Getting life insurance with autism in Canada is possible, and an autism spectrum disorder (ASD) diagnosis does not automatically prevent someone from qualifying for coverage. Age is an important factor in determining which type of policy may be available, as insurers may assess autism differently for children and adults. Depending on the applicant’s age, health profile, and individual circumstances, options may include children’s life insurance, traditional life insurance, simplified issue coverage, or guaranteed issue insurance.

Policy options available based on age:

• Under age 8: Guaranteed issue life insurance
• Under age 18: Children’s life insurance or guaranteed issue life insurance
• Above age 18: Traditional life insurance, simplified insurance, and guaranteed issue life insurance

Can autistic people get life insurance?

Yes, autistic people may get life insurance in Canada. Every application is assessed individually, with insurers considering factors such as your overall health, medical history, and a few others. Those with mild or well-managed autism and no significant additional health concerns may qualify for traditional life insurance (both term insurance and whole life insurance) at standard rates. On the other hand, those with more complex medical needs may still be eligible but could receive rated coverage, have additional underwriting requirements, or be directed toward simplified issue or guaranteed issue life insurance.

What is Autism Spectrum Disorder (ASD)?

Autism Spectrum Disorder (ASD) is a neurodevelopmental condition that affects the nervous system and changes the way the brain functions. It is most commonly diagnosed in childhood. Autism affects how people see and interact with the world. It can make social communication and interaction difficult and cause repetitive behaviours. 

While autism is a health condition, it is not considered an illness or disease. ASD is called a “spectrum” disorder because it includes a wide range of symptoms and abilities. Each person with ASD is unique and experiences it differently. There is no cure for autism, so it is a lifelong condition. But there are ways that people on the spectrum can manage their condition well and live a “normal” life.

What kind of life insurance can someone with autism get?

People with autism have access to many of the same life insurance options as other Canadians. Both adults and children can qualify for autism; however, the options will vary depending on the severity of the condition and the age of the applicant. 

• Life insurance for children under age 8: Children in this age group may have access to guaranteed issue life insurance, which does not require medical underwriting. This can be an option when traditional coverage is not available
• Life insurance for children under age 18: Children in this age range may qualify for children’s life insurance or guaranteed issue life insurance, depending on their health profile and the insurer’s eligibility requirements. Children’s life insurance may offer broader coverage, while guaranteed issue coverage typically has fewer health-related eligibility requirements
• Life insurance for adults above age 18: Adults with autism may qualify for traditional life insurance, simplified issue life insurance, or guaranteed issue life insurance. Traditional coverage requires underwriting, while simplified and guaranteed issue policies may offer alternatives when traditional coverage is difficult to obtain

Life insurance options for autistic adults in Canada

Most autistic adults can qualify for both term and whole life insurance, particularly those with mild to moderate ASD who live independently and have no significant co-existing medical conditions. Depending on their overall health and support needs, they may qualify for traditional life insurance, while simplified or guaranteed issue coverage may be available if traditional underwriting is more difficult.

When traditional life insurance is approved, an autistic applicant may:

• Be treated as normal, with the most affordable rates
• Be given a rating, meaning they may charge more than usual because of the pre-existing condition
• Have a 2-year deferral period, where they only provide temporary coverage for the first 2 years
• Have a limited amount of coverage because of the health condition

Term life insurance for autistic adults

Term life insurance provides coverage for a set period, such as 10, 20, or 30 years, and is often a suitable option for autistic adults who meet the insurer’s underwriting requirements. Traditional term life insurance is fully underwritten, but having autism does not automatically make an applicant ineligible.

Many autistic adults may qualify for standard term life insurance rates, particularly when they have mild to moderate ASD, live independently, and have no significant co-existing health conditions. However, an insurer may apply a Table rating or offer different coverage terms depending on the individual’s overall health, support needs, and other risk factors.

Whole life insurance for autistic adults

Whole or permanent life insurance is another type of traditional policy. The difference between whole and term life is that whole life policies last your entire life, not just for a set number of years. Just as with term life insurance, an adult with autism can likely get this type of coverage.

Irrespective of whether you opt for term or whole, you qualify only if:

• You are at least 18 years old
• You were diagnosed more than 1-3 years ago
• Your diagnosis is mild to moderate
• Your condition is being managed well
• You have proof of being able to function normally (such as having a job or attending school)
• There is little to no risk of health complications
• No history of alcohol abuse, drug use, or self-harm
• No history of serious medical health events (such as heart attack, stroke, epilepsy, etc.)

Simplified life insurance for autistic adults

Simplified life insurance offers a faster application process with fewer health questions and no medical exam in most cases. It can be an option for autistic adults who may not qualify for standard coverage or who prefer a simpler application. However, premiums are generally higher than traditional fully underwritten insurance, and coverage amounts may be more limited.

An adult with autism may qualify for simplified issue (no medical) life insurance if:

• You are at least 18 years old
• You were diagnosed more than 1 year ago
• Your diagnosis is mild to moderate
• You have a high level of functioning and independence
• No history of serious medical health events (such as heart attack, stroke, epilepsy, etc.)

Guaranteed issue life insurance for autistic adults

Guaranteed issue life insurance does not require medical underwriting, so applicants are generally not asked to provide detailed health information or undergo a medical exam. This can make it an option for autistic adults who have significant support needs or other health conditions that make traditional coverage difficult to obtain. However, it comes with higher premiums, lower coverage limits, and a waiting period of 2 years before the full death benefit becomes payable. So, only go for the guaranteed issue option if you don’t qualify for traditional life insurance. 

Life insurance options for autistic children in Canada

Life insurance options for autistic children vary depending on the age. Children under age 8 may be limited to guaranteed issue coverage, while children between ages 8 and 18 may qualify for children’s life insurance or guaranteed issue coverage, depending on the insurer. 

Parents can buy life insurance coverage on behalf of their autistic child or can even add a child rider in their base life insurance policy. While both provide financial protection, they differ in terms of coverage duration, benefits, and long-term value. 

The table below compares the stand-alone policy for a child with autism vs. a child rider:

Guaranteed issue life insurance for autistic children

Guaranteed issue life insurance can be an alternative for children who do not qualify for traditional children’s coverage. This is available for children under the age of 8 and requires no medical underwriting, so the insurer generally does not assess the child’s autism severity or medical history to determine eligibility. As with guaranteed issue coverage for adults, policies for children typically come with lower coverage limits, higher premiums, and a waiting period. During the waiting period, the full death benefit may not be payable if the child dies from a non-accidental cause.

Children’s life insurance for autistic children

Just as the name suggests, this type of life insurance specifically covers children usually under age 17 or 18. It’s purchased by a child’s parents for two main reasons: for the death benefit in the unfortunate circumstance that the child passes away before the parent, and to help the child get insurance coverage when they become an adult. Most children’s life insurance policies can start as early as when the child is 15 days old. 

A child with autism may qualify for standard children’s life insurance if:

• They are older than 8 years 
• They were diagnosed more than 1-3 years ago
• Their diagnosis is mild
• The condition is being managed well
• There is little to no risk of health complications

Whole life and universal life insurance are both permanent policies that can last for life and build cash value. The biggest difference is how flexible they are and how much control the policy provides. While whole life offers fixed premiums and cash value growth, universal life insurance gives flexibility in premium payments and investment choices.

Core differences

• Premium payments: Whole life insurance typically has fixed, predictable premiums, while universal life insurance allows more flexibility in how much and when you pay
• Cash value growth: Whole life policies offer more predictable cash value growth, while universal life policies allow you to choose from investment options whose performance can affect the policy’s cash value
• Policy risk and control: Whole life requires less active management. Universal life gives you greater control but also puts more responsibility and investment risk on you

To understand which of these differences matters most for your wallet, let’s break down how each policy actually works.

What is whole life insurance?

Whole life insurance (WL) is a type of permanent life insurance that provides lifelong coverage and includes a cash value component that can grow over time. As long as the policy remains in force and the required premiums are paid, beneficiaries receive the policy’s death benefit when the insured dies, generally tax-free.

With a whole life policy, the cost of insurance and premium are established when the policy is issued and remain fixed for the policy’s duration. Moreover, the cash value component grows within the policy over time and may be accessed during your lifetime through policy loans or withdrawals, subject to the policy’s terms and conditions.

How does whole life insurance work?

When you apply for a whole life policy, premium rates are decided based on the amount of coverage and other factors like your age, health, and lifestyle. In some cases, you may be asked to take a medical exam. Once your policy is approved, you are responsible for paying premiums either annually or monthly, depending on your agreement with the life insurance provider.

Every time you pay premiums, a portion of the money goes towards keeping the policy active and covering administration fees, while another portion is invested by your life insurance provider. This money is your policy’s cash value. It increases with a fixed interest rate and on a tax-deferred basis.

You also have access to cash value during your lifetime. Or, if you cancel the policy, you can walk away with a cash surrender value of whatever has accumulated minus applicable surrender charges. You can access this value whether you have participating or non-participating whole life insurance. Participating policies may earn dividends based on the insurer’s participating account, while non-participating policies do not pay dividends but provide guaranteed values.

When a whole life policyholder dies, the beneficiary receives a guaranteed death benefit. The life insurance company pays this benefit as a one-time, tax-free payment. This money can be used as income replacement for family members, to cover final expenses, as an inheritance, or anything else the beneficiary chooses to use it for.

Pros and cons of whole life insurance

What is universal life insurance?

Universal life insurance (UL) is also a type of permanent life policy that provides lifelong coverage and a tax-free death benefit when the policyholder dies. But what stands out the most about this type of insurance is its flexible premiums, death benefits, and investment options. This is perhaps the biggest difference between universal and both whole and term policies,

With a universal policy, you choose how much you want to pay in premiums. There is a minimum payment amount, set at least equal to the cost of insurance; administrative and other policy fees may be deducted separately from premiums or cash value according to the contract. However, policyholders can decide how much more they want to contribute to their policy’s cash value portion. The minimum premium cost can also vary over the course of the policy, depending on whether the size of the death benefit changes.

In addition to flexible premiums, this type of policy can give you a greater say in how your cash value is invested. You can choose among several investment account options that vary by interest rate and risk, such as the Daily Interest Account (DIA), Guaranteed Interest Account (GIA), Variable Interest Options (VIO), and Mutual Fund Accounts.

How does universal life insurance work?

Applying for a universal life insurance policy looks similar to other permanent life insurance policies: your minimum premium rate is decided by the life insurance provider based on the amount of coverage, as well as age, health, and lifestyle. To keep the policy active, you must ensure that your policy’s premiums are paid as agreed with your insurer. When you pass away, your beneficiaries will be entitled to a one-time, tax-free death benefit.

The key difference from whole life insurance is that universal life insurance gives you more flexibility over how much you pay and how your policy’s cash value is invested. After the cost of insurance and other policy charges are deducted, you can direct additional funds into investment accounts within the policy. These investments can grow on a tax-deferred basis.

