Many insured homeowners are still financially exposed, new national study finds

For many Canadian homeowners, an insurance policy doesn’t necessarily mean you’re financially protected.

A new national study has found that even among mortgage holders with insurance coverage, financial vulnerability is widespread, and confidence in that protection is often thin, especially as households age and incomes become less flexible.

According to research commissioned by The Canadian Association of Financial Institutions in Insurance (CAFII) and conducted by Pollara, half of Canadian mortgage holders say they could maintain their current lifestyle for less than six months if their primary income were disrupted.

“This study shows a troubling contradiction,” said Keith Martin, executive director of CAFII, in a statement. “Canadians know they’re vulnerable, yet many remain underinsured or uncertain about the protection they do have.”

Financial vulnerability persists despite insurance coverage

The Credit Protection Insurance Segmentation Study surveyed more than 3,000 Canadian mortgage and HELOC holders and found broad signs of financial strain.

Nearly half of respondents said the current economic environment is negatively affecting their personal finances, while 57% expressed concern about potential job loss over the next year. Perhaps most concerning, 50% said they would struggle to pay their bills if the main income earner were unable to work.

Despite relatively high insurance ownership, confidence in that coverage remains low. Only 38% of respondents said they feel confident they could continue paying their mortgage if their primary earner lost income, and 35% said they don’t know how long their life insurance coverage would actually last if needed.

Even among the 73% who believe they have sufficient life insurance, the study suggests that confidence is often emotional rather than based on a clear understanding of coverage terms.

“With average household debt levels so high, these blind spots leave families exposed at the worst possible time,” Martin said.

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Older homeowners face distinct gaps in protection

While financial stress spans age groups, the study highlights notable coverage gaps among Canadians over 40, many of whom are approaching retirement or managing mortgages later in life.

Job-loss protection, in particular, appears less common among older borrowers. While life coverage is included in most mortgage-related credit protection insurance, only about two-thirds of policies include job-loss protection overall. Among borrowers over 40, that figure drops to roughly half.

For older homeowners, job disruption can be harder to absorb. Re-employment may take longer, savings may already be earmarked for retirement and refinancing options can narrow with age.

The study suggests these realities make clarity around insurance coverage especially important for Canadians nearing retirement while still carrying mortgage debt.

Confidence, not just coverage, is the missing link

CAFII’s research identified five behavioural segments among mortgage holders, with two standing out as both vulnerable and underserved.

One group, described as “anxious realists,” struggles with affordability but stands to benefit most from protection. Another, “confident planners,” is financially stable but more likely to actively review and renew coverage. Together, these groups account for nearly half of mortgage and HELOC holders.

Affordability and trust remain major barriers. Only 30% of respondents said credit protection insurance offers good value for money, and fewer than one-third said they trust it more than other insurance products.

At the same time, banks and credit unions remain the primary source of information and sales, accounting for more than half of all credit protection purchases — placing financial institutions at the centre of consumer understanding.

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A moment to reassess

The study suggests Canadians are most likely to reconsider insurance during periods of financial stress, such as when bills become harder to manage, or economic uncertainty rises.

For homeowners, particularly older ones still carrying mortgage debt, the takeaway is not that insurance is inherently ineffective, but that understanding it matters. Knowing what’s covered, what isn’t, and how long protection lasts may be just as important as having a policy in place at all.

As Martin put it, the challenge for the industry — and consumers — “is not just providing insurance, but making sure Canadians understand and trust the protection available to them.”