Canadian households are underinsured by 14.5% on average, even as total life insurance holdings in the country sit at record levels, according to a study by Toronto-based MyChoice.
That gap, layered against a new Morningstar DBRS commentary on demographic change published August 4, 2026, points to a market that is not simply shrinking but reshuffling, creating openings for advisors willing to serve segments the industry has increasingly moved away from.
The Morningstar DBRS report, authored by Victor Adesanya, senior vice president, Global Insurance & Pension Ratings, and Marcos Alvarez, managing director, Global Financial Institution Ratings, noted that declining fertility rates across Canada and the US are narrowing the pool of young adults entering the workforce and forming families, the segment that has traditionally driven demand for term life insurance and income protection products.
Fertility rates in both countries have fallen well below the replacement level of 2.1 children per woman, the report stated, citing Macro Trends data from 1960 to 2026.
But the MyChoice study, which draws on Statistics Canada, Canada Mortgage and Housing Corporation, and Canadian Life and Health Insurance Association (CLHIA) data, suggests the resulting gap is less about disappearing demand and more about where the industry has stopped paying attention.
That 14.5% figure is a national average measuring coverage held against estimated need; at the provincial level, the gap varies significantly, with Ontario households facing the widest shortfall in the country at more than 30% underinsured relative to need.
Separate research cited by RGA points to an industry-wide shift toward high-net-worth clients and a decline in the number of insurance advisors as contributing factors, leaving reduced attention on mass market and term policies.
For advisors willing to work that segment, particularly younger families and first-time homebuyers, this points to comparatively thinner competition than the industry's overall size would suggest.
Morningstar DBRS identifies immigration as a key demographic offset in Canada, where it accounts for nearly all population growth and has become essential to sustaining the workforce as the domestic population ages.
Canada welcomed an estimated 395,000 immigrants in 2025, according to RGA. New immigrants often carry dependents, mortgages, and business interests that increase demand for life insurance coverage, a specific and quantifiable growth segment for advisors who build outreach, language capacity, or cultural fluency around newcomer communities.
At the other end of the demographic curve, rising life expectancy, now averaging nearly 80 years in North America, is driving demand for annuities, long-term savings products, and retirement income solutions, according to Morningstar DBRS.
Long-term care is a particular gap in Canada: a Leger Marketing survey commissioned by CLHIA found nearly three-quarters of Canadians have no financial plan to cover long-term care costs, even though long-term care is not covered as an insured service under the Canada Health Act.
For advisors serving older or retiring clients, that suggests the conversation should be actively shifting toward hybrid life and long-term care products and wealth transfer planning, rather than staying anchored to traditional term coverage.
Canada's life and health insurers paid out $18.6 billion in life insurance benefits in 2024, including $8.9 billion in death benefits, according to CLHIA data, underscoring the scale of obligations already in force even as underlying demand patterns shift.
More than 1.2 million Canadian mortgages were renewed in 2025, according to Money.ca, with the renewal wave expected to continue into 2026.
For homeowners whose coverage was purchased when their mortgage balance or income looked different, that renewal moment gives advisors a natural, recurring trigger to revisit whether existing coverage still matches actual financial exposure, rather than waiting for a policy review to be client-initiated.
Morningstar DBRS frames demographic change as a genuinely two-sided force for the life insurance industry, and the Canadian coverage gap data makes that concrete.
The same forces narrowing the traditional term life market are simultaneously expanding demand in retirement income, wealth transfer, long-term care, and immigrant-focused coverage.
For advisors, the practical takeaway is that the industry's broader "declining demand" narrative may be obscuring real, current growth opportunities in segments that have simply received less attention in recent years.