However, this flexibility also comes with more risk. Universal life policies have an ongoing Cost of Insurance (COI), which is deducted from the policy’s cash value. If your investments perform poorly, your cash value may not be enough to cover these costs. You may then need to increase your premiums or the policy could eventually lose its cash value and lapse, causing your coverage to end.

Pros and cons of universal life insurance

What is the difference between whole life and universal life insurance?

Whole life and universal life insurance differ in premium payment, investment choice, policy control, and a few other features. The table below outlines these differences.

Whole life vs universal life insurance

What do whole life and universal life have in common?

Whole life insurance and universal life insurance share some important key features. Both of these permanent life insurance policies:

• Provide lifelong coverage as long as the policy remains in force
• Build cash value that can grow on a tax-deferred basis
• Allow access to cash value during your lifetime through policy loans or withdrawals, subject to the policy terms
• Pay a tax-free death benefit to beneficiaries, provided the policy remains in force

Key factors to consider when choosing whole life vs. universal life insurance

When choosing between whole life and universal life insurance, consider factors such as your financial goals, risk tolerance, budget, and long-term objectives. Some of these factors are as follows:

• Budget: Consider how much you can comfortably commit to life insurance premiums over the long term. A policy should remain affordable not only today but also as your financial circumstances change
• Financial goals: Think about what you want the policy to accomplish. Your goals could include leaving an inheritance, covering final expenses, providing liquidity for your estate, supporting a business, or building cash value for future needs
• Risk tolerance: Consider how comfortable you are with fluctuations in the policy’s cash value. If you prefer greater certainty, you should consider whole life insurance
• Flexibility: Consider whether your financial needs are likely to change over time. If you want the ability to adjust your premium payments, coverage, or investment strategy as your income, expenses, or financial goals change, go for universal coverage
• Your investment knowledge: Think about how comfortable you are choosing and monitoring investment options. A policy like universal life insurance that requires more active management may not be suitable if you prefer a simpler approach.
• Ability to manage the policy over time: Think beyond the initial purchase. Universal life insurance requires more ongoing attention to premiums, cash value, investment performance, and policy costs. Choose this policy only if you are comfortable monitoring it throughout its lifetime

Is universal life insurance risky?

Universal life coverage is considered riskier than whole life insurance. Whereas whole life insurance offers many guarantees (fixed premiums, death benefit, policy dividend options), universal life insurance offers flexibility and a wider range of investment options. Naturally, this comes with greater risk.

That being said, the level of risk associated with a universal life insurance plan depends on the type of investments chosen. Universal life policyholders should always keep in mind that their cash value depends on their rate of return.

The greatest risk is if you rely on your policy’s cash value to pay your premiums. If your investments underperform and you do not have enough money in your cash value account to cover premiums, your policy can lapse. This could leave you without the crucial death benefit options that life insurance is meant to provide in the first place. It is therefore important to keep a close eye on the investment portion of your universal plan.

Is universal life insurance cheaper than whole life insurance initially?

Yes, universal life insurance is cheaper than whole life insurance initially. But it is not necessarily cheaper over the lifetime of the policy. Its overall cost depends on factors such as the Cost of Insurance (COI), premium structure, investment performance, and how the policy is managed. If investment returns are lower than expected or the cost of insurance increases, you may need to pay more to keep the policy in force.

Our advisor’s take on whole life insurance vs. universal life

Recently, one of our advisors at PolicyAdvisor worked with a 42-year-old non-smoking Canadian who wanted $500,000 of permanent life insurance to protect his family and create a financial legacy. He also wanted to build cash value that he could potentially access later in life, but his priority was knowing what his premiums and policy values would look like rather than taking on investment risk.

Client profile:

• Age: 42-year-old non-smoking Canadian
• Coverage need: $500,000 of permanent coverage for family protection, estate planning, and legacy planning
• Primary concern: Predictable premiums, guaranteed values, cash value growth, and lifetime access to policy value
• Our comparison: We compared whole life and universal life based on premiums, guarantees, cash value growth, investment options, flexibility, risk, and ongoing policy management. For this client, whole life was the better fit because he valued predictability and guarantees more than investment control or premium flexibility.

Why we recommended whole life insurance:

• Fixed premiums made it easier for him to budget for permanent coverage without worrying about changing insurance costs
• Guaranteed policy values provided more predictability than a universal life policy whose cash value depends partly on investment performance
• The policy builds cash value that he could potentially access through policy loans or withdrawals during his lifetime, subject to the policy terms
• Unlike universal life, he would not need to actively manage investment allocations or monitor whether the policy’s cash value remains sufficient to cover ongoing costs

Speak with a licensed advisor to compare whole life and universal life options based on your coverage needs and budget in more detail. Schedule a call now!

An extreme disability benefit rider is a life insurance rider that allows you to access a portion of your death benefit while you are still alive if you become permanently and severely disabled or have a severe loss of independent existence. Upon such an event, the policyholder receives an early payout of the death benefit. This tax-free sum can help cover major medical expenses and provides a temporary safety net for the insured and their loved ones.

 While it is not a replacement for disability insurance, it can provide a tax-free lump sum to help cover major expenses and offer a temporary safety net. The Extreme Disability Rider can usually be purchased as an add-on for participating life insurance policies in Canada. However, select insurers like Beneva and Assumption Life provide it as a built-in benefit with select policies.

What is an extreme disability rider?

An extreme disability benefit rider is an optional rider available with some Canadian life insurance policies that allows you to receive a portion of your life insurance death benefit early if you suffer a permanent and severe disability.

Usually, life insurance policies pay the death benefit after you pass away. With an extreme disability benefit rider, you can access part of that payment to cover major medical expenses, adjustment costs, and other immediate financial obligations. Since the early payout is deducted from your death benefit, your beneficiaries will receive less by the amount paid under the rider.

Extreme disability rider in Canada: At a glance

How does an extreme disability rider work? 

The Extreme Disability Benefit Rider essentially provides a portion of your death benefit in an accelerated manner. Instead of waiting until your beneficiaries receive your life insurance payout after your death, the rider allows you to receive a portion of that benefit if you are diagnosed with an illness or injury that results in decreased lifespan or an inability to perform Activities of Daily Living (ADLs).

Here is how an Extreme Disability Benefit Rider typically works:

Step 1: Purchase a life insurance policy

You buy a life insurance policy that includes an Extreme Disability Benefit Rider, either automatically or as an optional add-on at an additional cost.

Step 2: Experience a qualifying disability

If you suffer a severe, permanent disability that meets your insurer’s definition of extreme disability during your policy period, you may be eligible to claim benefits under the rider.

Step 3: Submit a claim

Submit the necessary documentation to qualify for the extreme disability benefit rider. The insurer assesses whether your condition satisfies the policy’s eligibility criteria.

Step 4: Receive a lump-sum benefit

Once approved, the insurer pays a lump sum representing a portion of your life insurance coverage in the form of an accelerated death benefit. When you eventually pass away,  your beneficiaries receive the remaining death benefit after deducting the amount already paid as part of the rider.

What qualifies as an extreme disability in Canada?

While the definition of extreme disability varies by insurer, it generally refers to a permanent physical or cognitive conditions that leave you unable to live or function independently. You must be completely unable to perform a specific number of activities of daily living (ADLs) without human assistance to qualify for the rider.

Most Canadian insurers require inability to perform at least 4 of the following 6 activities: 

• Bathing: Washing your body in a tub or shower
• Dressing: Putting on and taking off necessary clothing
• Toileting: Getting to and from the toilet and maintaining hygiene
• Transferring: Moving into or out of a bed, chair, or wheelchair
• Continence: Controlling your bowel or bladder functions
• Eating: Feeding yourself prepared food

Essentially, a severe loss of independent existence can qualify individuals for the Extreme Disability Benefit Rider. However, it is worth noting that the definition differs between insurers. Consult your advisor to determine what qualifies you for the rider.

Cognitive impairment in extreme disability rider

Apart from ADLs, severe cognitive impairment can also qualify individuals for the extreme disability benefit rider. Situations such as advanced dementia and irreversible organic loss (such as total blindness or the loss of two limbs) can also trigger the rider.

Here are some conditions that may qualify you for an extreme disability benefit rider in Canada:

• Paralysis resulting from a spinal cord injury
• Advanced multiple sclerosis (MS)
• Severe stroke with permanent impairment
• Traumatic brain injury
• Advanced Parkinson’s disease
• Late-stage dementia or Alzheimer’s disease
• Certain progressive neurological disorders
• Permanent loss of mobility requiring full-time assistance

Note that the rider does not pay out based on a medical diagnosis alone. Instead, insurers assess the functional severity and the permanent physical or cognitive impact caused by these conditions.

Is there a waiting period before an extreme disability benefit is paid?

Yes, there is a waiting period before an Extreme Disability Benefit is paid. Before the insurer approves a claim, you must satisfy the rider’s eligibility requirements, provide medical evidence, and remain in a state of continuous extreme disability for a set period specified in your policy. This waiting period varies by insurer and is outlined in the policy contract, typically ranging from 3 to 6 months.

Many Canadian insurers define eligibility based on a permanent and irreversible disability, typically requiring the policyholder to be unable to perform activities of daily living and with no reasonable expectation of recovery. Once it is medically certified and the waiting period is over, the accelerated death benefit is paid out to the insured.

What conditions typically do not qualify for the extreme disability rider in Canada?

The Extreme Disability Benefit Rider in Canada is designed for permanent and severe disabilities, making many conditions unlikely to qualify on their own. 

Here are some situations where an individual may not qualify for the rider:

• Temporary disabilities
• Broken bones or fractures expected to heal
• Short-term recovery after surgery
• Mild mobility limitations
• Partial disabilities that do not affect independent living

How much does an extreme disability rider pay in Canada?

The payout of the Extreme Disability Benefit Rider depends on the terms set by your insurer and your policy’s death benefit. Typically, the rider pays a one-time, lump-sum amount, allowing you to cover major disability-related expenses and other living costs. 

In many cases, the amount paid by the Extreme Disability Benefit Rider is calculated as a percentage of your life insurance coverage, subject to a maximum limit. Many insurers pay up to 50% of the policy’s death benefit, subject to a maximum dollar limit (typically ranging between $50,000 and $250,000, depending on the insurer and coverage amount).

Here are some illustrative examples of how your Extreme Disability Benefit Rider benefit is calculated:

*Maximum amount is subject to policy terms and insurer discretion.

Does the extreme disability benefit rider payout reduce your death benefit?

Yes, an Extreme Disability Benefit Rider is considered a form of accelerated death benefit. This essentially means that the money is paid from your existing life insurance coverage and not in addition to it. Once the policyholder passes away, the beneficiaries will receive the remaining amount.

Additionally, the extreme disability rider payout may affect your premiums. Some insurers may adjust premiums to reflect the reduced amount of coverage, while others may continue charging the original premium. If your policy also includes a Waiver of Premium rider, your future premiums may be waived entirely while your coverage remains in force.

