What is the best life insurance for couples in Canada?

The best life insurance for couples in Canada depends on a couple’s financial goals, family situation, and long-term plans. Policies from leading insurers such as BMO, Empire Life, RBC Insurance, and Manulife offer unique features that make them well-suited for couples seeking financial protection.

While many assume a joint policy is the best choice, separate life insurance policies can provide greater flexibility, personalized coverage, and better long-term value.

Here’s a quick overview of life insurance for couples in Canada:

Types of life insurance available for couples in Canada

In Canada, couples can choose between joint life insurance policies that cover both partners under a single plan or individual policies that provide separate coverage for each person. Based on the type you choose, the following options are available:

• Joint first-to-die life insurance
• Joint last-to-die (survivorship) life insurance
• Two separate life insurance policies
• Combined or multi-life insurance policy

Here’s a quick overview of the different policy types:

Joint first-to-die life insurance

A joint first-to-die life insurance policy covers two people under a single contract and pays the death benefit after the first insured person passes away. Once the benefit is paid, the policy ends, and the surviving partner no longer has coverage.

This option is commonly chosen by couples who want to ensure the surviving spouse has financial protection for living expenses, debts, child care, or mortgage payments. While it is comparatively less expensive than two separate policies, note that joint first-to-die life insurance only provides one death benefit.

Joint last-to-die (survivorship) life insurance

A joint last-to-die policy insures two people under one contract but pays the death benefit only after both insured individuals have passed away. Since the insurer does not pay until the death of both partners, premiums are often lower than buying two separate policies.

This option is great for parents or partners who wish to protect their children and other beneficiaries from debts and to support estate planning and wealth transfer.

Two separate life insurance policies

In this case, each spouse owns an individual policy with their own coverage amount, beneficiaries, and policy features. Each policy pays its own death benefit when the insured passes away, offering beneficiaries two separate payouts over time.

This is the most flexible option, working well for couples with different incomes, debts, health conditions, or long-term financial goals. Additionally, separate policies are easier to maintain in the event of a divorce or separation. Since they are not under a joint policy, the individuals continue to be insured without any complications or reassessment. 

Combined or multi-life insurance policy

A combined or multi-life insurance policy allows two people to have two coverage within a single insurance contract. It combines features of joint policies while offering personalized and individual solutions under one policy. 

Each insured person has their own benefit, but the policy is offered under one application and one premium payment schedule. Beneficiaries receive two death benefits, one for each policyholder. Despite being combined, the death benefits are separate for each individual. Since everything is under one policy, couples can save on policy or administration fees, reducing the overall costs.

Types of whole life insurance in Canada

While whole life insurance provides permanent coverage to policyholders as long as premiums are paid, many insurers offer the policy in different structures to suit different financial goals. The most common options are participating whole life insurance, non-participating whole life insurance, and limited-pay whole life insurance.

Here’s a quick overview of the different types of whole life insurance in Canada:

Participating whole life insurance

Participating whole life insurance is one of the most popular permanent life insurance policies in Canada. Alongside guaranteed lifetime coverage and cash value growth, eligible policies may also receive annual dividends based on the insurer’s financial performance.

These dividends can be used to purchase additional paid-up insurance, increase the policy’s cash value, reduce future premiums, or even repay policy loans. While the dividends are not guaranteed, most major Canadian insurers have historically paid them. 

Non-participating whole life insurance

Non-participating whole life insurance provides guaranteed lifetime protection with fixed premiums and guaranteed cash value growth. However, unlike participating whole life policies, it does not pay dividends.

Since there is no dividend component, these policies are simpler and more predictable. The returns and death benefit are guaranteed when the policy is issued, providing greater certainty over the life of the policy.

Limited-pay whole life insurance 

Limited-pay whole life insurance policies allow you to complete all premium payments within a predetermined period while keeping coverage for life. Common payment schedules include:

• 10 Pay
• 20 Pay
• Pay to Age 65

Although the premiums are higher since they are paid in a shorter period, policyholders no longer need to make payments once the policy becomes fully paid up. As the premiums are paid, the cash value increases on a tax-deferred basis if the policy is “exempt” under the Income Tax Act.

Once enough cash value has accumulated, you can borrow or withdraw from it (subject to policy rules) for retirement income, emergencies, or other financial needs. However, this may reduce the death benefit and cash value.

