Earlier in October, the Canadian Institute of Actuaries (CIA) released the sixth and final report of its series, COVID-19 Canadian Insurance Industry Monthly Aggregate Data Analysis, which has taken an intensive look at changes in life insurance claims since the beginnings of the pandemic. The CIA is the national organization of the actuarial profession in Canada, which uses mathematics, statistics, and financial theory to assess risk and act as advisors for the insurance industry.
- Report 1, published on Oct. 26, 2020, dives into the rise in life insurance claims in April and May of 2020 as compared to the same period the year before.
- Report 2 was published on Feb. 23, 2021, and contains data collected up to September 2020.
- Report 3 was published on June 22, 2021, and contains data collected up to the end of December 2020.
- Report 4 was published on Nov. 21, 2021, and contains data collected up to the end of May 2021.
- Report 5 was published on March 28, 2022, and contains data collected up to the end of December 2021.
- Report 6, covering data up to the end of June 2022, provides key findings made from the impact of pandemic on the life insurance industry and how they can help experts manage risk from COVID.
The reports’ findings are not unexpected. When the first wave was at its worst in April 2020, COVID-related individual life insurance claims represented 13% of total claims. During the second wave in January 2021, COVID-related death claims numbered 11% of total life insurance claims with a high of 6.8% for group insurance claims during the same month.
This level of “excess deaths,” as described by the CIA, will undoubtedly have an effect on the life insurance industry as a whole, however the number of claims is expected to keep reducing as time goes on.
Additional findings of the CIA reports
From March 2020 to June 2022, a period comprising 28 months, Canada experienced seven distinct waves of COVID-19 infections. The peak of the first wave happened in May 2020, and while the number of cases was low as compared to other waves, the amount of additional deaths was much higher.
The most new daily cases seen during the pandemic occurred in January 2022, with about 41,000 counted over a seven-day rolling average. This peak was during the fifth wave, which started in December 2021, and was due to Omicron’s higher rate of infection paired with waning vaccine-induced immunity and delayed booster shots.
A total of 3,268 reported individual life insurance claims were identified with COVID-19 as the cause of death in 2020. A further 2,403 and 1,369 reported COVID-19 claims were identified in 2021 and 2022, respectively. Since the start of the pandemic, the Government of Canada has counted 4,314,718 cases of COVID-19 and 46,025 deaths.
Approximately 25% of Canadians have individual life insurance plans, with another 38% covered through their employer, according to Reviewlution.com.
The report notes that there were very few life insurance claims identified with COVID-19 as the source of death in early 2020, although aggregate individual insurance claims amounts exceeded the comparable monthly equivalent amounts in 2019. This means that it’s likely there were life insurance claims impacted by COVID-19 that were not identified as such.
Life insurance protects your loved ones
Life insurance combined with good estate planning provides long-term peace of mind for families. It is a low-cost, high-return investment in you and your loved ones’ future, doubling as a tax-shielded investment while providing your family with an added layer of financial security. It’s never too late to purchase life insurance, even if you have a pre-existing health condition, and providers offer a wide range of coverage options.
Here are some of the most common types available:
- Term life insurance is affordable and easy to understand. It provides coverage for a specified length of time (usually 10 or 20 years), and costs are guaranteed for the “term.” Term life insurance can be converted to permanent life insurance at any time.
- Permanent life insurance policies are purchased for an indefinite period of time and come with a cash value, providing your beneficiaries with a tax-free payment when you pass away. This is a very good option to ensure that your loved ones receive some benefit from your dedication to your policy and to them. Permanent life insurance usually includes a funeral cost payment as well, although experts do caution that it is wise to save additional money for these sorts of arrangements. Different kinds of permanent life insurance include whole, universal and variable policies.
- Simplified issue life insurance does not require a medical test, but the insured will need to answer health- and lifestyle-related questions. Coverage amounts are usually limited.
- Guaranteed issue life insurance is issued immediately with no medical questions or underwriting, and is guaranteed even if you have been declined for life insurance in the past two years. The trade-offs for this simplicity are higher premiums and far lower coverage.
Learn more about your life insurance options at Lane’s
Life insurance can be a complicated topic. The life insurance professionals at Lane’s are here to provide the answers. We are a full-service Alberta-based insurance brokerage that works with the top carriers in the Canadian insurance industry to provide the very best coverage at excellent rates. Contact us at our Calgary, Edmonton, Banff, or Alberta offices.