Extreme disability rider vs. disability insurance

Although both an Extreme Disability Benefit Rider and disability insurance provide financial support if you are unable to work or live independently, they serve different purposes. 

An Extreme Disability Benefit Rider is designed for permanent disabilities that affect your daily living, while disability insurance replaces a portion of your income if an illness or injury prevents you from working. Unlike an extreme disability benefit rider, disability insurance in Canada usually pays a monthly benefit calculated as a percentage of your employment income, rather than your policy amount.

Here’s a quick comparison of Extreme Disability Benefit Rider and Disability Insurance:

Extreme disability rider vs. critical illness insurance

Just like disability insurance, many individuals confuse an extreme disability benefit rider with critical illness insurance. Critical illness insurance pays when you are diagnosed with a covered illness, while an Extreme Disability Benefit Rider pays only if you become permanently and severely disabled according to the policy’s definition.

An extreme disability benefit rider pays based on the effect that diseases or impairments have on your ability to function, while critical illness insurance pays based on eligible medical diagnoses.

Here’s a quick comparison of Extreme Disability Benefit Rider and Critical Illness Insurance:

Is an extreme disability rider worth it?

If you want comprehensive protection for yourself and your family, you can consider an Extreme Disability Benefit Rider. The benefits essentially allow policyholders to access and request an advanced payout of their death benefit, which can then be used for managing costs and other financial obligations. 

Here is an overview of who should consider an extreme disability benefit rider:

If you have any surplus budget, you can consider purchasing an Extreme Disability Rider to strengthen your policy and overall coverage.

Can you have an extreme disability rider with Critical Illness or Disability insurance?

Yes, in most cases, you can have an Extreme Disability Benefit Rider alongside a Critical Illness Insurance rider and Disability Insurance rider, when purchased as part of an eligible life insurance policy. Since each covers different situations and serves a different purpose, this combination offers enhanced protection and comprehensive coverage.

While Disability Insurance provides ongoing monthly income and Critical Illness Insurance pays a lump sum after a covered diagnosis, the Extreme Disability Benefit Rider offers an advance of your life insurance death benefit to cover immediate costs and other financial obligations. 

However, you cannot purchase the Extreme Disability Rider as an add-on to a standalone Critical Illness Insurance or Disability Insurance policy. It is offered as a built-in or optional feature for participating life insurance policies.

Pros and cons of an Extreme Disability rider

Which Canadian Life Insurance companies offer a built-in extreme disability benefit?

While an Extreme Disability Rider is available as a paid add-on with most major Canadian insurers, some insurers offer it as a built-in benefit on participating policies. 

Here’s a list of some of the major Canadian insurers that offer built-in Extreme Disability Benefits in Canada:

• Beneva
• UV Insurance
• Assumption Life

Apart from this, many insurers may offer Extreme Disability benefits as part of a different feature. Consult with your advisor and check if your policy offers these add-ons.

How to purchase an extreme disability rider in Canada?

PolicyAdvisor’s licensed life insurance advisors can help you compare life insurance policies with an extreme disability benefit rider from leading Canadian insurers based on your age, health, coverage needs, and budget.

Whether you are protecting your family or looking for additional financial security, our advisors can help you find the right life insurance policy with the appropriate rider. Our advisors at PolicyAdvisor compare rider availability and benefits across multiple insurers to help you choose the coverage that best fits your needs.

Frequently Asked Questions

Is an extreme disability benefit rider included with every life insurance policy?

Some insurers include it on eligible policies, while others offer it as an optional rider for an additional premium. Availability varies by insurer and policy type.

How much does an extreme disability benefit rider pay?

The payout for an Extreme Disability Benefit Rider depends on your insurer and policy. Many riders provide a percentage of your life insurance coverage, subject to a maximum benefit limit.

Can I add an extreme disability benefit rider after purchasing life insurance?

Some companies allow riders to be added later, while others require you to select them when you first purchase your policy.

Can seniors qualify for this rider?

Yes, but eligibility depends on the insurer’s issue age limits, underwriting rules, and the terms of the rider. Many insurers limit the ages at which you can add the rider to a life insurance policy, and some riders expire at a specified age or stop providing benefits after a certain age.

Is extreme disability benefit taxable in Canada?

Extreme disability benefit is typically not taxable in Canada. However, the amounts received by a policyholder while alive can create a taxable policy gain if proceeds exceed the policy’s adjusted cost basis.

Is the extreme disability rider the same as disability insurance?

No, the Extreme Disability Rider is not the same as disability insurance. The rider advances a portion of your life insurance death benefit for a permanent, catastrophic condition, while disability insurance replaces lost income during a temporary or long-term inability to work, usually with a much shorter waiting period.

Is an Extreme Disability Rider the same as a Compassionate Benefit or Compassionate Advance?

No. While both allow you to access part of your life insurance death benefit before you pass away, they are triggered by different circumstances. 

An Extreme Disability Benefit Rider pays a lump sum if you become permanently and severely disabled and meet the policy’s definition of extreme disability, whereas a Compassionate Benefit pays a portion of the death benefit if you are diagnosed with a terminal illness. However, both of these benefits are accelerated death benefits, essentially reducing your final payout.

In Canada, life insurance death benefits paid to a named beneficiary are tax-free. Taxes can arise, however, when you withdraw cash value, borrow against the policy, transfer ownership, or surrender the policy. Proper structuring of your policy can help your loved ones continue living their lives with minimal tax liabilities.

Quick overview:

Is life insurance payout taxable in Canada?

No, life insurance payout is not taxable. In Canada, a life insurance death benefit is generally tax-free when it is paid directly to a named beneficiary, regardless of the payout amount.

While the death benefit is generally tax-free, taxes can apply in certain situations. For example, interest earned on the death benefit after the insured’s death is taxable, and accessing the cash value of a permanent life insurance policy through withdrawals, surrender, or certain policy loans may trigger taxable income. Policy dividends may also have tax implications depending on how they are received or used. There are different tax rules when a corporation owns the policy or when the proceeds are paid to the estate instead of directly to a named beneficiary.

Do beneficiaries pay tax on life insurance in Canada?

No, beneficiaries do not pay tax on life insurance proceeds in Canada. If you name your spouse, child, or any other individual or entity (like a charity) as a beneficiary on your life insurance policy, the proceeds will be tax-free when paid to them. The beneficiary does not have to declare the proceeds as taxable income on their annual Canada Revenue Agency (CRA) return.

Appointing a beneficiary in your life insurance policy has several advantages:

• Proceeds are paid tax-free
• Proceeds do not have to go through probate
• Proceeds do not become a matter of public record

You should always appoint a beneficiary on your policy to ensure that the proceeds from your life insurance policies go to the beneficiaries of your choice, rather than directly to your estate or creditors. If you choose not to appoint a beneficiary, your estate will automatically be designated as the beneficiary.

What happens if you name your estate as the beneficiary?

If you name your estate as the beneficiary, the death benefit itself remains tax-free. However, the funds will be subject to provincial probate fees, exposed to creditors, and any interest they earn while the estate is being settled will be subject to income tax.

Additionally, naming the estate as the beneficiary could expose the death benefit to creditors if the estate has outstanding debts. The life insurance money may then be used to cover any outstanding debts of the estate and may be subject to other administrative fees and probate fees, meaning less money for your family. To avoid these issues, it is often recommended to name specific individuals or entities as beneficiaries instead of the estate.

When is life insurance taxable in Canada?

There are situations where the CRA may tax part of the policy’s value or related income. These taxes usually arise when you access your policy’s cash value, cancel (surrender) the policy, receive policy dividends, or earn investment income from the policy proceeds.

Withdrawals from the cash value

Permanent life insurance can grow in cash value and provide you with a potential source of future funds. Most policies with cash values allow you to withdraw some or all of the cash value (for a fee). However, these withdrawals are generally taxable. A withdrawal is taxed when the amount withdrawn exceeds the policy’s Adjusted Cost Basis (ACB). The ACB represents the policy’s tax cost for CRA purposes.

For example: If your policy has an ACB of $40,000 and you withdraw $55,000, the $15,000 gain may be taxable.

Policy loans

Whole life insurance policies allow policyowners to borrow against the cash value accumulated in their policy. Unlike a cash value withdrawal, a policy loan can be repaid, allowing you to restore the full death benefit. However, if the policy lapses while there is an outstanding loan, the CRA may treat it as a taxable disposition, and part of the amount may become taxable.

Policy loan amounts that are equal to or less than the policy’s ACB are non-taxable. However, policy loans taken in excess of the policy’s ACB will be taxable. In such a case, the insurance company will issue a T5 slip to report the taxable gain.

Policy as collateral

A policy owner can take a loan from a third-party institution, such as a bank, using the cash value as collateral on the loan. Generally, loans will be structured as a line of credit, and the loan proceeds will be received tax-free.

Upon the death of the insured, the proceeds from the life insurance policy are used to pay off the line of credit and any unpaid interest on the loan. If you repay the policy loan during your lifetime using your own funds, then there will be no tax impact.

Difference between policy withdrawal, policy loan, and collateral assignment

Surrendering

Upon surrendering or cancelling the policy before the policy end date to receive its cash value or surrender value, it can attract tax. The policy gain upon surrender [Gain = cash value – ACB] is considered income and hence, taxable.

For example, if your policy’s cash surrender value is $90,000 and its ACB is $70,000, the $20,000 gain is generally taxable.

Transferring your policy

Transferring ownership of a life insurance policy to another person or selling the policy can trigger a taxable disposition. CRA may calculate a policy gain based on the policy’s value and ACB, and any gain may be taxable.

Tax rules for policy transfers vary depending on whether the transfer is made to a family member, a corporation, or another individual. Transferring to a spouse is mostly tax-free (provided the spouse is a Canadian resident); on the other hand, if you transfer to anyone else or a corporation of your own, taxes can be triggered. 

Interest on death benefit

While the death benefit itself is tax-free, any interest earned after the insurer pays the proceeds is taxable.

For example, if a beneficiary receives a $500,000 death benefit and leaves it with the insurer or invests it in an interest-bearing account, the original $500,000 remains tax-free. However, any interest earned from that amount must be reported as taxable income in the year it is received.

Receive policy dividends

Participating whole life insurance policies may pay policy dividends based on the insurer’s financial performance. In most cases, these dividends are not taxable when they are used to purchase Paid-Up Additions (PUAs), reduce your premiums, or are paid directly as cash, as they are generally treated as a return of premium. However, if you leave the dividends on deposit with the insurer, any interest earned on those dividends is taxable and must be reported as income.

Is life insurance tax deductible in Canada?

No, life insurance premiums are generally not tax deductible in Canada. If you purchase a personal life insurance policy, you cannot claim the premiums as a deduction on your personal income tax return because the Canada Revenue Agency (CRA) considers them a personal expense.