Pros and cons of whole life insurance

How does whole life insurance work in Canada?

Whole life insurance combines lifelong financial protection with a built-in savings component. As long as you continue paying your premiums, you remain covered for the entirety of your life. Additionally, a portion of your premiums contributes to your policy’s guaranteed cash value, which grows over time. 

Here’s how a whole life insurance policy usually works:

Step 1: Choosing the right coverage amount

Choose a coverage amount that would secure the financial future of your family and protect your loved ones from outstanding debts or other costs. Many applicants choose anywhere between 7 and 15 times their annual income.

Step 2: Choose your policy type

Next, you will select the type of whole life insurance that best aligns with your financial goals.

Your options may include:

Step 3: Complete your application and pay your premiums

Once you have chosen your coverage amount and payment period, you will need to complete your application and name the beneficiary. Most applicants choose their close relatives, such as their spouse, children, or parents, as the beneficiary. Additionally, they can choose one or more beneficiaries.

Step 4: Your policy builds cash value

One of the defining features of whole life insurance is the cash value. Each premium payment contributes toward a guaranteed cash value that grows over time on a tax-advantaged basis. Additionally, if you choose a participating whole life policy, you may earn dividends based on how the insurer performs financially.

Step 5: Your beneficiaries receive the death benefit

If you pass away while your policy is active, your beneficiaries submit a claim to the insurance company. Once the claim is approved, the insurer pays the death benefit as a tax-free lump sum.

How much whole life insurance coverage do you need?

Choosing how much life insurance your family would need to protect their financial future if you were to pass away unexpectedly is an important aspect of purchasing a whole life policy. The coverage amount should be sufficient to help your loved ones maintain stability while replacing the lost income and support you currently provide.

For many families, a common rule of thumb is to choose coverage between 7 and 15 times their annual income. This offers a sizable amount that can cover most future expenses with ease.

Using the DIME method to estimate whole life insurance

Another 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 term life insurance you may need by considering four key financial obligations your family could face.

Let’s assume Michael, a 45-year-old business owner, wants to ensure his family is financially secure while also leaving an inheritance.

Here’s a projection of whole life insurance coverage using the DIME method:

Based on the DIME method, Michael may consider approximately $2.6 million in life insurance coverage. However, because he also wants to leave an inheritance and reduce the tax burden on his estate, he may choose a higher coverage amount through a whole life insurance policy. 

While it is a handy index, your ideal coverage amount may differ based on factors such as savings, investments, and long-term financial goals.

Do you need a medical exam for whole life insurance?

In many cases, yes. Most traditional whole life insurance policies in Canada require medical underwriting, particularly if you are applying for a higher coverage amount. Depending on your age, health, and smoking status, insurers may require you to take tests to assess your health conditions.

However, many insurers also offer simplified issue and guaranteed issue whole life insurance with little or no medical underwriting. It is worth noting that simplified issue and guaranteed issue whole life insurance policies will typically have lower coverage limits and higher premiums, compared to traditional policies with medical underwriting.

How much does whole life insurance cost?

The cost of a whole life insurance policy ranges between $264.15 and $1952.10. The premium depends on the policy type, coverage amount, and personal factors, such as gender, age, smoking status, and health. 

Here is a sample whole life insurance rate for $500,000 in coverage for a male non-smoker:

* Illustrative monthly premiums for a 20-year life insurance policy with a death benefit of $500,000

How are whole life insurance premiums calculated?

Life insurance companies calculate your premium by assessing how likely you are to make a claim over the life of the policy. It is primarily based on your age, smoking status, health conditions, coverage amount, and other related factors.

Here’s a brief overview of the factors that may affect whole life insurance premiums in Canada:

When should you purchase whole life insurance?

The best time to purchase whole life insurance is before you have significant financial responsibilities or while you are still young and healthy. Purchasing a policy earlier gives you access to lower premiums, which scale accordingly based on your age and other factors.

You can also consider purchasing whole life insurance before major milestones like starting a family or buying a house. The death benefit and cash value can protect your beneficiaries from financial hardships should you pass away unexpectedly.

Learn the best time to buy life insurance in Canada

Should you buy whole life insurance for your child?

