Underinsured and overleveraged, Chief Distribution Officer explains why advisors need to press their clients on insurance
Canada has a growing personal debt problem. Since 2015, average weekly earnings in Canada have grown around 30 per cent. Total household debt has grown 40 per cent in that same time. Mortgage debt has grown 52 per cent. Canadians are at a point where they now owe $1.80 for every dollar of disposable income, according to StatCan, and the total household debt in this country in 2025 was estimated at $2.8 trillion. It’s not uncommon to see households in major cities carrying $600,000 in mortgage debt and another $50,000 in consumer debt. Those households may earn well enough to service and pay down that debt over time, but what if the unexpected happens?
Michael Aziz is ringing alarm bells about this household debt, noting that Canadians are largely underinsured for the debts they carry. Aziz is Chief Distribution Officer at Foresters Financial and he explains that many Canadians with workplace insurance plans with think that life insurance is enough. Others might have a policy that hasn’t kept pace with their growing debt loads. Despite countless pulls on Canadians’ finances, Aziz argues that advisors need to prioritize getting their clients the amount of coverage they need.
“You might ask people if they have life insurance, and they say they’re covered through their work. Normally that coverage is only one or two times their annual salary, and that’s not normally enough,” Aziz says. “It gets even worse when you start talking about critical illness. It’s not an easy time for Canadians right now, they have to choose where they put their resources, but they need coverage.”
Aziz believes there could be value in educating clients about insurance in the context of their debt loads, using the debt they carry as the set floor for their life and critical illness insurance. That context around insurance, Aziz says, can help advisors and clients have a productive conversation about insurance as a meaningful protection for a family if one of their primary breadwinners either passes away or loses the ability to work.
Mortgage debt, for most, represents the largest risk to insure against. While some Canadians may carry mortgage life insurance and Aziz says that some coverage is better than nothing, he argues that better options are available that don’t diminish in coverage with gradual principal payments. The core differences in these products, he says, are a ripe area for advisors to educate clients.
For advisors working with incorporated professionals and business owners, Aziz also notes that insurance can serve as more than just a risk protection vehicle. Whole life insurance products held by corporations can be used to generate retirement income or as a source of liquidity through leverage.
Whatever a client’s employment situation may be, Aziz acknowledges that the high cost of living and pressure on monthly budgets may leave some clients reticent to add insurance coverage because they see it as expensive. Critical illness insurance, in particular, can be perceived as too pricey. Aziz argues, though, that many premiums in the insurance space have actually come down. Moreover, the advantages that come with signing up to a policy earlier in life can be significant, making this a valuable decision for younger clients to take. Certain mechanisms like return of premium, too, can be helpful for critical illness plans, allowing clients to get back what they’ve put in once the period of time they want to be covered for is over.
Debt levels can also creep higher, steadily growing past the point of current insurance coverage. Aziz notes, though, that participating life insurance products can often grow at a rate that would normally outpace debt creep over time. The growth can even help control for growing tax liability issues in estate plans, like the appreciation of a family cottage. While the applications for these products can vary, Aziz believes there’s a core question that advisors can ask their clients to get them thinking more about their coverage in the context of their debts.
“If something happens to the main bread earner, how is the family going to survive? How are the children going to go to school? How’s the debt going to be paid? So that, that creates the need and gets the thought process going. So debt is a very important and we’re seeing more debt,” Aziz says. “But we’re competing for those limited resources. And until the consumer sees a choice between something they want to have or their life insurance payment, I still think we haven’t shown true value.”