However, there are a few exceptions where life insurance premiums may qualify for a tax deduction, particularly for businesses or self-employed individuals who use a life insurance policy as collateral for a business loan.

When can businesses claim life insurance premiums?

Businesses may be able to deduct a portion of life insurance premiums if all of the following CRA conditions are met:

• The policy is required by a lender as collateral for a business loan
• The policyholder must be the borrower
• Assignment of the death benefit must be made to the lender as collateral for the debt
• The loan is used to earn business or investment income
• The amount deducted is limited to the lesser of the premiums paid or the net cost of pure insurance for the year

In addition, businesses can deduct premiums paid on behalf of their employees. These costs are deductible and are treated as payments to employees, like health and dental benefits, or disability insurance. A corporation can pay a shareholder’s life insurance premiums if the shareholder is also an employee, with the premiums paid in the shareholder’s capacity as an employee.

How are corporate-owned life insurance payouts taxed?

When a private Canadian corporation owns a life insurance policy, the death benefit is generally received by the corporation tax-free. The corporation may then credit its Capital Dividend Account (CDA) by an amount equal to the death benefit minus the policy’s Adjusted Cost Basis (ACB) at the time of death. The CDA balance can be distributed to Canadian-resident shareholders as a tax-free capital dividend, making corporate-owned life insurance an effective estate and tax planning tool.

Are employer-paid group life insurance premiums taxable in Canada?

Yes, employer-paid group life insurance premiums are generally considered a taxable benefit for employees in Canada. Although you don’t pay tax on the premiums themselves, you will pay income tax on the value of the employer-paid benefit.

On the other hand, if an employer provides group life insurance as part of an employee benefits plan, the employer can generally deduct the premiums as a business expense. However, the value of employer-paid group term life insurance premiums is typically considered a taxable benefit for the employee and must be included in their taxable income.

How does life insurance help in tax planning?

Life insurance offers several tax advantages that make it an effective financial planning and estate planning tool in Canada. Key tax benefits of life insurance include:

• Tax-free death benefit: In most cases, beneficiaries receive the death benefit tax-free
• Tax-deferred cash value growth: The cash value in eligible whole life and universal life insurance policies grows on a tax-deferred basis while it remains in the policy
• Estate planning advantages: Naming a beneficiary can help the death benefit bypass the estate, potentially avoiding probate fees and delays (where applicable)

How can I avoid paying taxes on life insurance?

While most life insurance death benefits are already tax-free in Canada, these strategies can help minimize taxes on your policy and estate:

• Name a beneficiary: Avoid having the death benefit paid to your estate, which may result in probate fees and delays
• Avoid unnecessary cash value withdrawals: Withdrawals exceeding the policy’s Adjusted Cost Basis (ACB) can be taxable
• Limit policy surrenders and transfers: Surrendering or transferring ownership can trigger a taxable policy gain
• Use policy loans carefully: Some policy loans may create tax consequences, especially if the policy lapses
• Consult a tax or insurance professional: Get advice before making withdrawals, policy changes, or estate planning decisions to minimize potential tax liabilities

Our experts at PolicyAdvisor can inform you what life insurance products are best for your situation and how to reduce the taxability of your death benefit. Book some time with our expert advisors below to see how you can structure your life insurance needs in the most tax-efficient manner.

Most cancer survivors in Canada can qualify for life insurance once treatment is complete and they have remained cancer-free for a period determined by the insurer. Eligibility for coverage depends on the type and stage of cancer, treatment received, remission period, age, and overall health.

Can you get life insurance after cancer in Canada?

Yes, cancer survivors can qualify for life insurance in Canada. Insurers assess each application individually, taking into account factors such as cancer diagnosis, treatment history, time since treatment, overall health, and the likelihood of recurrence.

Whether you are approved and what premiums you pay will depend on the insurer’s underwriting and approval processes. Even if you do not qualify for fully underwritten policies, you may be eligible for simplified or guaranteed issue coverage.

Life insurance for cancer survivors in Canada: At a glance

Can you get life insurance while being treated for cancer?

It is usually difficult to qualify for traditional life insurance while you are actively undergoing cancer treatment in Canada. Most Canadian insurers will postpone an application until treatment has been completed and there is a substantial period of recovery.

If you are currently receiving chemotherapy, radiation therapy, or recovering from cancer surgery, an insurer may wait until treatment is complete. However, this is different from a complete rejection. Once treatment is completed and you have remained cancer-free for a period, you may be able to apply for coverage.

How do insurers evaluate cancer survivors?

When you apply for life insurance after cancer, insurers evaluate your overall health profile and the likelihood that your cancer could affect life expectancy.  Additionally, cancer survivors who qualify for traditional life insurance may sometimes be offered a rated (or substandard) policy instead of standard coverage. 

A rated policy provides the same death benefit and policy features as a standard life insurance policy, but the insurer charges a higher premium because the applicant’s medical history presents a higher-than-average insurance risk.

Here are the major factors that affect your rating, eligibility, and coverage amount as a cancer survivor in Canada:

Type of cancer

Some cancers generally have higher long-term survival rates than others. Insurers consider this during underwriting, as recurrence risks vary considerably across diagnoses. Insurance companies may assess survivors of breast cancer and prostate cancer differently from colon cancer and thyroid cancer, with a focus on the severity and chances of recurrence.

Cancer stage and grade

Another factor that affects coverage and eligibility is the stage and grade of your cancer at diagnosis. 

Here’s a quick overview of how cancer stage and grade may affect your underwriting:

• Cancer stage: Earlier-stage cancers generally have better underwriting outcomes, while late-stage cancers often require longer waiting periods before you can qualify for coverage
• Cancer grade: Higher-grade cancers are more likely to trigger additional medical review and may affect eligibility or premium rates

Additionally, many insurers might also use a TNM classification alongside checking if the cancer was localised or had spread. Applicants may also be required to submit additional pathology and follow-up reports to accurately assess the risk profile.

Treatment received

Insurers also factor in the treatment you receive, since different medical procedures have varying effects on the human body. Insurers might have varying underwriting criteria for treatments such as surgery, chemotherapy, radiation therapy, or even stem cell therapy.

How long you have remained cancer-free

One of the biggest factors that affect your coverage and underwriting for life insurance as a cancer survivor in Canada is how long you have remained cancer-free and the duration since treatment ended. Being cancer-free for several years significantly improves eligibility and ability to access higher coverage amounts.

Risk of recurrence

Alongside treatment and remission, insurers also focus on the risk of recurrence, since it directly affects quality of life and the level of risk they assume. Applicants whose reports show no evidence of recurrence generally receive more favourable underwriting outcomes than those who are still undergoing active monitoring.

Here are the factors at a glance:

How long do you need to be cancer-free before getting life insurance?

One of the most common questions cancer survivors ask is when they can apply for life insurance after completing treatment. Every insurer has its own underwriting guidelines, which influence the appropriate timeline and conditions for eligibility. However, most insurance companies prefer to see a period of successful recovery after treatment before approving coverage.

During treatment, traditional life insurance is generally unavailable for patients. However, in the first few years after treatment, insurers may postpone applications or offer limited alternatives.

After approximately three to five years, many applicants begin to qualify for more traditional life insurance options, depending on the type of cancer. When cancer survivors live five to ten years without recurrence, underwriting outcomes often improve further for many localized cancers.

What if you have recently had cancer?

If you have recently completed cancer treatment and do not yet qualify for traditional or simplified coverage, guaranteed issue life insurance may be your only immediate option. Guaranteed issue policies ask no medical questions and do not decline applicants based on their health history.

However, these policies usually come with limitations, such as:

• Lower coverage amounts: Coverage is often limited to approximately $25,000 to $50,000, depending on the insurer
• Higher premiums: Premiums are typically significantly higher than those for fully underwritten policies since the insurer accepts applicants without assessing their health
• Waiting period: Many guaranteed issue policies include a two-year waiting period for death from natural causes. If the policyholder passes away from a natural cause during this period, the beneficiary typically receives a refund of premiums paid rather than the full death benefit

These policies are designed to provide some financial protection when other life insurance options are not yet available. However, as time passes after treatment, it may be worth exploring whether you qualify for better coverage.

Types of life insurance for cancer survivors in Canada

Depending on the type of cancer and health profile, applicants can choose or are given the application type based on their health conditions and other underwriting factors:

Fully underwritten life insurance

Fully underwritten life insurance is a traditional underwriting option that requires a thorough health and lifestyle evaluation before approval. It involves a detailed application, medical history review, and often a physical exam.

This option generally provides cancer survivors with access to higher coverage amounts and lower premiums than simplified or guaranteed issue policies, provided they meet the insurer’s medical underwriting requirements. However, in the first few years, applications for cancer survivors may be postponed.

For cancer survivors with a stable medical history and a longer cancer-free period, fully underwritten coverage is generally the best option since it can provide significantly more coverage at a more competitive premium than simplified or guaranteed coverage. 

Simplified issue life insurance

Simplified issue is a type of life insurance underwriting for term or permanent policies that requires applicants to answer a limited number of health questions without completing a medical exam. While approval is faster, premiums are much higher than those of traditionally underwritten policies.

This is a good choice for cancer survivors in Canada with moderate health concerns or who are in recent remission and may find it difficult to qualify for traditional coverage.

Guaranteed issue life insurance

Guaranteed issue life insurance offers coverage without any medical questions or examinations. Acceptance is generally guaranteed as long as the applicant meets the insurer’s age requirements.  

This policy type is essentially a last-resort option for survivors with serious medical conditions or those who have recently recovered from high-grade cancer and who have difficulty qualifying for life insurance coverage. Guaranteed issue features the highest premiums and lower coverage limits, owing to the high risk assumed by the insurer. 

It is also worth noting that the policies have a 2- to 3-year waiting period for natural causes. During this time, if the insured passes away from an illness or natural cause,  there is a refund of paid premiums or payment of a reduced or graded death benefit.

Here is a comparison of the different types of applications and underwriting for the policies:

Can you reapply for better life insurance after cancer?

Yes, in many cases you can. If you initially purchase simplified issue or guaranteed issue life insurance because you have recently completed cancer treatment or did not qualify for traditional coverage, you may be able to apply for a fully underwritten policy later.

If you have remained cancer-free for several more years or have satisfied the underwriting conditions, insurers may offer you a traditionally underwritten life insurance policy. Stable health conditions may also lead to lower premiums and higher coverage amounts, owing to your reduced risk. Additionally, some policies also allow you to convert term into permanent and group coverage into individual.

It is also recommended to review your coverage periodically. Insurers may offer more favorable underwriting options and the option to switch to traditional coverage or a better solution with lower premiums and higher coverage amounts. However, it is recommended not to cancel an existing policy until your new coverage has been formally approved and is in force.

What to do if your life insurance application is denied?