Many Canadian parents and grandparents purchase whole life insurance for children to give them lifelong coverage at a young age. Buying coverage while a child is young can lock in lower premiums for life, guarantee their future insurability regardless of changes in health, and begin building cash value that they can access later in life, subject to the policy terms.

One of the most popular options is a 20-pay whole life policy. With this payment option, premiums are paid for only 20 years, but the child keeps lifelong coverage without making any further premium payments once the policy is fully paid up.

What is the cash value of whole life insurance? 

One of the biggest advantages of whole life insurance is that it builds cash value in addition to providing a guaranteed death benefit. Cash value in life insurance is essentially an accumulated savings component funded by a portion of the premiums you pay. 

This cash value amount grows over time at a guaranteed rate and can be accessed tax-deferred during your lifetime through policy loans, withdrawals, or even to cover premium payments. It is also worth noting that this amount is separate from the death benefit. At death, beneficiaries receive the policy’s death benefit (base amount plus any paid‑up additions and dividends on deposit, minus loans/interest). The accumulated cash value generally remains with the insurer and is not paid out in addition to the death benefit.

How does cash value grow?

During the early years of the policy, a larger portion of your premium goes toward insurance costs and administrative expenses. As a result, the cash value grows gradually. However, as the policy matures, the cash value typically increases at a faster pace. 

Additionally, if you own a participating whole life policy, annual dividends may further increase your cash value and death benefit. Unlike market-based investments, guaranteed cash value is not affected by volatility. This makes it a relatively stable long-term commitment.

How to use cash value in whole life insurance?

You can access the cash value of a whole life insurance policy by taking out a policy loan, making a partial withdrawal, using the cash to pay premiums, or fully surrendering the policy.

Each option has different tax implications and may affect your policy’s cash value or death benefit, so it’s important to understand how they work before accessing your policy.

Here’s an overview of how you can use the cash value of your whole life insurance policy:

What are whole life insurance dividends?

If you purchase a participating whole life insurance policy, you may receive annual dividends from your insurer. These dividends are based on the performance of the insurer’s participating account and may be paid to eligible policyholders

The dividends are issued when the participating account performs better than expected in terms of investment returns, claims experience, and operating expenses. Additionally, dividend scale interest rates and payouts vary by insurer and can change over time. While these amounts are not guaranteed, they add flexibility and long-term value to your policy

How to use your whole life insurance dividends?

Similar to the cash value component, you can use your dividends to purchase additional paid-up life insurance, receive cash payments, or even repay your outstanding policy loans.

Here’s an overview of how you can use your whole life insurance dividends:

Can you cancel your whole life insurance policy? 

Yes, most whole life insurance policies can be cancelled at any time. However, since these policies build cash value, cancelling them differs from cancelling a term life policy. If you surrender your whole life insurance policy, the insurer generally pays you the available cash surrender value after deducting any applicable surrender charges, outstanding policy loans, or unpaid interest. Once cancelled, your coverage ends, and your beneficiaries will no longer receive a death benefit. 

Like most life insurance policies in Canada, whole life insurance also includes a free-look (cooling-off) period, typically lasting 10 to 30 days after you receive your policy. During this period, policyholders can review and cancel the policy, receiving a full refund of any premium paid.

Are there any exclusions to whole life insurance?

While whole life insurance covers natural and accidental death, there are certain exclusions and situations where a claim may be denied, or the policy may become void.

Here’s an overview of common exclusions to whole life insurance:

Exclusions vary by insurer and policy. Review policy wordings for specific limitations and definitions that apply to your coverage.

How does whole life compare to other life insurance policies available?

Whole life insurance is one of the many types of life insurance available in Canada. Depending on your financial goals, you may also consider term life insurance, universal life insurance, Term-to-100 insurance, or no-medical life insurance.

Here’s a quick overview of how whole life insurance compares to other popular options:

For a detailed comparison of the plans, check out the different types of life insurance in Canada.

Is whole life insurance worth it in Canada?

Yes, whole life insurance can be worth it if you are seeking lifelong financial protection, guaranteed cash value growth, and estate planning benefits. Unlike term life insurance, whole life insurance is not designed solely to replace your income for a limited period. It provides permanent financial protection while building cash value, in exchange for comparatively higher premiums.

