Life insurance is key to financial confidence and mental well-being, study finds

Canadians increasingly view life insurance not only as a financial safeguard, but as a source of peace of mind in an era of heightened economic strain.

With two thirds of respondents reporting higher financial anxiety over the past year, concerns are most acute among Gen Z adults (89%). But the 2025 Blue Cross Life Insurance Study found that insured Canadians are more likely to feel in control of their finances than those who are uninsured (85% v. 76%) and more prepared for unexpected life events (62% v. 41%)

It highlighted a strong link between coverage and mental well-being with almost nine in ten insured Canadians saying that their policy supports their emotional health by offering assurance that family members would be protected (44%) and easing worries over debt and final expenses (36%).  Gen Z respondents were most likely to highlight this benefit, with 92% saying life insurance contributes to their mental health.

But half of uninsured households said they would struggle to sustain their current lifestyle for a year if their main income earner died, although 54% of this cohort reported no plans to purchase coverage.

“Canadians want to feel confident and in control of their financial future,” says Tim Mawhinney, President & CEO of Blue Cross Life. “However, many remain unclear about the life coverage they have, what it includes and how it fits into their long-term needs. This leads to gaps at life's most vulnerable moments, when protection is needed most.”

Workplace life insurance emerged as an important but imperfect foundation with a third of Gen Z and more than a third of Millennials relying solely on employer-provided plans. However, most of these respondents worry about adequacy with 89% questioning whether their coverage is sufficient, and over half expressing concern about losing protection if they change jobs.

Although some group policies allow additional coverage at life milestones, many remain tied to employment. When conversion to individual coverage is possible, participants noted that the costs are often higher than open-market policies and amounts may be limited.

While younger Canadians are more likely to consider life insurance, they also report the most obstacles to securing it. Overall, 89% of respondents noted the value of securing life insurance coverage in their twenties.

Among uninsured Gen Z respondents, nearly two thirds said their biggest worry is how quickly life circumstances can shift, and while 92% acknowledge the risks of being uninsured, 31% cited affordability as a barrier, followed by competing expenses (29%), lack of understanding (26%), and procrastination (23%).

“Despite awareness that long-term planning is crucial, confusion and perceived cost remain major barriers. Younger Canadians need more clear, relatable and accessible pathways to coverage – ones that reflect how they live, work and plan for the future,” concludes Mawhinney.

The survey was conducted among 2,162 adults aged 25 and older was conducted between May and July 2025 and follows another recent study highlighting an insurance protection gap that is largely due to costs.