If your life insurance application gets denied because of a cancer history, it usually just means you need a different approach. Insurers vary widely in how they assess cancer risk, so a denial from one insurer is often not a denial everywhere. Here’s what to do next:

• Ask why your application was declined: Request the reason from your insurer or advisor to understand whether the rejection was due to recent treatment, a high-risk cancer type, or missing medical information
• Apply with another insurer: Canadian insurers have different underwriting requirements and risk tolerances. Another insurer may assess your cancer history more favourably and offer coverage or a rated policy
• Wait and reapply later: If your application was declined because treatment ended recently or you are still within the insurer’s postponement period, waiting until you have been cancer-free for longer may improve your eligibility
• Consider a simplified issue or guaranteed policy: If you don’t qualify for fully underwritten life insurance, a simplified or guaranteed issue policy may be an option
• Check group life insurance through work: Employer-sponsored policies often do not require individual health underwriting, especially for the base coverage amount
• Look into “graded” or “modified” policies: These offer coverage with limited payouts in the first two to three years, followed by full benefits. They are easier to qualify for and can bridge the gap while you wait to reapply for standard coverage

What riders should you consider adding to your life insurance policy as a cancer patient in Canada?

If you qualify for life insurance after cancer, choosing the right riders can make your policy more flexible and provide additional financial protection if your health or life circumstances change in the future. While rider availability varies by insurer and policy type, the following options are particularly valuable for many cancer survivors:

• Waiver of Premium Rider: This rider waives your life insurance premiums if you become totally disabled and are unable to work due to a covered illness or injury. If you are diagnosed with another serious illness or experience a disability that prevents you from earning an income, your policy can remain in force without you having to continue paying premiums
• Term Conversion Rider: If you purchase a term life insurance policy, a conversion rider allows you to convert it to an eligible permanent life insurance policy before a specified age or the end of the conversion period without providing new medical evidence. This is particularly helpful for cancer patients and recovering applicants.
• Guaranteed Insurability Rider: Also known as a Guaranteed Purchase Option, this rider allows you to increase your life insurance coverage at specific life events or policy anniversaries without undergoing another medical exam or answering additional health questions. 

How much life insurance coverage do cancer survivors need?

For many Canadian families, a rule of thumb is to purchase life insurance worth 7 to 15 times your annual income. However, this is just a baseline and should be adjusted based on your financial situation.

Another great method of calculating how much coverage you need is to use the Debt, Income, Mortgage, and Education (DIME) method. It is a simple way to estimate how much life insurance you may need by considering four key financial obligations your beneficiaries could face.

Check out our life insurance calculator to determine how much coverage you need.

How to purchase life insurance for cancer survivors in Canada 

PolicyAdvisor’s licensed life insurance advisors can help cancer survivors compare life insurance quotes from leading Canadian insurers based on their cancer history, age, budget, and coverage needs.

Whether you have recovered from an early-stage cancer or completed treatment for a more complex diagnosis, our advisors can help you find the right coverage for your situation. Our advisors at PolicyAdvisor compare underwriting guidelines across multiple insurers, explain your options, and help identify the policy that offers the best balance of coverage and affordability.

The best dividend-paying whole life insurance companies in Canada for 2026 include Equitable Life, Manulife, iA, Sun Life, Canada Life, RBC Insurance, and Empire Life. These insurers offer participating whole life insurance policies that provide lifelong coverage, guaranteed cash value growth, and the potential to earn annual dividends. These companies have maintained relatively stable dividend scale interest rates (DSIRs) over the years, ranging from 5.75% to 6.40%. The dividend scale interest rate (DSIR) is an important measure of a participating policy’s performance, but it should not be the only factor you compare.

What is dividend paying whole life insurance?

Dividend-paying whole life insurance, also known as participating whole life insurance, is a type of permanent life insurance that provides lifelong coverage, guaranteed cash value growth, and the opportunity to receive annual dividends. These dividends in whole life insurance are not guaranteed and are based on the performance of the insurer’s participating account.

Who should consider dividend-paying whole life insurance?

Dividend-paying whole life insurance may be suitable for:

• Individuals looking for lifelong financial protection
• Families planning to leave a tax-efficient inheritance
• Business owners and high-net-worth individuals focused on long-term estate or succession planning
• Canadians who want guaranteed coverage with the potential for additional policy value through dividends

Which is the best dividend-paying whole life insurance company in Canada?

Equitable Life, Manulife, iA, RBC Insurance, Sun Life, Empire Life, and Canada Life are among the best dividend paying whole life insurance companies in Canada for 2026. These insurers are categorized as the best based on factors such as their participating whole life products, dividend scale interest rates (DSIRs), financial strength, participating account performance, policy flexibility, cash value growth potential, and reputation for long-term stability.

Dividend scale interest rates of Canada’s top participating whole life insurers (2026)

*Note: Dividend rates are not guaranteed and may change annually. Always confirm the current dividend scale interest rate with the insurer or your advisor.

Equitable Life

Equitable Life is a mutual insurance company, meaning it’s owned by its participating policyholders, which can influence its dividend distribution.​ Its participating whole life insurance plan is popularly known as Equimax and has two variations: Estate Builder and Wealth Accumulator, designed to support different long-term financial goals. Equitable Life has consistently maintained one of the highest dividend scale interest rates (DSIRs) among Canadian participating insurers in recent years.

Quick overview:

• Participating whole life insurance plans: Equimax Estate Builder, Equimax Wealth Accumulator
• Dividend scale interest rate: 6.40% 
• Participating account fund size: $3.32 billion
• AM Best financial strength rating: A
• Premium payment options: 10-pay, 20-pay, and pay to 100 options

Manulife

Manulife is one of Canada’s largest life insurers and offers Manulife Par, a participating whole life insurance plan that provides guaranteed lifetime coverage, cash value growth, and the potential to receive annual, non-guaranteed dividends. It also offers Manulife Par with Vitality Plus™, which combines a participating whole life insurance plan with the Manulife Vitality wellness program, allowing policyholders to earn rewards and discounts for healthy lifestyle choices while benefiting from other features.

Quick overview:

• Participating whole life insurance plans: Manulife Par, Manulife Par with Vitality Plus™
• Dividend scale interest rate: 6.35% 
• Participating account fund size: $15.98 billion
• AM Best financial strength rating: A+ 
• Premium payment options: 10-pay, 20-pay, and pay to 90 or 100 options

iA

iA Financial Group is one of Canada’s leading providers of dividend paying whole life insurance. It has two participating plans, iA PAR Estate and iA PAR Wealth, to meet different long-term financial goals. While iA PAR Estate is designed to maximize the death benefit for estate planning, iA PAR Wealth focuses on accelerating cash value growth for those seeking greater long-term wealth accumulation.

Quick overview:

• Participating whole life insurance plans: iA PAR Estate, iA PAR Wealth
• Dividend scale interest rate: 6.35% 
• Participating account fund size: $69.36 million
• AM Best financial strength rating: A+
• Premium payment options: 10-pay, 20-pay, and pay to 100 options

RBC Insurance

RBC Growth Insurance and RBC Growth Insurance Plus are RBC Insurance’s participating whole life insurance plans that have the potential to earn annual, non-guaranteed dividends. Premiums are invested in RBC’s participating account, which follows a diversified, long-term investment strategy designed to support stable dividend distributions over time. RBC Insurance has always maintained a good DSIR. While it was 6.00% in 2022, the current rate as of 2026 is 6.30%.

Quick overview:

• Participating whole life insurance plans: RBC Growth Insurance, RBC Growth Insurance Plus
• Dividend scale interest rate: 6.30%
• Participating account fund size: $51.39 million
• AM Best financial strength rating: A
• Premium payment options: 10-pay, 20-pay, and pay to 100 options

Sun Life

Sun Life offers a range of participating whole life insurance plans, including Sun Par Protector II, Sun Par Accumulator, and Sun Par Accelerator. Sun Life has a strong track record of maintaining dividend scales and providing flexible policy options. With flexible premium payment options and dividend choices, Sun Life’s participating policies are designed to help Canadians protect their loved ones while building long-term wealth and supporting estate planning goals.

Quick overview:

• Participating whole life insurance plans: Sun Par Protector II, Sun Par Accumulator, Sun Par Accelerator
• Dividend scale interest rate: 6.25%
• Participating account fund size: $24.2 billion
• AM Best financial strength rating: A+
• Premium payment options: 10-pay, 20-pay, and pay to 100 options

Empire Life

Empire Life offers two participating whole life insurance plans, EstateMax and Optimax Wealth. EstateMax focuses on maximizing the death benefit for estate planning, while Optimax Wealth is designed to accelerate cash value growth for wealth accumulation. With a 6.25% dividend scale interest rate (2026) and a diversified participating account, Empire Life offers flexible dividend options such as paid-up additions, premium reductions, or cash payments.

Quick overview:

• Participating whole life insurance plans: EstateMax, Optimax Wealth
• Dividend scale interest rate: 6.25% 
• Participating account fund size: $1.32 billion
• AM Best financial strength rating: A
• Premium payment options: 10-pay, 20-pay, and pay to 100 options

Canada Life

Canada Life is one of Canada’s oldest and most established insurance providers, offering participating whole life insurance products designed for stability and long-term growth. Canada Life’s Wealth Select is designed to build higher cash values earlier in the policy, making it suitable for those focused on wealth accumulation. Estate Select, on the other hand, emphasizes higher long-term cash value and death benefit growth for estate planning. 

Quick overview:

• Participating whole life insurance plans: Wealth Select and Estate Select
• Dividend scale interest rate: 6.00%
• Participating account fund size: $62.77 billion
• AM Best financial strength rating: A+
• Premium payment options: Max 10, Max 20, Pay to age 100

Current dividend scale interest rates in Canada (2026)

In 2026, the DSIR offered by participating life insurance companies in Canada ranges from 5.75% to 6.40%. The DSIR is one of the factors insurers use to calculate the annual dividends paid on participating whole life insurance policies. While it’s a useful benchmark for comparing participating insurers, it’s only one component of the dividend calculation. Each insurer uses its own dividend methodology, so policies with similar DSIRs can generate different dividend payouts and long-term cash value growth.

The table below compares the current dividend scale interest rates offered by whole life insurance companies in Canada over the years.

How much does dividend paying whole life insurance cost?

The cost of dividend-paying whole life insurance in Canada typically ranges from about $138 to over $2,550 per month, depending on your age, coverage amount, health, premium payment option, and the insurer you choose. Because participating whole life insurance includes guaranteed lifetime coverage, guaranteed cash value growth, and non-guaranteed dividends, it generally costs more than term life insurance. 

The table below shows illustrative monthly premiums for participating whole life insurance policies in Canada based on different ages and coverage amounts.

*Illustrative premiums for a male non-smoker are based on a participating whole life insurance policy before the impact of future dividends. Actual premiums vary, and future dividends are not guaranteed.

How do whole life insurance dividends work?

Whole life insurance dividends are annual, non-guaranteed payments that participating life insurance companies may distribute to eligible policyholders when their participating account performs better than expected. Insurers review the performance of their participating account each year and determine whether a dividend will be paid and how much.