Whole life insurance may be worth considering if you:

• Want guaranteed lifetime coverage
• Want to leave a tax-free inheritance for your family
• Need funds to cover estate taxes or final expenses
• Have dependents who will rely on your financial support
• Want to build guaranteed cash value over time

However, if your priority is affordable coverage at lower premiums, you may consider a term life policy. While it does not build cash value or pay dividends, it offers high coverage at relatively low premiums, making it a good choice for individuals with debts, mortgages, and other temporary financial obligations.

Additionally, some Canadians combine term life and whole life policies. They purchase term policies for large and temporary financial obligations, while relying on a smaller whole life insurance policy for lifelong protection and estate planning.

Our advisor’s take on whole life insurance

At PolicyAdvisor, we recently helped a 42-year-old parent who had already secured term life insurance to protect their family’s income and was seeking coverage that would last beyond retirement. Their goal was to leave a financial legacy for their children while building an asset they could access later in life if needed.

Client profile

• Age: 42
• Family: Married with two children
• Primary concern: Lifelong financial protection and leaving an inheritance
• Coverage goal: $1,000,000 in permanent life insurance

Why we recommended whole life insurance

• Guaranteed lifetime coverage that will not expire after retirement
• Fixed premiums that remain predictable over the life of the policy
• Guaranteed cash value that grows over time and can be accessed if needed
• Opportunity to earn dividends through a participating policy, which helps increase long-term policy value

How to purchase whole life insurance in Canada?

PolicyAdvisor’s licensed life insurance advisors can help you compare whole life insurance quotes from Canada’s leading insurers based on your age, budget, health, coverage needs, and financial goals.

Whether you are looking to build wealth, protect your family, or leave a lasting financial legacy, our advisors at PolicyAdvisor can help you choose the whole life insurance policy that best aligns with your long-term objectives.

Frequently asked questions

Is the whole life insurance death benefit taxable in Canada?

No. In most cases, life insurance death benefits are paid tax-free to your named beneficiaries.

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

Term life insurance provides coverage for a fixed period and does not build cash value. Whole life insurance provides lifelong coverage, builds guaranteed cash value, and may pay dividends if it is a participating policy.

How long does it take to build cash value?

Cash value begins accumulating once your policy is in force, although growth is generally slower during the first few policy years. It typically accelerates over the long term.

Can I borrow money from my whole life insurance policy?

Yes, most whole life policies allow you to borrow against your accumulated cash value. Any outstanding loan and interest will generally reduce the death benefit if not repaid.

Are whole life insurance dividends guaranteed?

No, dividends are only available on participating whole life policies and are not guaranteed. They depend on the insurer’s financial performance.

Can whole life insurance expire?

No, whole life insurance provides lifetime coverage as long as the policy requirements are met.

Can I have more than one life insurance policy?

Yes, many Canadians own multiple life insurance policies to meet different financial needs. For example, you may combine whole life insurance with a term life policy for additional temporary coverage.

What is term life insurance in Canada?

Term life insurance is a type of life insurance that provides financial protection for a set number of years. If the insured dies during that coverage period, the insurer pays a tax-free lump sum to their chosen beneficiaries. Since term life insurance does not have a savings or investment component, it typically costs much less than permanent life insurance. This is great for applicants seeking higher coverage amounts for lower premiums. 

For example, a healthy 35-year-old parent may be able to purchase $500,000 in coverage for somewhere between $25 and $40 per month. The same amount of coverage for whole life insurance could cost around $250 to $400 per month. This makes whole life roughly ten times more expensive than a term life policy.

Term life insurance in Canada: At a glance

Types of term life insurance in Canada

Although term life insurance provides temporary coverage, insurers offer it in several structures to suit different needs. The most common options are Term 10, Term 20, and Term 30 policies, while some insurers also provide level term, annual renewable term (ART), and return of premium (ROP) term policies.

Here’s a quick overview of the different types of term life insurance in Canada:

Pros and cons of term life insurance

How does term life insurance work in Canada? 

Term life insurance has one of the most straightforward processes among insurance policies. You choose how much coverage you need and how long you want it to last. In exchange for regular premium payments, your insurer agrees to pay your beneficiaries a tax-free death benefit if you pass away during the policy term.

