Gen Z's Shift: Critical Illness Insurance Matters

Why Generation Z Prioritizes Critical Illness Insurance Over Life Insurance

Generation Z, born between 1997 and 2012, unequivocally transforms the traditional family model. Many in this generation choose not to marry or have children, which undoubtedly elevates the need for critical illness insurance over life insurance.

How Digital Natives Are Reshaping Family Models and Insurance Needs

This generation, which includes those in their twenties today, is undeniably reshaping society. The proportion of single people who choose not to marry or have children is significantly higher than it was in the 1980s.

Generation Z is indisputably the first to have grown up entirely in the digital era, making them unquestionably digital natives. They are effortlessly comfortable with technology, social media, and a hyper-connected lifestyle, which undeniably influences their communication style and information consumption patterns.

As the most diverse generation in history, about 49 percent of Generation Zer’s indisputably identify as an ethnic or racial minority. This generation unequivocally values inclusivity, diversity, and equality, expecting brands and organizations to reflect these values unmistakably.

Generation Z is resolutely socially conscious and actively seeks ways to positively impact the world, whether it’s through fighting climate change, promoting equality, or supporting mental health.

They also resolutely prioritize success, learning new skills, and challenging themselves. Gen Zer’s are unmistakably known for their entrepreneurial spirit and are unequivocally go-getters, often engaging inside hustles and personal branding.

Generation Z’s Shift: From Traditional Family to Critical Illness Coverage

Regarding healthcare, Generation Z unmistakably seeks convenience, efficiency, and transparency. It readily embraces telemedicine and prioritizes mental health.

They are concerned about how cancer or a heart condition could affect their lifestyle. They know that they can recover from cancer or a heart stroke today because of medical technology. However, they are concerned about its effect on their lifestyle and financial situation.

According to a report on a study by the Canadian Institute of Actuaries (CIA) published in August 2024, cancer and heart disease continue to dominate critical illness insurance claims in terms of prevalence.

This CIA study, the fifth of its kind, is entitled Canadian Individual Critical Illness Insurance Morbidity Experience Study. It covers policies with an anniversary between 2012 and 2020, based on the 2008 CANCI expected incidence rate tables (Canadian population rates). The 2008 CANCI are the 2008 Canadian Critical Illness Tables published by the Canadian Institute of Actuaries.

The report comes from the Morbidity Risk Research Commission (MBRC) of the CIA Research Council. SCOR, the reinsurer, is a partner. Ben Miclette, Chair of the MBRC, and Josephine Robertson, project lead at SCOR, led the project.

Two big risks

The CIA study reveals that cancer accounted for the largest proportion of claims and the highest actual-to-expected (A/E) outcomes, both based on the number of lives insured and benefit amounts. Cancer represents 67% of claims based on the number of lives insured and 70% based on benefit amounts.

Cardiovascular claims accounted for the second highest number of claims, at 33%, based on the lives insured and on a benefits and amounts basis.

CIA spokesperson Josée Gonthier explained to the Insurance Portal that the A/E results offer comparisons between the (actual) paid claims of the group of policies included in the study and those expected, specifying that expected claims are based on the incidence rates of the general population (versus an insured population) common to all studies published to date.

Gonthier explains why the percentage based on insurance amounts can be higher than that based on lives insured (70% compared to 67% for cancer). In the case of insured lives, each insurance policy has the same weight (weighting) in the analysis regardless of the insurable amount. In the case of amounts, the weight of each policy is based on the insurable amount, “and therefore higher insured amounts have more weight in the analysis,” she says.

Average benefit of nearly $90,000

The total number of claims in the observed group of policies was 12,820. The average insurance benefit paid was $86,518. This average includes partial benefits. Partial benefits are paid for non-life-threatening medical conditions and can represent between 10% and 25% of the amount of insurance underwritten, depending on the condition or the insurer involved.

With 8,994 and 1,310 claims, respectively, in terms of lives insured, life-threatening cancers and heart attacks come first, followed by stroke, which resulted in 592 claims. Coronary artery bypass surgery came fourth with 337 claims, and multiple sclerosis fifth with 327 claims.

In sixth place, benign brain tumours generated 194 claims. Benefits paid for this disease are, on average, the highest, at $105,504 per claim. Coronary artery bypass surgery was the second most costly claim for insurers, averaging $98,803, and stroke was the third, with an average of $96,894.

Lear More About Life Insurance

Policyholders smoke less.

The data sample collected by the Canadian Institute of Actuaries represents a group of policyholders made up of 8% smokers and 92% non-smokers. Smoking is one of the major causes of cancer, as mentioned by the Canadian Cancer Society on its website.

The insured population has a better profile than the general population. According to the 2019 results presented by Health Canada‘s Canadian Tobacco and Nicotine Survey (CTNS), 13% of Canadians aged 25 and over, or 3.3 million people, were smokers. Since then, the situation has improved. According to the CTNS 2022 results, 11.7% of Canadian adults aged 25 and over were smokers.

According to the Canadian Cancer Society, smoking remains the leading cause of death in Canada.

By obtaining critical illness coverage, individuals can receive a cash benefit upon being diagnosed with cancer or a heart problem. This money can be used for medical treatment, mortgage payments, or other personal expenses. The cash payment can help individuals maintain their lifestyle while undergoing treatment, ultimately aiding in a quicker recovery. The need for critical illness coverage is underscored by the fact that even those with health insurance resolutely struggle to pay their medical and other bills when critical illness strikes.

Critical insurance benefit pays a tax-free lump sum that the recipient can use however and whenever they wish.

For PERSONAL COSTS like

Replace lost income
Pay or retire a debt/mortgage/line of credit
Supplement retirement savings
Fund children’s education and financial plans
Extra time off work or unpaid leave for the spouse
Celebrations, vacations and dream items (car, boat, etc.)
Freedom of choice and flexibility can make a tough situation better

Not only can one spend the money on whatever they choose, including items not listed in this piece, but a lump sum payment allows for flexible spending options – either incrementally or all at once.

Conclusion
Generation Z is redefining norms and values, and this transformation extends to their approach to insurance. Prioritizing critical illness coverage over life insurance, embracing digital advancements, and valuing inclusivity and diversity, Gen Z’s choices reflect a deeper understanding of contemporary risks and opportunities. As they continue to influence the market, their preferences provide invaluable insights for the insurance industry.

Insurance Broker in Kitchener Glenn Stewart

Contact Glenn Stewart, Insurance Advisor CIP, CRM, CHS, CEA
1-888-256-8685 or glenn@glennstewartinsurance.com

Is your insurance plan up to date with today’s needs? Ensure you’re covered for life’s uncertainties. Explore comprehensive critical illness insurance to safeguard your future and maintain your lifestyle. Act now—your health and financial security can’t wait!