Dividend calculations are based on several factors, including:

• Investment returns: Income earned from the participating account’s investments, such as bonds, equities, and other assets
• Mortality experience: Whether policyholders, as a group, live longer or shorter than expected
• Policy expenses: Administrative and operating costs compared with what the insurer originally anticipated
• Taxes: Changes in the insurer’s tax obligations that affect the participating account
• Lapse and claims experience: The number of policies surrendered or claims paid compared to expectations

How can you use whole life insurance dividends?

Policyholders with dividend paying whole life insurance policies in Canada have several flexible options for using their dividends. While insurance companies do not guarantee dividends, many companies have a long history of consistently paying them. Here are the most common ways you can use your dividends:

• Purchase paid-up additions: Use dividends to buy additional coverage that increases both your death benefit and cash value without paying additional premiums
• Reduce or pay premiums: Apply dividends to lower or cover your future premium payments, making the policy more affordable over time
• Accumulate with interest: Leave dividends on deposit with the insurer to grow at a guaranteed interest rate, creating a savings-like feature within the policy
• Withdraw as cash: Receive dividends in cash, which you can use freely, though they may be subject to taxation depending on the policy’s structure
• Repay policy loans: Use dividends to repay any outstanding loans taken against the policy’s cash value, preserving the long-term value of the policy

How are whole life insurance dividends taxed in Canada?

Whole life insurance dividends are generally not taxable in Canada when they’re considered a return of premium. However, the tax treatment depends on how you choose to use your dividends.

• Paid-up additions (PUAs): Generally not taxable when used to purchase additional paid-up insurance; these additions increase your policy’s cash value and death benefit
• Premium reductions: Generally not taxable, as the dividends are used to reduce your policy premiums
• Cash payouts: Usually not taxable if the payment does not exceed the adjusted cost basis (ACB) of the policy. Amounts above the ACB may be taxable
• Accumulated dividends with interest: The dividend itself is generally not taxable, but any interest earned on accumulated dividends is taxable in the year it is credited
• Policy loans or withdrawals: If you borrow against or withdraw from your policy’s cash value, part of the amount may be taxable depending on the policy’s ACB and Canadian tax rules

Tips to choose the best dividend-paying life insurance companies

Choosing the right dividend-paying whole life insurance company involves more than selecting the insurer with the highest dividend scale interest rate (DSIR). Compare each provider’s dividend history, participating account, policy features, financial strength, and dividend options to find a policy that aligns with your financial goals.

• Compare dividend scale interest rates (DSIRs): A higher DSIR may indicate stronger participating account performance, but it shouldn’t be your only deciding factor. Compare DSIRs alongside guaranteed values
• Review dividend performance history: Choose a company that consistently pays dividends and demonstrates stability through strong dividend scales, interest rates, and performance during market downturns
• Check dividend options: Look for flexible dividend options such as paid-up additions (PUAs), premium reductions, cash payments, and dividend accumulation with interest
• Evaluate the participating account: Consider the size, investment strategy, and long-term performance of the insurer’s participating account, as it plays a significant role in determining future dividends
• Assess financial strength: Select insurers with strong financial ratings from agencies such as AM Best, Moody’s, or S&P Global, reflecting their ability to meet long-term policy obligations
• Compare policy flexibility: Look for optional riders, flexible premium payment periods (10-pay, 20-pay, or life pay), and customization features that can adapt to your changing needs
• Review cash value access: Understand how easily you can access your policy’s cash value through loans or withdrawals, along with any associated conditions or charges

What happens if an insurer reduces dividends?

If an insurer reduces dividends, your whole life insurance policy may grow more slowly than expected. This means the cash value accumulation and death benefit growth could be lower than originally illustrated. However, your guaranteed values, such as the base death benefit and guaranteed cash value, remain unaffected.

Policyholders may need to adjust premium payments, reduce paid-up additions, or revise their long-term plans depending on how they use the dividends. It’s important to review your policy annually with your advisor to ensure it still aligns with your financial objectives.

What happens to dividends if I cancel my whole life policy?

If you surrender a participating whole life insurance policy, future dividend payments stop. What happens to previously earned dividends depends on how you choose to use them:

• Paid-up additions (PUAs): The value of any additional paid-up insurance purchased with dividends is typically included in your policy’s cash surrender value
• Accumulated dividends with interest: Any dividends left on deposit with the insurer, along with any accumulated interest, are generally paid out when you surrender the policy
• Cash payouts: If you have already received dividends as cash, they won’t be included in your surrender value
• Premium reductions: Dividends previously used to reduce your premiums have already been applied and won’t form part of your surrender payout
• Tax implications: If your cash surrender value exceeds the policy’s adjusted cost basis (ACB), a portion of the payout may be taxable under Canadian tax rules

How do I choose the best whole life insurance policy in Canada with PolicyAdvisor?

Choosing the best whole life insurance policy in Canada involves more than just comparing premiums. Since this policy comes with lifetime coverage and potential cash value growth, selecting the right policy can seem overwhelming.

PolicyAdvisor makes this process simpler and smarter for you! Our licensed advisors work closely with you to understand your unique needs and help you compare the top policies across Canada. Whether you’re looking for wealth transfer, estate planning, or guaranteed lifelong protection, our experts will guide you toward the best plan that aligns with your objectives. Schedule a call with us today to get customized quotes.

The cheapest term life insurance in Canada starts at just $11 per month for a healthy applicant with $100,000 in coverage over a 10-year term. However, the actual premium depends on factors such as your age, health, smoking status, occupation, insurer, and coverage needs. While one insurer may offer the lowest rates for young couples, another may be more affordable for seniors, smokers, or applicants with certain health conditions.

Which companies offer the cheapest term life insurance in Canada?

The companies offering the cheapest term life insurance in Canada include Beneva, Canada Life, Manulife, UV Insurance, and Wawanesa. Based on our comparison of representative premium quotes from leading insurers, these companies offer some of the lowest rates for different applicant profiles in 2026:

• Manulife: Cheapest term life insurance for couples
• Canada Life: Cheapest term life insurance for seniors
• Beneva: Cheapest term life insurance for mortgage protection
• UV: Cheapest term life insurance for people with health conditions
• Wawanesa: Cheapest term life insurance for smokers

Cheapest term life insurance in Canada: Company overview

Based on our 2026 comparison of representative quotes, these insurers offered the lowest rates for specific applicant profiles. Results vary by age, health class, province, and coverage amount.

Manulife: Cheapest term life insurance for couples

Manulife offers some of the lowest term life insurance premiums for couples in Canada, with a 10-year term policy and $100,000 in coverage starting at just $11.87 per month for a healthy 20-year-old. Its Pick-A-Term feature also lets couples choose the term length that best aligns with their mortgage, income replacement needs, or long-term financial goals. 

Manulife life insurance also offers joint first-to-die and joint last-to-die coverage options, allowing couples to insure both lives under a single policy. This can be a more cost-effective alternative to purchasing two separate policies while simplifying policy management. Moreover, couples purchasing the same coverage amount and term can also benefit from built-in premium savings, making it a cost-effective way to secure comprehensive financial protection together.

The table below compares Manulife’s representative premiums with those of Empire Life and BMO Insurance for joint term life insurance policies.

*Representative monthly values for non-smokers in good health purchasing $100,000 in coverage with a 10-year term for a joint term life insurance policy

Canada Life: Cheapest term life insurance for seniors

Canada Life combines competitive premiums with long-term flexibility, making it a strong option for those looking for cheap life insurance for seniors. Premiums start at $28.17 per month for a healthy 55-year-old purchasing $100,000 in coverage over a 10-year term. 

Its My Term™ Life Insurance plan is designed to provide long-term peace of mind, featuring guaranteed premiums, automatic renewals without additional medical evidence until age 85, and the option to convert to permanent life insurance before age 70 without further underwriting. Canada Life term insurance features make it a good choice for seniors seeking flexible, long-term coverage.

Here is a table depicting how Canada Life is a more affordable option for seniors purchasing term life insurance:

*Representative monthly premiums for male non-smokers in good health purchasing $100,000 coverage with a 10-year term

Beneva: Cheapest term life insurance for mortgage protection

Beneva offers some of the most competitive rates for term life insurance designed for mortgage protection, especially when paired with a disability rider. Premiums start at $95.20 per month for a healthy 20-year-old purchasing $1,000,000 in coverage over a 25-year term with a $2,500 monthly disability rider. It is more affordable than Empire Life at most ages and remains competitively priced against iA. 

In addition, Beneva life insurance includes an Extreme Disability Benefit at no extra cost. The built-in Extreme Disability Benefit adds extra protection, giving policyholders more value than comparable policies that do not include this feature.

Here is a table depicting how Beneva is a more affordable option for mortgage protection (term life insurance) with disability coverage:

*Representative monthly premiums for male non-smokers in good health purchasing $1,000,000 in coverage with a 25-year term and a $2,500 monthly disability rider with a 2-year term

UV Insurance: Cheapest term life insurance for people with health conditions

UV Insurance offers some of the most affordable term life insurance options for applicants with certain health conditions, with premiums starting at $13.50 per month. It provides more affordable premiums than Assumption Life, Canada Protection Plan, and a few other insurers across all age groups while providing more accommodating underwriting for certain health conditions and lifestyle factors. 

UV also offers simplified issue term life insurance with flexible 15-, 20-, 25-, and 30-year terms, making it a strong choice for applicants who may not qualify for traditional coverage. In comparison, Assumption Life offers simplified issue coverage with 10- and 20-year terms, while Canada Protection Plan offers 10-, 20-, and 25-year terms, giving UV the widest range of coverage durations for applicants who may not qualify for fully underwritten policies.

Here is a table depicting how UV is a more affordable no-medical insurance (Simplified issue) option for people with health conditions:

*Representative monthly premiums for male non-smokers in good health purchasing $100,000 coverage with a 10-year term

Wawanesa: Cheapest term life insurance for smokers

Wawanesa is one of the cheapest providers of term life insurance for smokers in Canada. Premiums for a 10-year term life insurance for smokers start at just $12.06 per month for a healthy 20-year-old purchasing $100,000 in coverage. 

Along with competitive smoker premiums, Wawanesa life insurance is a strong choice for those planning to quit smoking. Its plan comes with a feature where eligible policyholders who remain smoke-free for 12 months can apply for non-smoker rates, subject to underwriting approval, which helps reduce premiums over time.