Here’s how a term life insurance policy usually works:

Step 1: Choosing the right coverage amount

Choose a coverage amount that would secure the financial future of your family and protect your loved ones from outstanding debts or other costs. As a general rule of thumb, many applicants choose coverage anywhere between 7 and 15 times their annual income.

Step 2: Choose your policy term

Once you have selected the coverage amount, you need to choose how long your coverage should remain in place. Most Canadian insurers offer the following periods:

Step 3: Complete your application and pay your premiums

Once you have chosen your coverage amount and period, you will need to complete your application and name the beneficiary. Most applicants choose their close relatives, such as their spouse, children, or parents, as the beneficiary.

Once the application is completed, you will need to pay your premiums. You can make premium payments monthly or annually. Some insurers offer lower overall costs if you choose to pay annually instead of monthly.

Step 4: Your beneficiaries receive the death benefit

If you pass away while your policy is active, your beneficiaries submit a claim to the insurance company. Once the claim is approved, the insurer pays the death benefit as a tax-free lump sum. 

Unlike investment or estate assets, term life insurance proceeds are typically paid directly to named beneficiaries, helping them access funds more quickly during a difficult time. 

How to choose the right term life insurance coverage amount?

Choosing the right amount of term life insurance is one of the most important decisions you will make when buying a policy. The coverage amount should be enough to help your loved ones maintain financial stability by replacing the lost income and support you provide if you were to pass away unexpectedly.

When deciding the coverage amount, you should keep in mind factors such as:

• Outstanding mortgage balance
• Personal loans or other debts
• Daily living expenses
• Future childcare costs and education expenses
• Funeral and final expenses
• Income replacement for several years

For many families, a common rule of thumb suggests choosing coverage between 7 and 15 times their annual income. This offers a sizable amount that can cover most future expenses with ease. 

Using the DIME method to calculate term life insurance

Another 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 term life insurance you may need by considering four major financial obligations your family may need to cover if you pass away.

Let’s assume Sarah is 35 years old, married, has one young child, and is the primary income earner for her family.

Here’s an estimate of her term life insurance needs using the DIME method:

Based on the DIME method, Sarah may consider approximately $1.7 million to 2 million in term life insurance coverage. This amount could help her family pay off outstanding debts and offer financial security for the foreseeable future. While it is a handy index, your ideal coverage amount may differ based on factors such as savings, investments, and long-term financial goals.

Do you need a medical exam for term life insurance?

Not always. Many Canadians can qualify for term life insurance without a medical exam. However, this depends on your age, health, lifestyle, and the amount of coverage you apply for. Many insurers now offer accelerated underwriting and simplified issue options, which allow eligible applicants to qualify without a medical exam. Some insurers also offer no-medical life insurance, although these policies may have lower coverage limits and higher premiums.

However, you may still need a medical exam if:

• You are applying for a high coverage amount
• You are older or have certain pre-existing medical conditions
• The insurer requires additional health information based on your application

Most term life insurance policies in Canada may require you to submit a health questionnaire and furnish information about your height, weight, blood pressure, and medical history. If you are a smoker, you may be subject to additional blood, urine, or cotinine tests. Some applicants may also be required to undergo an electrocardiogram (ECG).

How much does term life insurance cost in Canada?

The cost of a term life insurance policy ranges between $21.60 and $741.60 per month. Your premiums depend on the coverage amount and personal factors, such as gender, age, smoking status, and health. 

Here is a sample term life insurance rate for $500,000 coverage:

*Monthly premiums for non-smoking male

Some insurers also offer lower overall premiums if you choose to pay annually instead of monthly. Speak with your advisor to compare the payment options and determine which offers the best value for your policy.

How are term life insurance premiums calculated?

Life insurance companies calculate your premium by assessing the likelihood of paying a claim during the policy term. This is primarily based on your age, health status, smoking status, coverage amount, and other related features.

Here’s a brief overview of the factors that may affect term life insurance premiums in Canada:

When should you purchase term life insurance?

The best time to purchase term life insurance is while you are still young and healthy, before taking on major financial responsibilities. Buying a policy earlier can help you lock in lower premiums, as life insurance generally becomes more expensive with age and as health changes.

In terms of financial responsibilities, you can consider purchasing term life insurance before major milestones such as starting a family, buying a house, or taking on significant debts or loans. The death benefit can help protect your beneficiaries from financial hardships should you pass away unexpectedly.

