A new study commissioned by the Canadian Association of Financial Institutions in Insurance (CAFII) has found a “concerning trend” among Canadian homeowners.
Involving 1,175 Canadian homeowners, the research was conducted by LIMRA on behalf of CAFII to examine whether individuals with lower incomes prioritize credit protection insurance (CPI) over others and whether the product plays a significant role in the market for homeowners.
CAFII reported: “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…
“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. Despite the alarming rate of underinsurance, only 55% of all homeowners with credit own some form of CPI.”
It was noted that low-income homeowners have notably less CPI coverage compared to their high-income counterparts. For CAFII, this suggests a substantial gap in knowledge when it comes to CPI.
“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,” CAFII added.
In response, LIMRA recommends raising awareness about insurance and credit protection through educational initiatives, as well as providing priority access and considering survivorship.
“The findings of this report underscore the urgent need for Canadians to assess their insurance needs and coverage,” CAFII executive director Keith Martin said. “We must ensure that all Canadians, regardless of income, have access to affordable insurance solutions that protect their financial wellbeing.”
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