Here is a table depicting how Wawanesa is a more affordable option for smokers:

*Representative monthly values, based on smokers in good health. $100,000 coverage, 10-year term

Our methodology for ranking the cheapest term life insurance companies in Canada

When ranking the cheapest term life insurance companies in Canada, we compared several factors, including the following:

• Monthly premiums: We compared representative monthly premiums across leading Canadian life insurers using similar coverage amounts and policy terms to identify the most affordable options for different applicant profiles
• Applicant age: Premiums increase with age, so we analyzed rates across multiple age groups to determine which insurers consistently offer the lowest prices throughout different life stages
• Health profile: We assessed insurers based on their pricing and underwriting approach for applicants with certain health conditions, including the availability of simplified issue coverage and flexible eligibility requirements
• Smoking status: Since smokers typically pay higher premiums, we compared smoker-specific rates and considered features such as the ability to qualify for non-smoker premiums after smoking cessation
• Coverage needs: We evaluated insurers for different coverage requirements, including standard term life insurance as well as mortgage protection with a disability rider, to identify the best-value provider for each use case
• Policy features and flexibility: Beyond premiums, we reviewed factors such as available term lengths, renewability, convertibility, built-in benefits, optional riders, and premium discounts to identify insurers that provide the best overall value

Is term life insurance worth it?

Yes, term life insurance is worth it. It is highly beneficial for Canadians seeking affordable, high-coverage protection for a specific period. Term policies offer low premiums and broad coverage, making them ideal for families, new homeowners, or anyone with temporary financial obligations like mortgages or child-rearing expenses. Many insurers offer customizable term lengths (10, 20, or 30 years), convertible options, and other built-in features to match your needs. 

Term life is especially useful if you only need insurance during your peak earning years. Although it doesn’t build cash value like permanent insurance, it provides significant financial protection at a fraction of the cost. With rising living expenses, term life insurance remains a budget-friendly choice for Canadians.

How much does $500,000 or $1 million in term life insurance cost?

The cost of life insurance increases with both your coverage amount and age, but it remains one of the most affordable ways to protect your family’s financial future. For healthy, non-smoking Canadians, $500,000 of 20-year term life insurance starts at $13.95 per month for a 20-year-old woman and $21.60 per month for a man. Increasing the coverage to $1 million increases premiums to $21.15 per month for women and $35.99 per month for men at the same age.

How can I lower my term life insurance premium?

You can lower your term life insurance premium by choosing the right coverage amount, policy term, and insurer for your needs. Here are some effective ways to reduce your term life insurance premium costs:

• Buy coverage at a younger age: Term life insurance premiums generally increase with age. Purchasing a policy while you are young and healthy can help you get lower rates for the entire term
• Choose only the coverage you need: Buying a policy that matches your financial obligations, such as your mortgage, income replacement, or debts, can keep premiums lower than purchasing more coverage than necessary
• Select a shorter policy term: A 10-year or 20-year term policy costs less than a 30-year term because the insurer assumes less long-term risk. Select a policy term that matches your financial needs
• Maintain a healthy lifestyle: Non-smokers and applicants in good health generally qualify for the lowest premiums. Improving your health and quitting smoking may help you secure lower rates or qualify for non-smoker pricing, depending on the insurer
• Consider annual premium payments: Some insurers offer a small discount if you pay your premium annually instead of monthly
• Compare quotes from multiple insurers: Premiums can vary significantly between insurance companies for the same applicant. Comparing term life insurance quotes helps you find the most affordable policy without sacrificing coverage

How to compare term life insurance quotes with PolicyAdvisor

To get the best term life insurance quotes in Canada, you need to compare policies from multiple insurers while factoring in your age, health, coverage amount, and policy length. At PolicyAdvisor, we make this process simple and transparent. Our licensed advisors work with over 30 of Canada’s top life insurance companies to help you find the most competitive quotes that match your unique needs. 

You can use our free term life insurance calculator to instantly explore coverage options and premiums, or speak with our experts for personalized guidance. We review your goals, suggest the right term length, explain optional riders, and ensure you don’t overpay for coverage. Schedule a call with us today to get the best and cheapest life insurance quotes for your financial protection.

The cheapest life insurance policy in Canada is term life insurance, with premiums starting as low as $10 per month for young and healthy applicants. However, the lowest-cost policy for you depends on your age, health, coverage amount, and the insurer you choose. Some of the cheapest life insurance providers in Canada include Beneva, BMO, Canada Life, Desjardins, and a few others. 

Quick summary:

Permanent life insurance can do more than provide a death benefit; it can also become a long-term financial asset. Some permanent policies, like cash value life insurance, build cash value that policyholders may access during their lifetimes, making them useful for financial goals such as estate planning, retirement, or wealth preservation. 

Quick overview:

• Main types: Whole life and Universal life
• Pros: Provides lifelong coverage and wealth accumulation
• Cons: Can be more expensive than term life insurance

What is the cash value of life insurance?

A cash value life insurance policy is a type of permanent life insurance that provides both lifelong coverage and a built-in savings component. As you pay premiums, a portion goes toward your insurance coverage while the rest accumulates as cash value inside the policy. This cash value grows over time and can be accessed during your lifetime through policy loans, withdrawals, or by surrendering the policy, depending on the terms of your contract.

Not all life insurance policies have cash value. Only permanent policies, such as whole life insurance and universal life insurance, include this feature. The way cash value grows depends on the type of policy you choose. For example, participating whole life policies may increase cash value through dividends, while universal life policies grow based on the performance of the investments you select.

How does cash value life insurance work in Canada?

Let’s understand how cash value life insurance works with an example:

Suppose Sarah, a 35-year-old non-smoking woman, purchases a $500,000 participating whole life insurance policy and pays a $250 monthly premium. Part of each premium covers her lifelong insurance, while the rest builds her policy’s cash value, which grows on a tax-deferred basis and may increase further through insurer dividends.

After 20 years, Sarah could accumulate approximately $60,000 to $90,000 in cash value, depending on the insurer and policy design. She can use this money by borrowing against it, withdrawing it, or using it to help pay future premiums. Any outstanding loans or withdrawals may reduce the death benefit ultimately paid to her beneficiaries.

Disclaimer: The figures shown are for illustrative purposes only. Actual cash values vary by insurer, policy design, and individual circumstances

Which life insurance policies build cash value?

In Canada, only permanent life insurance policies include a cash value feature. These policies provide lifelong coverage while allowing a portion of your premiums to accumulate as cash value over time.

The following types of life insurance can build cash value:

• Whole life insurance: Includes guaranteed cash value that grows steadily over time. Participating whole life policies may also increase cash value through insurer dividends, although dividends are not guaranteed
• Universal life insurance: Combines permanent life insurance with an investment component. Your cash value grows based on the performance of the investment options you choose and their performance, so returns are not guaranteed

How is cash value in life insurance calculated?

The cash value of a life insurance policy is calculated based on how your premiums are allocated, the type of permanent policy you own, how long you have held the policy, and more. The amount of cash value your policy builds depends on several factors, including:

• Policy type: Whole life policies typically offer guaranteed cash value growth, while universal life policies grow based on the performance of the investments you choose
• Premium amount: Higher premiums generally result in faster cash value accumulation
• Policy duration: Cash value grows gradually and typically becomes more substantial after the policy has been in force for several years
• Dividend performance: Participating whole life policies may increase cash value through dividends declared by the insurer, although these are not guaranteed
• Interest or investment returns: Universal life policies earn returns based on the investment options selected, which can affect how quickly the cash value grows
• Policy fees and insurance costs: Administrative fees and the cost of insurance reduce the portion of your premium that goes toward building cash value

How long does it take cash value to build?

The cash value of a participating whole life insurance policy begins accumulating in the first year. However, it typically takes 10 years or more to build a significant amount of cash value. How quickly your cash value grows depends on how the policy is structured. Some policy designs prioritize higher cash value in the early years, while others focus on maximizing long-term growth or estate value.

Cash value growth is not the same for every participating whole life insurance policy. It varies based on the policy’s design and your financial objectives. Some policy designs are structured to build cash value more quickly in the early years, while others prioritize long-term growth or maximizing the tax-free death benefit.

Illustration assumptions:

The illustrative example below is based on a 40-year-old male non-smoker contributing $1,500 per month ($18,000 annually) to a participating whole life insurance policy for 20 years. It compares two policy designs using the same premium to demonstrate how cash value growth can vary depending on the policy structure.

Cash value over time for 2 different strategies

Disclaimer: This example is provided for educational and illustrative purposes only. It is not a projection or guarantee of future policy performance. Actual cash values will vary based on factors including the insurer, policy design, dividend scale, premium structure, policy charges, and individual circumstances. Participating policy dividends are not guaranteed and may increase or decrease over time. Consult a licensed insurance advisor for an illustration based on your specific situation.

Why do cash values differ across different whole life strategies?

Cash values can differ significantly between participating whole life insurance policies, even when the premium amount is identical. This is because policies can be structured with different goals and funding strategies. Some policy designs prioritize faster cash value growth, allocating more of the early premiums toward building accessible funds that can support future financial needs. Others focus on maximizing the death benefit, directing more of the premium toward creating a larger estate value from the beginning, which may result in slower cash value accumulation in the early years.

Over the long term, the difference between these strategies may become smaller, and in some cases, a policy designed primarily for estate protection may generate stronger cash value growth over time. The right policy design depends on your financial objectives, whether you prioritize early access to funds, retirement income planning, business succession, or maximizing the tax-free legacy passed on to beneficiaries.

How to borrow from the cash value in life insurance?

There are a few ways to borrow from your life insurance policy’s cash value: you can withdraw money, take a policy loan, use it to pay your premiums, or surrender your policy for its cash surrender value. In each scenario, there are a few things to note.

• Borrow against the cash value: Most permanent life insurance policies allow you to take a policy loan using your cash value as collateral. Since the cash value secures the loan, you typically don’t need a credit check or additional security. Your policy remains active, but interest accrues on the loan, and any unpaid balance, including interest, will reduce the death benefit paid to your beneficiaries
• Withdraw cash value: Some policies let you withdraw a portion of your accumulated cash value without cancelling your coverage. This provides access to funds when needed, but it reduces your policy’s cash value and may also decrease the death benefit
• Use cash value to pay premiums: If your policy has built up enough cash value, you may be able to use it to cover future premium payments. This can reduce your out-of-pocket expenses while keeping the policy in force. However, using cash value for premiums lowers the amount available for future growth and could affect the policy’s long-term value
• Surrender your policy: If you no longer need the coverage, you can surrender your policy and receive its cash surrender value. This is the amount remaining after deducting any applicable surrender charges, outstanding policy loans, or fees. Once surrendered, your life insurance coverage ends, and your beneficiaries will no longer receive the death benefit

What happens when you withdraw cash from life insurance?

Withdrawing cash from a permanent life insurance policy gives you access to your accumulated cash value, but it can affect your policy, death benefit, and your taxes.

• Tax implications: Withdrawals up to your policy’s Adjusted Cost Basis (ACB) are generally tax-free. Any amount above the ACB may be treated as taxable income under Canadian tax rules
• Reduced death benefit: Taking money out of your policy typically lowers the cash value and may reduce the death benefit paid to your beneficiaries 
• Potential fees: Depending on your insurer and policy terms, you may have to pay withdrawal or surrender charges
• Policy loan considerations: If you borrow against your cash value instead of withdrawing it, the loan is not usually taxable immediately. However, if the policy later lapses with an outstanding loan, the unpaid amount may become taxable

Cash value vs. cash surrender value vs. death benefit

What are the benefits of cash value life insurance?