Learn which is the best time to buy life insurance in Canada

What happens when your term life insurance expires?

Once your policy expires, it does not pay out automatically. Instead, you have several options, depending on your insurer and personal circumstances.

Here is an overview of the choices you can make once your term life insurance policy expires:

If you renew your policy, you will have to pay an increased premium based on your age and other factors at the time of renewal. Renewing can be a good option if you still have financial responsibilities and wish to remain covered for an extended period.

On the other hand, many applicants also convert their term life insurance into a permanent life insurance policy before a specified age or deadline. It is great for those who want lifelong coverage or are interested in estate planning.

However, you can choose to purchase a new policy with different coverage amounts or policy terms to align with your changing needs or financial planning. Alternatively, you can also choose to let the policy expire if your financial needs are met or you have enough savings to offset future costs.

Can you cancel your term life insurance policy?

Yes, most term life policies can be cancelled at any time. If you no longer need coverage, you can cancel your policy by notifying your insurer or advisor. Once cancelled, your coverage ends, and your beneficiaries will no longer be eligible to receive a death benefit. In most cases, you will not receive a refund on the premiums you have already paid. 

Additionally, most Canadian insurers are required to provide a free look or cooling-off period after you receive your policy contract. During this time, you can review the policy terms and cancel the policy for a full refund of any premiums you have paid (provided you have not raised any claims during this time). While the industry standard is ten days, some insurers may offer up to 30 days.

Are there any exclusions to term life insurance?

While term life insurance generally covers natural and accidental death, there are certain exclusions where a claim may be reduced or denied. These exclusions vary by insurer and policy, so it’s important to review your policy contract carefully.

Here’s an overview of common exclusions to term life insurance:

How does term life compare to other life insurance policies available in Canada?

Aside from term, you can get permanent life insurance. Unlike a fixed term for 10 or 20 years, these policies cover you for the rest of your life and may have an investment component.

Some of the most common types of permanent life insurance are:

• Whole
• Universal
• Term-to-100

Here’s a quick overview of how term life insurance compares to other popular options:

For a detailed comparison of the plans, check out the different types of life insurance in Canada

Is term life insurance worth it in Canada?

Yes, term life insurance is worth it for most Canadians who are seeking affordable financial protection for a specific period. The policy offers high coverage at relatively low premiums, making it a good choice for individuals with debts, mortgages, and high financial liabilities.

A term life insurance policy helps your loved ones replace lost income and pay off major outstanding debt, ensuring the burden does not rest upon them. It is one of the most cost-effective options for safeguarding your family from financial responsibilities should you pass away.

However, if you need lifelong coverage or are seeking to build cash value and estate planning, a permanent life insurance policy may be more suitable. While the premiums are significantly higher than term life, it provides more financial protection and rewards you with cash value and lifelong protection.

If your goal is to protect your family’s finances and cover immediate debts without paying the higher cost of permanent life insurance, term life insurance offers excellent value and coverage.

Our advisor’s take on term life insurance

At PolicyAdvisor, we recently helped a 35-year-old parent secure affordable term life insurance to protect their family’s financial future. They were seeking enough coverage to replace their income, pay off their newly acquired mortgage, and support their children’s future while keeping monthly premiums affordable.

Client profile

• Age: 35
• Family: Married with two young children
• Primary concern: Income replacement and mortgage protection
• Coverage goal: $1 million in affordable life insurance

Why we recommended term life insurance

• Affordable premiums for a high coverage amount during their peak earning years
• Coverage aligned with their mortgage term to help pay off outstanding debt
• Flexibility to extend the term if financial protection is still required
• The option to convert to permanent life insurance when financial needs change

How to purchase term life insurance in Canada?

PolicyAdvisor’s licensed life insurance advisors can help you compare term life insurance quotes from Canada’s leading insurers based on your age, budget, health, coverage needs, and financial goals.

Whether you are looking to protect your family, cover your mortgage, or secure affordable coverage for a specific period, our advisors at PolicyAdvisor can help you choose the right term length, coverage amount, and optional riders to fit your needs.

Connect with an advisor

Looking for the best term life insurance quotes in Canada? PolicyAdvisor makes it easy to compare quotes from Canada’s leading life insurance companies.

