Canada’s life insurance market moving from digital experimentation toward full-scale AI deployment. Manulife and PolicyMe are both using automation to simplify underwriting, widen access, and reduce friction in the buying process.
The commercial pressure behind the shift is clear. According to PolicyMe’s 2025 Life Insurance Gap Report, 42% of Canadians do not have life insurance or are unsure whether they do.
A further 65% said they are unlikely to buy life insurance in the next five years. Another 25% said they are not confident their family would remain financially secure if they died unexpectedly.
Separate research by MyChoice found that Canadian households hold an average of $509,000 in life insurance coverage against an estimated need of $595,000. Ontario showed the largest provincial shortfall, with households needing nearly $794,000 but holding only $552,000, leaving a gap above 30%.
Term policy sales fell from 397,000 in 2019 to 340,000, while premium sales became more concentrated in participating whole life products.
Participating whole life policies accounted for 56% premium sales. The gap is especially sharp among younger Canadians, with Gen Z showing a 44% life insurance need gap, more than double the Baby Boomer level.
The data suggests that Canadians are not rejecting life insurance as a concept. The larger problem is that the buying process creates enough friction to delay or prevent purchase.
Research cited at the conference found that only 32% of Canadians trust their insurer. Complexity and affordability concerns are driving non-purchase decisions more than a lack of perceived need.
Manulife and PolicyMe are addressing that same problem from different market positions. Manulife is applying AI inside an established insurer’s underwriting structure, while PolicyMe is redesigning the customer entry point.
Allianz ranked first in the 2026 Evident AI Index for Insurance, overtaking AXA. Manulife ranked third overall and first among life insurers, while Zurich placed fourth and Liberty Mutual fifth.
The ranking reflects real deployment rather than future plans. In Canada, Manulife’s AI investment has already changed the underwriting experience for advisers and applicants.
Manulife expects to generate more than $1 bn in enterprise value from AI by 2027, after reaching $300 mn by year-end 2025. Manulife’s main Canadian deployment is MAUDE, the Manulife Automated Underwriting Decision Engine. The tool was introduced in 2018 as Canada’s first AI system to make automatic underwriting decisions.
MAUDE can deliver decisions in as little as two minutes. Manulife also redesigned the application process, reducing medical questions by up to 40%.
For advisers, the system reduces cycle times and cuts follow-up touchpoints. For customers, it creates a simpler experience at the point where many applicants are most likely to abandon the process.
Manulife increased its AI talent pool by 41% year-on-year. Manulife is among a small group of insurers globally that publish both realised and projected company-level AI returns.
PolicyMe is taking a different approach. Instead of applying AI only inside the existing product structure, the company has redesigned how customers enter the life insurance buying process.
The platform became the first in Canada to evaluate every applicant across the full life insurance spectrum in a single real-time session. It then automatically routes each person to the best-priced coverage their profile supports.
Previously, applicants often had to select a product category before knowing whether they could qualify. That created a structural problem because customers might choose guaranteed issue coverage when they could have qualified for fully underwritten protection.
That mistake can be expensive. Consumers who buy guaranteed issue coverage despite qualifying for fully underwritten insurance often pay up to five times more for the same amount of protection.
PolicyMe applies more than 1,000 reflexive underwriting rules. Most applicants answer about 30 questions, while the same session also returns a critical illness decision across 44 conditions without a separate application.
The company’s own data shows that about one in four applicants aged 51 and older who disclosed a pre-existing condition still qualified for fully underwritten coverage. That challenges the common assumption that health history automatically blocks access to standard coverage.
For applicants who do not qualify for fully underwritten or simplified issue coverage, PolicyMe and Securian Canada created a guaranteed issue permanent life product. It requires no medical questions and provides coverage up to $100,000.
PolicyMe’s research found that 13% of Canadians aged 55 and older said the possibility of a medical exam makes them less likely to buy life insurance. For that group, guaranteed issue coverage is not only a fallback product, but the route that gets them insured.
According to Beinsure analysts, the Canadian life insurance market is shifting toward AI-led access rather than simple online quoting. The challenge is whether they can reduce underwriting uncertainty, match customers to suitable products, and remove friction before applicants leave the purchase journey.
