The findings indicate that people in Canada have been overpaying for coverage by 36 percent.
Canadian life insurance is substantially more expensive than it should be, according to a recent PolicyMe study which showed that people in the country to our north are paying an average of 36 percent too much.
This analysis was based on the data from 4,800 existing policies in Canada.
The findings have shown that the Canadian life insurance industry may be ready for somewhat of an overhaul. The reason is that the traditional methods used in this industry is letting many people in the country down. The data analysis was conducted on the firm’s own platform. Through the data, the firm was able to demonstrate some of the drawbacks of the industry in the country and provide suggestions for making the best decisions in purchasing coverage.
“We see far too many Canadians being sold the wrong life insurance coverage,” said PolicyMe CEO and co-founder, Andrew Ostro. “It’s our hope that this analysis makes people more aware of the common pitfalls that occur when shopping for life insurance. Canadians need to ask the right questions, get the most accurate recommendation when it comes to product and coverage fit, and find the best price.”
The company identified three primary reasons that Canadian life insurance is being overpriced.
- Premiums calculations are overly simplified – The firm claims that the typical industry calculation multiplies an applicant’s household income by a number that is essentially arbitrary, typically within the range of 10 to 15. A more complex calculation would use algorithms to help predict a family’s projected finances in order to identify a more realistic amount that would be needed to maintain a lifestyle in case of an unexpected death.
- Many people have the wrong coverage in the first place – The firm suggests that most Canadians could benefit from term life insurance but are covered by mortgage policies instead. They indicated that mortgage brokers are incentivized to sell those products even though customers could reduce their premiums by an average of 46 percent by choosing a term product instead. It would bring the average monthly payment down from $67 to $36.
- Price comparisons aren’t being conducted enough – The insuretech startup claims that Canadian life insurance is purchased following inadequate product and price comparisons to find the best deal.