Our advice is 100% free, with no obligation to buy. Whether you are comparing insurers, choosing a policy term, or deciding how much coverage you need, we are here to guide you every step of the way.

Frequently asked questions

Is the term life insurance death benefit taxable in Canada?

No. Life insurance death benefit is generally tax-free in Canada. The amount is paid tax-free to the named beneficiaries if the policyholder passes away during the term.

Can I have more than one term life insurance policy?

Yes, many Canadians own multiple life insurance policies to cover different financial needs or life stages. Additionally, you can combine term and permanent policies to satisfy different financial goals.

Can I convert my term life insurance into permanent life insurance?

Yes, many Canadian insurers allow you to convert your policy before a specified age or conversion deadline without additional medical underwriting. Check your policy or consult with your advisor for eligibility requirements.

What happens if I miss a premium payment?

Most insurers provide a grace period (usually 30 or 31 days) during which you can make the missed payment and keep your coverage active. If the premium remains unpaid beyond this grace period, your policy may lapse.

Can I renew my term life insurance policy after it expires?

Yes, in many cases. Many term life insurance policies in Canada are renewable within a specified period or until a specified age. If you choose to renew, your premiums will typically increase based on your age at the time of renewal.

Does term life insurance cover accidental death?

Yes, most term life insurance policies cover accidental death, alongside death due to illness or natural causes, provided the policy is in force and no exclusions apply.

Why is whole life insurance more expensive than term life insurance?

Whole life insurance costs more because it provides lifelong coverage, guaranteed cash value accumulation, and a guaranteed death benefit. Participating policies may also be eligible to earn annual dividends, adding further long-term value. Term life insurance only covers you for a fixed period and does not build cash value, making it a more affordable option.

How does adding riders affect whole life insurance premiums?

Adding optional riders, such as critical illness coverage, accidental death benefits, or disability waiver of premium, increases whole life insurance premiums. Riders provide additional benefits tailored to individual needs but come at an added cost. For example, a critical illness rider might add 10-20% to the base premium.

Can I lower my whole life insurance premiums after buying a policy?

In most cases, your premiums are fixed when you purchase the policy and cannot be reduced later. However, you may be able to lower your overall costs by choosing a different payment option, reducing your coverage amount, or selecting a non-participating policy.

Can I switch from term life insurance to whole life insurance?

Yes, many term life insurance policies include a conversion option that allows you to convert some or all of your coverage to whole life insurance without completing a new medical exam. The conversion must usually be completed before a specified age or policy anniversary, depending on your insurer.

How much does a $250,000 whole life insurance policy cost?

The cost of a $250,000 whole life insurance policy ranges from $132-$914. The actual costs may vary based on your age, gender, health, smoking status, policy type, and insurer. In general, premiums are higher for $250,000 than for $100,000 in coverage.

Which premium payment option has the lowest monthly cost?

Life Pay typically offers the lowest monthly premiums because the cost of the policy is spread over the longest payment period. In contrast, 20 Pay policies have higher monthly premiums but are fully paid up sooner.

How can I reduce the cost of whole life insurance?

You can lower your whole life insurance premiums by purchasing coverage at a younger age, choosing an appropriate coverage amount, maintaining good health, selecting a non-participating policy, opting for a longer premium payment period, and comparing quotes from multiple insurers.

The average cost of life insurance in Canada starts at around $7 per month for a healthy young adult purchasing a basic term life insurance policy. Depending on the type of policy, coverage amount, age, health, and insurer, premiums can range from $7 to over $3,276 per month. Individuals who smoke, have pre-existing medical conditions, work in high-risk occupations, or require larger coverage amounts generally pay higher premiums. On the other hand, young and healthy applicants typically qualify for lower premiums.

Quick summary: Average life insurance costs in Canada

Disclaimer: The premiums shown above are illustrative estimates based on specific applicant profiles and policy assumptions, and your actual life insurance cost may vary depending on several factors such as your age, gender, health, smoking status, medical history, coverage amount, policy type, term length, and the insurer’s underwriting guidelines.

