Most young people engage with insurance only when legally required â auto, tenant, or home insurance.
Typical advice for saving on these types include shopping around, bundling with other kinds of insurance, and raising your deductible to lower premium payments.
You can also ask for discounts, according to the Insurance Bureau of Canada: if you are mortgage-free, claims-free, or have upgraded your home against fire and flooding, you can likely get a better deal on your home insurance.
For drivers, installing a theft deterrent or a usage-based insurance app which tracks your driving habits can reduce your auto premiums. Keeping a clean driving record is also key, the bureau advises. Your broker or insurer can help find savings within your policy.
Non-mandatory insurance is a lesser-known game, however.
In terms of other valuable items worth protecting, thereâs your health, your ability to work, and your life.
And young people are vastly underinsured, said Kenneth Doll, a Calgary-based financial planner with Wealth Architects and a life insurance consultant who offers fee-based advice.
âItâs like many things in life â there needs to be a trigger,â he said. âThere needs to be an event that takes place that leads them to purchase insurance. It could be buying a house, having children, getting married.â
Or sometimes there will be a tragic event that spurs them, said Rob TĂ©trault, head of the Tetrault Wealth Advisory Group at CG Wealth Management, in Winnipeg.
Perhaps a friend dies and their spouse is left without insurance, he pointed out, and a young family to support alone.
âMost people need a push in order to get insurance,â TĂ©trault said. âAnd then theyâll say, âWhat happens to my kids if that happened to me?â
âInsurance doesnât feel urgent, right? Itâs just something thatâs on the back burner, kind of like making a will. Until itâs too late, and then one day youâre not insurable.â
The unfortunate part of young people being underinsured, he added, is thatâs when insurance is the cheapest â premiums are based on age and health.
For life insurance, thereâs term and permanent coverage, Doll said.
Term life insurance expires after a set time, making premiums more affordable. A common term is 20 years, Doll explained, which is usually purchased once someone is responsible for someone else â a spouse, or children. If an income-earner dies, the mortgage still needs to be paid, the children still need to be raised.
âThe thinking is: after 20 years, the children will be somewhere around 20, and their mortgage will be close to paid off,â Doll said. âSo at the end of the term, they may let [the policy] go. They may think, âWe made it through, nothing happened.ââ
Renewing for another term is possible but more expensive since you are older, he said.
Permanent insurance lasts the rest of your life and is more costly. You can also structure your coverage with a bit of both, Doll said â buying a small permanent policy for $100,000 when youâre young and itâs cheaper, and then a term policy for $900,000 when you have kids.
Your coverage when you need it most â children are young, paying down the house â would total $1 million.
âAs people go through the different stages of life, life insurance changes its purpose along with you,â Doll said. âAs people approach retirement, permanent insurance becomes an important conversation because people want to have some insurance for the rest of their life.
âItâs also the most cost effective way to pay capital gains taxes upon death. So it becomes an estate planning tool after about age 55 or 60.â
Disability insurance also replaces income if you are unable to work, while critical illness insurance provides a lump sum payment upfront if you become sick, TĂ©trault said. This lump sum can be used for flights, medical treatments, and breaks from work.
âThink of high-earning professionals â dentists, lawyers, doctors â they typically have [disability insurance] in place,â TĂ©trault said. âIf they fall ill, or their back goes, then theyâll have income replacement.â
When a family member was diagnosed with cancer, TĂ©trault said critical illness insurance helped pay for flights to the Mayo Clinic for a second opinion, as well as treatments.
Financial professionals can advise clients on insurance needs, TĂ©trault said, noting that insurance is often part of a broader financial plan: âto mitigate risk, to protect capital, to reduce taxes, to ease an estate transfer.â
Itâs worth talking to your partner about what life would look like if one person passed away or was unable to work.
âIf itâs a complete disaster, and thereâs no way youâre paying the mortgage, and youâd have to sell, or maybe you canât even pay your rent â just have a conversation,â TĂ©trault said. âInsurance is usually very affordable at a young age.â
Although some jobs offer life or disability insurance as part of their benefits, they are often not enough to replace income for many years, Doll said.
When asking people how big a lottery win would allow them to retire, Doll pointed out most people say $2 million or $3 million. But when talking about life insurance, they think $200,000 coverage or that workplace benefits is enough.
âThe number should be the same as the lottery, because youâre dying, youâre not coming back,â Doll said. âYouâre not earning another penny.â
This report by The Canadian Press was first published May 13, 2025.
Nina Dragicevic, The Canadian Press
