The life cycle of Canadians is changing which is impacting everything from personal finances, to retirement and insurance planning. Many Canadians are now working into retirement, are having children later in life and are living longer overall.
TD Bank recently issued a report confirming that the average age that Canadians expect to retire is 61 years old, while the average life expectancy of Canadians is 80 years old. This means many Canadians will have to save at least 20 years worth of income in order to support themselves during retirement. This is where insurance is extremely important.
Dave Minor, Vice President of TD Insurance says insurance can play an integral role in mitigating the risks associated with this shifting life cycle.
“People are living longer, supporting adult children and aging parents, and are more active later in life than previous generations – and that means they need more money to sustain their quality of life,” says Minor. “That’s why it’s so important for Canadians to speak with their insurance provider and develop a financial plan that includes the right insurance to safeguard their income and assets.”
Medical advancements resulting in more people surviving critical illnesses is one major reason that men and women are living longer. This has led to an increased demand for critical illness insurance coverage which protects people in the event that they suffer a critical illness and if they don’t, they can receive up to 100% of their premiums back. Critical illness insurance is playing a vital role in protecting families against the increasing risk of a critical illness disrupting a family’s ability to earn income and save for the future, especially during prime income earning years.
For once people can bank their money and leverage insurance on living a long life, versus planning for death.
In addition, according to Statistics Canada many Canadian families are choosing to start their families later in life. The number of women who are giving birth in their 40’s has more than doubled in the past few decades. Many families put off insurance planning until they start a family, however, doing so results in higher insurance premiums. Individuals’ who invest in their insurance at a younger age when they are in good health benefit from lower premiums and reduce the risks of being denied coverage because of health issues.
Canadians are also carrying more debt. The debt load of the average Canadian is approx. 150% of their personal disposable income. A report by TD Economics found that over the past ten years while the average debt load in Canada increased at twice the pace of income, the debt loads of those 65 years and older grew at three times the rate and contributed to as much as half of the overall debt growth. Life insurance is frequently used to cover debts and protect the estate assets in the event of a death so that loved ones are able to manage the debt of the insured and are not left with the burden of dealing with their accumulated debt.
The great news about this report is that Canadians are enjoying a longer life more than ever and can now plan to live a long life. The key to prosperity however will be effective financial and insurance planning.