Why Women Face a Wider Life Insurance Gap in Canada, and What’s Behind It

Canadian households are underinsured by an average of 14.5%, holding roughly $509,000 in life insurance coverage against an estimated need closer to $595,000, according to a recent industry study. Within that shortfall, the gap isn’t evenly distributed: women carry a 32% insurance need gap, compared to 28% for men.

The scope of the gap

The study, based on Statistics Canada, CMHC, and Canadian Life and Health Insurance Association data, found that total life insurance coverage in Canada has reached record levels even as the average household falls further behind what it actually needs.

Where the gender difference likely comes from

The data doesn’t spell out every cause, but a few likely contributors stand out. Women are more likely to take career breaks for caregiving, whether for children or aging parents, which affects both income and the group benefits that often come with steady employment. Coverage needs also tend to be calculated around income replacement, so lower average earnings can translate into lower coverage even when the underlying financial responsibilities, like a mortgage or dependents, are the same.

A structural shift making this more urgent

Part of the broader gap comes from a slow erosion of employer-sponsored coverage. As more Canadians move between jobs, take on contract work, or run their own businesses, fewer people have access to the group life insurance that used to come bundled with steady employment. That shift affects everyone, but it particularly affects women, who are more likely to move in and out of the workforce over their careers.

Where this leaves you

None of this is a reason to panic, but it is a reason to check. If you’ve never reviewed your own coverage against what your household would actually need, or if it’s been a while since you have, it’s worth taking a look. Cove’s Women’s Division exists in part to support exactly this kind of planning conversation, and we’re happy to help you think through where you currently stand, just book a meeting with us.

References:

• One in three Canadians underinsured amid widening life insurance gap – Report
• Life Insurance Coverage Gap in Canada Offers Industry-Wide Opportunity