24% of Canadians with life insurance doubt their coverage is enough

The number on the policy application looks sufficient at signing. Two years later, with mortgage rates higher, daycare costs compounding, and inflation reshaping household budgets, the same coverage amount reads differently. What seemed like careful planning in 2024 becomes a question mark in 2026.

PolicyMe's second annual life insurance study found that while more Canadians now carry coverage, 24% of those who already have policies doubt the amount is adequate. Coverage gets calculated once, at purchase, using income and debt levels from that single moment. Households evolve: mortgages refinance, children arrive, aging parents need support, inflation erodes the real value of the death benefit. The policyholder's life changes. The coverage amount does not.

The calculation most people skip

Life insurance is sold in dollar amounts, often arrived at through a rough multiplier of annual income, seven times, ten times, occasionally more. That multiplier was derived from actuarial tables decades ago, designed to replace income over a long enough period for dependents to stabilize. The problem is that the multiplier assumes static conditions: the same debt load, the same housing cost, the same family structure.

Most households do not have static conditions. A 35-year-old who buys $500,000 in term coverage while earning $70,000 a year might think the math works. But if that person's mortgage was financed at 2.8% in 2021 and refinanced at 5.4% in 2026, the monthly payment has already changed the household's cash position. Add a second child, a tuition savings target, or aging parents who need support, and the $500,000 becomes visibly insufficient without the policyholder ever changing jobs or income.

Inflation is the other input that gets underpriced. The Canadian Consumer Price Index rose roughly 15% between 2021 and 2026. A policy purchased five years ago is effectively worth 15% less in real terms today, but the face value has not adjusted. Permanent policies with cash value components may have some built-in growth, but term policies, the majority of coverage sold to younger families, lock in the death benefit at issue. That number does not keep pace with the cost of living unless the policyholder manually increases coverage, which requires new underwriting and higher premiums.

Where the confidence gap actually sits

The 24% figure does not evenly distribute across demographics. Group coverage through employers remains the most common entry point for life insurance in Canada, but employer plans typically offer one to two times annual salary, enough to cover funeral costs and a few months of expenses, not enough to replace a primary earner's income for a decade. Roughly 50% of Canadians with coverage rely primarily on workplace benefits, which terminate immediately upon resignation or layoff.

The confidence gap is highest among middle-income households carrying both mortgages and dependents. The wealthy have access to financial advisors who model worst-case scenarios and recommend higher limits. Lower-income households often qualify for smaller amounts or forgo coverage entirely, meaning the question of adequacy does not come up. The middle class carries the debt-to-coverage mismatch: large enough obligations to need substantial protection, but not enough disposable income to buy the amount required without trade-offs against other priorities.

The rise of digital insurance platforms has increased the volume of policies issued but potentially decreased the depth of advice at the point of sale. Online calculators use averages. They do not account for irregular income, regional cost differences, or second-order risks like a parent needing long-term care support. A buyer who completes the application in 20 minutes rarely revisits the coverage number after signing. Household events--a job change, a refinance, a birth, inflation--force the question years later. The 24% who doubt their coverage are responding to that gap between the day they signed and the life they actually have.