Are you paying too much for life insurance?

File photo. (Pressmaster/shutterstock.com)

VANCOUVER — Beware of paying too much for life insurance. According to PolicyMe, an online insurance platform, a recent survey found Canadians are overpaying for life insurance by as much as 36 per cent.

The start-up looked at how the industry calculates coverage and found the average customer with a policy had $200,000 more in coverage than they actually needed, and weren't looking for deals.

It also examined how much those with existing policies pay, and their habits while looking for coverage.

"When it comes to life insurance, it's not just a buy or do not buy decision. A lot of consumers are confused by that," says PolicyMe co-founder and CEO Andrew Ostro. "You should be looking at different insurance companies to see for your particular policy, your unique needs, (and) who is offering you the best price. And we see, too often, customers are not doing that and that leads to about a nine per cent increase in price from not shopping around."

Some insurance providers have also seen a bump in interest for life insurance policies since the pandemic began, Ostro says.

"Interestingly enough, (we found) it hasn't really been a fear of passing away as a result of COVID, it's more been just a general awareness around mortality," he says. "The life insurance need has always been there. The pandemic hasn't caused people to need the product more."

He advises those currently looking shop around, ask a lot of questions and try to understand exactly what the coverage entails. Ostro says PolicyMe finds in the end, many people don't even need it.

"Twenty-six per cent of the users that come through our platform and use our advice algorithms, the recommendation to them is do not buy life insurance," he says. "Through our calculations we've determined that your family does not need that protection, and we're not going to sell you something that you don't need."