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Study shows many Canadians vulnerable to a personal financial crisis

Less than one-third have insurance coverage for many serious life events

Mississauga – March 7, 2017 – A new study from investment firm Edward Jones reveals that many Canadians are financially vulnerable to unexpected personal financial crises, such as sudden illness or extended disability. While the majority of Canadians (63 per cent) have some form of insurance, less than one-third are covered for serious unforeseen life events.

The study points to an overall lack of financial preparedness when it comes to unforeseen life events, with almost half (48 per cent) admitting they do not believe they have enough money to cover unexpected, or even expected expenses should  a serious illness prohibit them from working, or if they were to experience a prolonged recovery from an injury. This ranges from having sufficient emergency funds that may be needed right away, to continuing to fund their retirement goals. Almost one quarter (23 per cent) of Canadians reveal they are not at all prepared financially if they pass away too soon, and only 16 per cent have purchased a life insurance policy that could cover their remaining mortgage payments in the event of death.

“While Canadians may think they are protected, there is a gap between what many people have and what they might actually need to cover a serious issue,” says James McKeown, senior insurance specialist with Edward Jones. “Like most planning and investment tools, there’s no one-size-fits-all approach, and things change from year to year. In the same way that doctors recommend an annual health check-up, we recommend an annual insurance check-up with a financial expert to help determine what would best protect you in a personal crisis.”

According to the study, only one quarter (25 per cent) of Canadians have personal term life insurance, just 18 per cent have personal whole or universal life insurance, and fewer than 10 per cent have personal critical illness or personal long term care insurance. A lack of understanding of their insurance needs might explain these deficiencies — only 26 per cent of Canadians say they have thoroughly reviewed their insurance needs within the past year.

“While planning for the unexpected may seem like an oxymoron, it is a vital part of any long-term financial strategy, and this includes considering worst-case scenarios,” added McKeown. “Smart financial planning is like venturing out to sea — even great sailors pack a life jacket.”

The study highlights that many may also be in trouble if they are suddenly unable to work; only 15 per cent said they feel “very prepared” financially if they get too sick too work, and 21 per cent say they are “not at all ready” to tackle this unexpected situation. Similarly, 22 per cent say they would not be in a position to deal with a prolonged injury.

Data in this news release was gathered via an online survey of a representative sample of 1564 Canadians between October 10 and 13, 2016, using Leger’s online panel, LegerWeb. A probability sample of the same size would yield a margin of error of +/-2.5%, 19 times out of 20.

About Edward Jones

Edward Jones is a full-service investment dealer with one of the largest branch networks in Canada. It is a member of the Investment Industry Regulatory Organization of Canada and the Canadian Investor Protection Fund, and a participating organization of the Toronto Stock Exchange.      

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