A new TD Insurance survey finds budget stress pushing Canadians toward reducing coverage they don't fully understand with Gen Z most at risk
One in three Canadians say they would consider reducing their insurance coverage to ease financial pressure even though the majority admit they don't fully understand what protection they currently have.
New survey data released by TD Insurance from a survey of 1,500 nationally representative Canadian adults and reveals a population caught between mounting cost pressures and a fundamental lack of insurance literacy. While 85 per cent of respondents acknowledged that insurance is an important financial safeguard, 84 per cent said they don't fully understand what their coverage does and doesn't include and 50 per cent couldn't identify what insurance they actually hold.
That disconnect has real consequences. With inflation and household debt continuing to squeeze budgets, 56 per cent of respondents said they worry a single unexpected expense could force them into difficult financial choices, and 71 per cent fear one surprise cost could undo months of savings progress.
The confidence gap
TD described the findings as evidence of "a growing insurance confidence gap" - a divergence between the perceived importance of coverage and consumers' ability to evaluate or act on it. Some 62 per cent of survey respondents said they were not confident their current insurance would fully protect them in an emergency, yet many are still entertaining the idea of reducing it.
Kristen Gill, vice-president of general insurance at TD Insurance in Toronto, said the temptation to cut coverage when money is tight is understandable but carries real risk. "When budgets are stretched, it's natural to look for places to save," Gill said. "But reducing coverage without fully understanding what you have — or what you'd be giving up — can leave you exposed to costs that far exceed what you'd save on premiums."
Her advice: review before you cut. Understanding the scope of existing policies, she said, is the essential first step before making any changes that could leave a household vulnerable.
Gen Z most likely to reduce and least likely to understand
Younger Canadians are bearing the sharpest edge of this dynamic. Among Gen Z respondents, 55 per cent said they would consider cutting back on insurance to relieve budget pressure; the highest proportion of any age group surveyed. At the same time, 44 per cent of Gen Z find insurance confusing, and 58 per cent have postponed reviewing their coverage altogether.
For financial advisors working with younger clients on holistic financial plans, the data signals a potential advice gap worth addressing proactively. A client who quietly trims insurance to cover a shortfall without flagging it to their advisor may be introducing significant risk into an otherwise sound plan.
The survey arrives at a time when many Canadians are reassessing their household finances broadly. With interest rates still elevated relative to the post-pandemic era and discretionary spending under pressure, insurance premiums are increasingly viewed as a variable cost rather than a fixed one.
That framing concerns advisors who see insurance as foundational to a comprehensive wealth strategy. Canada's protection gap (the difference between the coverage households carry and what they actually need) has been a persistent concern across the financial planning community. When budget-driven decisions reduce coverage further, that gap widens.
The TD data suggests there may be room for advisors to add meaningful value by initiating insurance review conversations rather than waiting for clients to raise them. Given that half of surveyed Canadians don't know what coverage they hold, a structured policy audit could serve as both a practical planning exercise and a trust-building touchpoint.
