New study shows nearly half of mortgage-holders could last less than six months without income
Many Canadians are risking their most valuable asset by being underinsured, leaving them vulnerable if they were to lose their income.
A newly released survey reveals a worrying financial picture for many homeowners with mortgages or HELOCs who, even with insurance coverage, remain financially exposed. Half of these households believe they could not maintain their lifestyle for more than six months if their main income source disappeared.
The study, commissioned by the Canadian Association of Financial Institutions in Insurance (CAFII) and conducted by Pollara, also found that 44% of respondents say the current economic climate is hurting their finances, while 57% worry about job loss in the coming year.
Although insurance is widespread, many homeowners are unsure of how well they’re actually protected. Only 38% feel confident they could keep paying their mortgage if the primary earner lost income, and just 35% know how long their life-insurance coverage would last.
“With average household debt levels so high, these blind spots leave families exposed at the worst possible time,” says CAFII’s executive director Keith Martin. “The challenge for our industry is not just providing insurance, but making sure Canadians understand and trust the protection available to them.”
The study grouped borrowers into five categories, with two standing out: the “Confident Planner,” representing 26% of respondents and showing strong financial footing and a higher likelihood of purchasing coverage, and the “Anxious Realist,” at 25%, feeling pressured financially but still seeing the need for protection. Together they account for almost half the participants and reflect substantial gaps in preparedness.
Although 29% of mortgage holders and 22% of HELOC borrowers have credit-protection or similar insurance, many question whether it is worthwhile. Only 30% of those with coverage believe the product offers good value, and fewer than one third consider it affordable or more trustworthy than other insurance. Among those without coverage, 41% cite cost as a barrier, while 40% say they don’t see its relevance.
Consumer awareness is also limited. Just 39% of mortgage or HELOC holders without CPI recall being informed about it, and about a quarter to a third say they received too little information to even judge key product features.
One of the clearest gaps lies in job loss protection: just 66% of mortgage-related CPI policies include this benefit, compared to 94% that include life insurance protection. Older borrowers are less likely to have job loss coverage than younger ones.
Most Canadians learn about CPI through banks or credit unions, which account for 67% of conversations and 53% of actual purchases. However, 48% of non-holders report that financial professionals advised them not to buy CPI, suggesting inconsistent guidance and missed opportunities for consumer education.
“This research provides the CPI industry with a roadmap for better meeting the needs of financially vulnerable Canadians,” says Martin. “The opportunity exists to close protection gaps, improve communication, and demonstrate value, particularly during life transitions and economic stress when families need protection most.”
