TD Bank Group Newsroom
70 is the new 50: How changing lifecycles are affecting insurance needs
-- Canadians should review their insurance coverage to help plan for longer golden years --
TORONTO, March 12, 2012 /CNW/ - Working into retirement, postponing having children, living longer - the lifecycle of Canadians is changing, and this has implications not only on personal finances and retirement savings, but on insurance needs, too.
According to a recent report by TD, the average age Canadians expect to retire is 611. With average life expectancy now at 80 years old2, Canadians planning to retire at that age need to be prepared to save at least two decades worth of income to support themselves during retirement.
Dave Minor, Vice President, TD Insurance says insurance can play an integral role in mitigating the risks associated with this shifting lifecycle.
"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."
Minor offers his perspective on how these lifecycle shifts will impact the insurance needs of consumers:
We are living longer
Thanks to medical advancements, more people are surviving critical illnesses and living longer; the average life expectancy is now 78 for men and 83 for women3. As a result, Minor says critical illness insurance is becoming more important to protect against the increasing risk of critical illness disrupting a family's ability to earn income and save for the future, especially during prime income earning years.
Life insurance is also an effective safety net to help offset the loss
of income due to death. You can estimate how much life insurance
protection you and your family need with a life insurance calculator at
Families are postponing having children
Today, many families are choosing to have children later in life. According to Statistics Canada, the number of women giving birth in their 40s has more than doubled in the last few decades4.
"Many young and healthy Canadians put off buying life insurance until they start planning for a family. But the reality is, even if you're postponing having children until later in life, sooner rather than later is the best time to purchase a policy. You will generally be rewarded with better rates at younger ages and reduce the risk of being declined for coverage due to health issues," says Minor.
More parents are financially supporting adult children
High youth unemployment (currently at 14.7%, almost double the national rate5) and increasing post-secondary education costs means many young people are relying financially on their parents until their late 20s. This can translate into higher-than-expected household expenses, including additional life insurance coverage to mitigate the loss of, or a disruption in, household income, and even an increase in home insurance coverage that may be needed for the extra valuables in the home.
We are carrying more debt
The average debt level of Canadian households is now equivalent to around 150% of personal disposable income6. What's more, a report by TD Economics found that over the past decade, while average debt-loads 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 as much as half to the overall debt growth7.
"Life insurance is frequently used to cover debts and protect the estate assets in case of death, sometimes even paid for by the beneficiaries to help manage the cash flow of the insured," says Minor. "Term insurance is a good option for this objective as it is generally inexpensive and provides a pre-determined pay out to the designated beneficiaries."
"Everyone should review their insurance needs, because it will help them plan for their future well past their prime earning years" says Minor. "Having a financial plan that includes the right insurance coverage will provide them with financial support and protect them from unexpected events.
About TD Insurance
TD Bank Group's insurance companies and operations carry on business under the TD Insurance brand. TD Insurance offers a wide range of products to help protect clients from the 'accidents of life' including credit protection, life, health, travel, home and auto insurance. With more than three million clients, TD Insurance authorized products and services are available through a network of more than 1,000 TD Canada Trust branches, the Internet and telephone. The TD Insurance brands include TD Insurance Credit Protection and TD Insurance Life and Health, which are the number one provider of critical illness insurance and direct life and health premium origination in Canada. And through its TD Insurance Meloche Monnex and TD Insurance Home and Auto brands, TD Insurance is the largest direct-response insurance group in the country. For more information, visit www.tdinsurance.com.
1 The 2012 TD Age of Retirement Report results were collected through a custom, online survey by Environics
Research Group between November 22 and December 2, 2011. A total of
1,006 Canadians aged 25-64 who are not retired were surveyed.
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