD Life Insurance Advisor based in Markham, Ontario, said he's noticed that many more customers in their mid-30s, especially, have been asking about life insurance coverage over the last few months and attributes the increase to a few factors.  

A wakeup call 

"Things really picked up during COVID-19, and with us being locked indoors and spending more time with our families I think we had more time to think about protecting our assets and our families should something happen," said Phillips-Brown. 

"A lot of people in the mid-thirties age bracket, where we saw lots of interest in life insurance, have young families. Many of these people would be contributing to a Registered Education Savings Plan (RESP) for their kids, for example, or want to protect other assets like their home should something unfortunate happen." 

Phillips-Brown adds that a few clients were surprised to learn that life insurance can be used to protect mortgage balances, children's education plans, and years of savings should they pass away.

"I would hate to see any of my clients needing to use those assets to cover the cost of a funeral, or drain them to use as income to cover regular day-to-day expenses like phone bills or housing when it's easy to avoid that financial burden on your partner or family," he said.  

Proactively protecting wealth 

Phillips-Brown also believes that younger clients are becoming more aware of their health which has potentially led to sparking important family conversations around financial planning. 

"A good friend of mine who is thirty-five and in good health, and who went to the gym daily suffered a heart attack out of the blue," he said. 

"He fortunately is doing well, but this led to some conversations about the need for life insurance to protect his family and their assets. I think younger people in general are more aware of situations like these and are being proactive in seeking to protect their loved ones and assets sooner."

It's not just customers who are interested in protecting and transferring wealth to their families that Phillips-Brown said should be interested in purchasing life insurance. Single people, would still need a modest sized coverage amount to help protect their family from the financial pressures of covering the expenses of a funeral. 

"I think a lot of people have avoided the subject because they don't want to think about their mortality or believe life insurance has to be pricey because of the concept that you are insuring your life," said Phillips-Brown. "Because car insurance can be more costly, depending on the situation, I understand how some people would believe that insuring your life would be costly, but it's a matter of education because this coverage can be quite affordable." 

While every insurance company has different pricing models, the premiums for life insurance coverage are primarily determined by a person's age and health. For the same coverage amount and product, premiums are lower the younger the customer. Premiums for women are generally less costly than for men because women tend to live longer. The current average lifespan for women in Canada according to Statistics Canada is 84 years of age, compared to about 80 years of age for men. Because life insurance companies are more likely to have to pay out claims to men sooner, they pay higher premiums to account for the higher risk.

Digital demand 

Because of social-distancing and lockdown measures in place to prevent the spread of COVID-19, Phillips-Brown says there's been a 65% increase over the last year in the number of applications completed online for life insurance coverage on the TD online platform. A customer can get a quote in as little time as a minute, and complete an application in less than 10 minutes.

"I wish it didn't take the uncertainties of a pandemic for this to happen. There is no car or house without you," he said. 

"People tend to appreciate those things a lot more than themselves and that alone should hit home. But I think interest in this is here to stay. I think interest in protecting your siblings and parents or spouse financially or having control over passing the wealth you've created onto your kids is something that is positive and productive for any of us to be thinking about."