Cash value life insurance offers a unique blend of lifelong coverage and financial flexibility, along with other benefits like access to cash value, guaranteed savings growth, and estate planning advantages, making it a valuable financial planning tool for Canadians.

• Lifelong coverage: Unlike term life insurance, cash value life insurance protects your entire life as long as premiums are paid, ensuring your loved ones receive a guaranteed death benefit
• Tax-deferred growth: The cash value component grows on a tax-deferred basis, allowing your savings to accumulate more efficiently over time. This is especially beneficial for Canadians looking to build long-term wealth
• Access to cash value: Policyholders can access the cash value through loans or withdrawals. These funds can be used for various purposes, such as funding education, supplementing retirement income, or covering emergencies
• Financial flexibility: The ability to borrow against your policy or use the cash value to pay premiums provides financial flexibility during times of need or as part of retirement planning
• Estate planning advantages: The death benefit is generally paid out tax-free to beneficiaries, making it an effective tool for estate planning and ensuring a financial legacy

What are the disadvantages of cash value life insurance?

Some of the disadvantages of cash value life insurance include:

• Permanent life insurance costs significantly more than term life insurance
• It can take some years before the policy builds meaningful cash value
• Accessing cash value through withdrawals and policy loans can lower your cash value and death benefit
• Cash value policies have more features and fees than basic term life insurance, making them more complex to understand and manage

Common myths about cash value life insurance

Common myths about cash value life insurance include that it grows quickly, does not affect the death benefit, and is guaranteed, among others.

Is a life insurance policy with cash value right for you?

Deciding which life insurance policy is best depends on your family’s financial goals. Permanent life insurance policies with cash value options do come at a higher premium cost compared to term life insurance plans, but they can be extremely beneficial for those looking for a guaranteed death benefit with the bonus of investment opportunities.

Book a call with one of our licensed life insurance advisors at PolicyAdvisor today and get the right policy. We work with over 30 of Canada’s best life insurance companies and can help you to make sure you get the policy that’s right for you. Schedule a call now!

As a couple, managing finances means sharing major responsibilities, such as a mortgage, raising children, paying off debts, or planning for retirement. For most Canadian couples, two separate term life insurance policies are considered the best default choice because they provide two death benefits, flexible coverage amounts, and separate beneficiaries.

While separate life insurance policies are the best fit for most couples due to their flexibility, joint life insurance can be a more suitable and cost-effective option for couples who want to protect shared financial obligations, simplify policy management, or reduce policy fees.

Comparing life insurance options for couples in Canada

Each policy type has its own series of benefits and features. Two separate term life policies are ideal for families, while joint first-to-die life insurance is ideal for individuals seeking protection for mortgages and other major expenses. Meanwhile, a joint last-to-die policy is well suited for estate planning and creating a legacy.

Here’s a comparison of the major life insurance options available for couples in Canada:

It is also worth noting that many insurers offer a conversion or survivor privilege when couples purchase life insurance. This allows the surviving partner to purchase a new individual policy within a short window (usually 30 to 90 days) without undergoing a medical exam or answering new health questions.

Top 5 best life insurance companies for couples in Canada

Choosing the right life insurance company for couples is just as important as choosing the right type of policy. While many insurers offer great benefits, the following companies offer greater flexibility, built-in benefits, and features that make them particularly suitable for partners with shared financial goals.

Here’s an overview of the five best life insurance companies for couples in Canada:

BMO Insurance

BMO Insurance is an excellent choice for couples who want their coverage to remain stable even after a life-changing event. Even if one insured person in a joint policy passes away, the surviving insured member can continue coverage at the same premium, provided the coverage amount remains unchanged.

This feature is great for couples seeking hassle-free coverage, especially at older ages when premiums are higher. In addition, BMO also offers the Empathy service, which provides emotional and logistical support to the policyholder’s beneficiaries.

Beneva

Beneva is well suited for couples who want more than just a death benefit. The policies include valuable built-in features such as the Extreme Disability Benefit and Guaranteed Insurability Option, ensuring policyholders can increase coverage later on without additional medical underwriting (under qualifying circumstances).

Additionally, eligible policies also have the option to add valuable riders such as child coverage and accidental death benefits, allowing couples to customize their protection and help ensure the financial safety of their beneficiaries.

Empire Life

Empire Life has one of the most seamless application processes, combining a streamlined online application process with competitive policy features. Couples can benefit from policy fee savings, strong term conversion options, and the ability to choose from a wide selection of term and permanent life insurance plans.

Policyholders can also add critical illness insurance under the same policy, making it easier for them to build a comprehensive financial protection plan. Additionally, the joint first-death plan offers temporary insurance to the surviving partner for an additional 90 days. This gives the spouse time to figure out their next steps without suddenly being unprotected.

RBC Insurance

RBC Insurance stands out for its Pick-a-Term feature, which lets partners choose a customized term length rather than selecting only standard options such as 10 or 20 years. This flexibility allows them to match coverage with major financial obligations like mortgages, education, or even retirement planning.

Many eligible policies also feature a seamless conversion option, allowing couples to transition from term to whole life without additional medical underwriting. Couples can also benefit from policy fee savings when purchasing joint coverage.

Manulife

Manulife is an excellent option for couples who want to combine life insurance with wellness incentives. Through the Manulife Vitality program, policyholders can earn points and receive rewards for maintaining healthy lifestyle habits, such as exercising, participating in activities, and completing health assessments.

Additionally, Manulife life insurance offers a Waiver of Premium option for couples. If either partner becomes totally disabled due to injury or illness, the premiums for the entire joint policy are waived, ensuring coverage remains active while household income is impacted.

Quick overview of the five best insurance companies for couples in Canada:

How much life insurance coverage do couples need?

For many Canadian families, a rule of thumb is to purchase life insurance worth 7 to 15 times your annual income. However, this is just a baseline and should be adjusted based on your financial situation.

A great method of calculating how much coverage you need is to use the Debt, Income, Mortgage, and Education (DIME) method. It is a simple way to estimate how much life insurance you may need by considering four key financial obligations your beneficiaries could face.

Use our life insurance calculator to estimate how much coverage you need.

What mistakes do couples make when buying life insurance in Canada?

Many couples purchase life insurance to protect their loved ones, but choosing the wrong policy, waiting too long, or having insufficient coverage can leave their family financially vulnerable.

Here are some of the common mistakes you should avoid as a couple while purchasing life insurance in Canada:

• Waiting too long: Many couples postpone buying life insurance until they have children or purchase a home. Purchasing coverage early protects you from higher premiums later on due to age and health conditions
• Buying too little coverage: Some couples choose the lowest premium without considering how much coverage their family would actually need. Ensure the policy amount sufficiently covers debts, future income replacement, and living expenses
• Choosing the wrong type of policy: Many couples automatically choose a joint policy because it appears simpler or less expensive. However, a term life policy or a joint last-to-die policy might offer better estate planning and coverage in certain situations
• Forgetting the Stay-at-Home Partner: Many couples think they only need insurance on the person who earns the most money. If a stay-at-home partner passes away, the surviving partner must pay for child care, cleaning, and cooking.
• Not reviewing coverage after major life events: Many couples forget to review their coverage amount or duration after major events like child birth, starting a business, purchasing a home, or taking on significant debt. This can leave them without sufficient coverage or term in the future.

Can you change or cancel your life insurance policy as a couple in Canada?

Yes, most life insurance policies in Canada can be changed or cancelled. However, your available options depend on the type of policy you own and the rules specific to your insurer and policy. Common changes include increasing coverage, converting term coverage to permanent coverage, or replacing a joint policy with individual policies.

Here are some of the most common changes couples make to their life insurance coverage:

It is also worth noting that most policies include a “free-look” period to review and cancel for a refund. As a couple, you should review your life insurance coverage and goals after major life events, such as purchasing property, having children, or planning for retirement. Contact our advisors today for a comprehensive plan based on your needs.

Our advisor’s take on the best life insurance for couples

At PolicyAdvisor, we recently helped a married couple in their early thirties secure life insurance after purchasing their first home and welcoming their first child. They were seeking coverage to ensure the surviving spouse could continue paying the mortgage, replace lost income, and support their child.

Client profile

• Ages: 32 and 34 years
• Family: Married with one young child
• Primary concern: Income replacement and mortgage protection
• Existing debt: $620,000 mortgage
• Coverage goal: $1.5 million in total life insurance
• Approximate monthly premiums: $332.1 (Male) and $288.45 (Female), respectively

Why we recommended separate term life insurance

• Each spouse required a different coverage amount based on their income and financial responsibilities 
• Separate policies ensured both partners remained insured even if one policy paid a death benefit 
• The policies included the option to convert to permanent life insurance if their long-term financial goals changed 
• Affordable monthly premiums allowed them to get higher coverage without exceeding their budget 

How to purchase life insurance for couples in Canada?

PolicyAdvisor’s licensed life insurance advisors can help couples compare life insurance quotes from leading Canadian insurers based on their ages, budget, coverage needs, and financial goals. They can help you estimate your coverage and decide between joint and separate policies.

Whether you are newly married, raising a family, or planning your estate, PolicyAdvisor can help you compare quotes and apply online with licensed advisors. We will compare policy types, term lengths, and riders to help you choose the right protection for you and your loved ones.

Frequently Asked Questions

What is the best life insurance for couples in Canada?

For most Canadian couples, two separate term life insurance policies are the best option. They offer better flexibility and allow each partner to choose their own coverage, beneficiaries, and riders with ease.

Is joint life insurance cheaper than separate policies?

Joint life insurance can sometimes have lower premiums than purchasing two comparable individual policies because both partners are insured under a single contract. However, it only pays one death benefit. Once it is paid, coverage ends.

Can common-law couples purchase life insurance together?

Yes, most Canadian insurers allow common-law partners to purchase either separate or joint life insurance policies if they meet the insurer’s eligibility requirements. Coverage options are usually the same as those available to married couples.

Can couples have different coverage amounts?

Yes, if you have separate life insurance policies. Since each policy is its own contract, you can choose to customize it based on your needs. Additionally, you can choose separate beneficiaries.

Can couples buy life insurance online?

Yes, couples can buy life insurance online. Our trusted advisors at PolicyAdvisor can help you compare quotes.

Can we name a minor child as beneficiary?

In most cases, appoint a trustee for any minor’s share so funds can be managed for the child’s benefit until they reach the age of majority in your province.

What if one of the partners has a health condition?

You can consider separate policies so one partner’s health does not influence the other’s pricing or approval. Consider exploring fully underwritten, simplified issue, or guaranteed issue options, depending on your situation.

What happens to joint life insurance after divorce or separation?

This depends on the policy terms and agreement between the policyholders. Some joint life insurance policies can be split into separate policies or transferred to one partner, while others may need to be cancelled.