A 2024 study by The Fraser Institute showed that between 1997 and 2024, the cost of health care insurance for the average Canadian family increased “2.2 times as fast as the cost of food, 1.7 times as fast as the average income, and 1.6 times as fast as the cost of shelter.” With this growing financial burden, how can families prepare for uncertainties and risks while managing their budget?
Understanding Public Health Care Costs
The Fraser Institute’s August 2024 report on the price of public health care insurance in Canada showed that the average annual payment across six common family types ranges from $4,908 to $17,713. Here’s a breakdown of the cost of health care by family type:
| Family Type | Average Cash Income | Average Total Tax Bill | Tax Rate | Health Care Insurance |
|---|---|---|---|---|
| 2 Parents, 0 Children | $147,542 | $70,824 | 48.0% | $16,528 |
| 2 Parents, 1 Child | $171,329 | $73,693 | 43.0% | $17,198 |
| 2 Parents, 2 Children | $176,266 | $75,904 | 43.1% | $17,713 |
| 1 Parent, 1 Child | $72,608 | $22,903 | 31.5% | $5,345 |
| 1 Parent, 2 Children | $80,862 | $21,032 | 26.0% | $4,908 |
| Unattached Individuals | $55,925 | $24,122 | 43.1% | $5,629 |
When compared to rates in 1997 (the earliest year for which data can be generated for comparison), you can see a significant increase in the cost of health care. To be exact, since 1997, healthcare costs have increased by a whopping $137.1% for the average family consisting of 1 parent and 1 child, and 82% for the average family consisting of 2 adults and no children.
The report also showed significant increases at the height of the COVID-19 pandemic — particularly in the year 2020 — then a drop in the following years, and a steady increase again by 2024. In fact, the cost of public health care insurance for all family types included in the study is higher in 2024 than in pre-pandemic years.
When compared to the changes in income and the cost of basic necessities, it’s clear that public health care is making a significant dent in most families’ budgets.
The Role of Private Life Insurance in the Current Climate
Public health care insurance in Canada is universal in the sense that all citizens and permanent residents have access to it. However, that doesn’t mean it’s all-encompassing. Funded by taxes, Medicare covers all care deemed “medically necessary”, such as hospitalizations, tests, and doctor’s appointments, but it doesn’t cover things like prescription medication, dental care, and eye care.
On top of this, your benefits for things like critical illness and long-term care will depend on the amount of coverage you choose, how your chosen insurance provider defines critical illness, and which conditions they cover.
For such patients, managing critical and long-term illnesses for years can rack up extensive medical bills and put them and their families in financially precarious situations.
Thankfully, there are safeguards for protecting your family from future risks, such as life insurance. Life insurance can act as a buffer, providing financial security to your beneficiaries when you pass. It covers large debts and final expenses such as medical bills and funeral costs — ensuring that your family can continue to live unburdened in your passing.
Life insurance isn’t just for critical and long-term illnesses either. It’s a great safety net in case of accidental death and disability too. If you’re met with an accident and gain a disability such as paralysis or loss of vision, your benefit can cover the cost of hospitalization, rehabilitation, and lost income. Find the top life insurance companies in Canada here.
Market Trends and Consumer Demand
According to a report by ResearchAndMarkets.com, the insurance industry has been witnessing a “surge in demand”. This is driven in part by Canada’s climbing population and the COVID-19 pandemic — the latter of which spurred “a notable shift in priorities”.
As Canadians reckoned with unprecedented death rates during the pandemic, attention shifted to life insurance coverage. And with rising healthcare expenses, more and more people realized the importance of comprehensive coverage.
The report also notes that a surge in the nation’s GDP per capita (up 20.1% to US$52,015 in 2021) indicated “robust economic growth” that could result in more demand for life insurance all around.
Key Advice From MyChoice
- Regularly review your household budget to account for the rising cost of health care and other essential expenses.
- Plan for long-term health care and consider insurance policies that provide coverage for long-term and critical illnesses.
- Seek advice from professionals such as financial advisors and brokers, and use MyChoice to shop around for the best life insurance quotes for you.