What do Canadians want in their insurance coverage?

Canadian employers should reassess life and health benefits as new data show younger workers are locking in substantial personal coverage earlier, disclosing more mental health conditions and shifting their substance‑use habits.

Currently, there is a strong clustering of personal policies around the $500,000 mark, finds a new report from digital life insurer PolicyMe that analyses over 18,000 responses from term life insurance customer interactions from Q4 2025 to track how Canadians select coverage, name beneficiaries and report health issues.

The data “gives a clear snapshot of how Canadians are thinking about protection,” according to the company, noting that many applicants are converging around similar coverage levels, despite ages and incomes, while “navigating new health and lifestyle patterns that could shape the future of life insurance.”

According to the report, for many Canadians, $500,000 hits the sweet spot between affordability and coverage. It is enough to provide real protection for loved ones without creating a financial strain, even as day‑to‑day costs like rent, groceries and child care keep climbing. The company adds that younger buyers in particular “seem particularly determined to lock in coverage early, prioritizing long‑term protection even when budgets are tight.”

The number of Canadians who have access to employer-provided medical or dental benefits has been growing slightly over the past few years, according to a previous report from Statistics Canada (StatCan). However, many workers continue to encounter significant gaps in the benefits offered by their employers, according to another report from RBC Insurance.

Coverage peaks at high‑obligation life stages

PolicyMe’s analysis also shows coverage demand peaking during life stages associated with heavier financial obligations. Larger policies and longer terms appear more frequently during years “marked by mortgages, young children, and peak earning potential.”

As debts are repaid and dependants become financially independent, “coverage needs tend to decrease as well.”

The pattern broadly aligns with the risk curve facing many mid‑career employees balancing mortgage, child care and caregiving costs, suggesting value in flexible benefits structures that allow staff to adjust coverage as circumstances change.

Mental health moves to forefront

On the health side, the PolicyMe study highlights a rising prominence of mental health within applicants’ overall profiles. Mental health, psychological, emotional, eating or developmental conditions make up a significant share of disclosures, alongside allergies or immune conditions, respiratory issues, diabetes and hypertension.

PolicyMe says these trends point to “a generation of younger Canadians that is both more transparent about their health and facing distinct health challenges,” and notes that “the growing role of mental health in the context of overall well‑being is an especially important sign that the life insurance industry must continue to evolve alongside contemporary Canadian health trends.”

Canada’s Gen Z employees are experiencing the fastest growth in mental health issues and chronic disease compared with other age groups, putting employers at higher risk of lost productivity and escalating benefits costs in the workplace, according to a previous report.

Substance‑use patterns shift in younger cohorts

The PolicyMe report further identifies changing substance‑use patterns among younger Canadians, with implications for underwriting and, indirectly, employer benefit costs. PolicyMe finds that younger age groups report “lower alcohol consumption but higher nicotine and cannabis use” than previous generations. Cannabis and cannabinoid oil use is comparatively high in younger cohorts, while regular daily alcohol consumption trends lower.

Despite these shifts, underwriting rules have been slow to change. PolicyMe notes that life insurers “often treat any nicotine consumption, whether or not it involves traditional cigarettes, similarly to smoking, which can have a significant effect on eligibility and premiums,” and that underwriting frameworks “remain largely unchanged, making this an area of ongoing consideration as usage patterns shift.”

“Life insurance decisions are largely informed by life itself, balancing competing financial obligations such as mortgages and children against changing health realities and habits,” says PolicyMe.

“The lives of Canadians are evolving, and as their coverage decisions change, the industry will likely continue evolving alongside them.”

Here is everything employers need to look for when buying group insurance in Canada, according to PolicyAdvisor:

• Assess your team’s demographics, health conditions and family coverage needs to design a plan that works for everyone
• Decide whether a mandatory plan for all employees or a voluntary enrolment option makes sense, based on your total employee size; companies with a workforce of fewer than 10 employees should make group insurance mandatory for all full‑time employees
• Include essential core benefits like health, dental, life and disability coverage, and offer optional add‑ons for extra flexibility
• Evaluate coverage for dental, vision, mental health and paramedical services to ensure the plan addresses diverse employee needs
• Compare multiple group insurance providers based on pricing, claims‑approval times, provider network size and customer‑satisfaction ratings
• Choose a plan with adjustable coverage options so you can scale benefits as your workforce grows or changes
• Review renewal terms, rate guarantees and factors that may cause premium increases over time
• Check if the plan offers wellness benefits, such as gym memberships, smoking‑cessation programs or nutrition counselling, to encourage healthier lifestyles
• Ensure the policy has minimal medical underwriting so employees with pre‑existing conditions can easily qualify
• Look for tax advantages by confirming that employer‑paid premiums qualify as deductible business expenses
• Confirm whether dependants can be added to the plan at affordable rates to make the coverage more attractive