Factors affecting life insurance cost in Canada

The cost of life insurance in Canada is mainly driven by factors like age, gender, health, coverage amount, and more. Some of these factors include: 

• Age: The age of the individual directly affects the life insurance cost. The older the individual, the higher the premium
• Gender: Life insurance premiums may vary by gender, with women generally paying lower premiums than men due to their longer average life expectancy
• Coverage amount: The higher the coverage amount you choose, the higher the life insurance premium will be
• Health: An individual’s health also affects premium rates. A healthy individual, compared to someone with a history of medical conditions, qualifies for lower rates
• Smoking status: Any insurance company in Canada will charge a higher premium if you are a smoker. This is because the health risks associated with smoking are higher than those for a non-smoker
• Lifestyle: If you are involved in high-risk activities as a result of your hobby or occupation, then the insurer views you as higher risk. This increased liability will also result in you paying higher premiums

Life insurance costs by policy type

The type of life insurance policy you choose is one of the biggest factors affecting your premium. In general, term life insurance is the most affordable option, while permanent policies, such as whole life insurance, cost more because they provide lifelong coverage and can build cash value. No-medical life insurance also tends to have higher premiums since insurers assume more risk by offering coverage without requiring a medical exam.

What is the cost of term life insurance in Canada?

The cost of term life insurance in Canada with $500,000 in coverage can range from $14 to $200 per month, depending on the applicant’s age, gender, and health. Because term life insurance provides coverage for a fixed period and does not build cash value, it is the most affordable type of life insurance. It is well-suited for individuals and families looking to protect their income, cover a mortgage, or provide financial security during their highest-earning years.

Term life insurance cost in Canada

*Illustrative monthly cost of term life insurance for a 10-year period for individuals of various ages with $500,000 in coverage

What is the cost of whole life insurance in Canada?

In Canada, participating whole life insurance with $100,000 in coverage costs between $139 and $382 per month, whereas a non-participating policy may cost between $71 and $320 per month, depending on the applicant’s age and insurer. The cost of whole life insurance is generally several times more expensive than an equivalent term life policy because it provides lifelong coverage and builds cash value. 

Participating whole life insurance may also pay policy dividends, depending on the insurer’s dividend performance. It is commonly chosen for estate planning, wealth transfer, tax-advantaged savings, and leaving a guaranteed financial legacy.

Cost of whole life insurance in Canada

*Illustrative monthly costs for a male individual of various age ranges seeking a whole life insurance policy with $100,000 in coverage for a 20-pay premium option

What is the cost of a no-medical life insurance policy in Canada?

The cost of a 20-year no-medical life insurance policy with $500,000 in coverage ranges from $39 to $380 per month. While no-medical policies offer faster approval and do not require a medical exam, they generally cost more than fully underwritten life insurance because insurers take on greater underwriting risk. These policies are often suitable for individuals with pre-existing health conditions, those who may not qualify for traditional life insurance, or applicants who need coverage quickly.

Cost of a no-medical life insurance policy

*Illustrative monthly cost of a 20-year no-medical plan with $500,000 in coverage

Life insurance costs by coverage amount

The amount of term life insurance coverage you choose has a direct impact on your monthly premium. Higher coverage amounts generally cost more, although the premium increase is not always proportional. The cost of a $100,000 term life insurance policy will be much lower than that of a $250,000 term life policy. The coverage amount in the section below details the cost of different coverage amounts in Canada.

How much does a $100,000 life insurance policy cost?

A $100,000 term life insurance policy in Canada costs approximately $7 to $44 per month. While premiums remain relatively affordable for younger applicants, they increase significantly with age due to the higher insurance risk. A $100,000 may be suitable for people looking to cover final expenses, smaller debts, or supplement existing life insurance. However, it may not provide enough coverage for someone with a mortgage, dependents, or significant income replacement needs.

Cost of a $100,000 life insurance policy

*Illustrative monthly cost of term life insurance for a 10-year plan with $100,000 in coverage for a male/female non-smoker

How much does a $250,000 life insurance policy cost?

The cost of a $250,000 term life insurance policy ranges from approximately $10 to $98 per month. A $250,000 coverage is a popular choice for individuals and families looking to cover obligations such as a portion of their mortgage, income replacement, children’s education costs, outstanding debts, or other long-term expenses.

Cost of a $250,000 life insurance policy

*Illustrative monthly cost of term life insurance for a 10-year plan with $250,000 in coverage for male/female non-smoker

How much does a $500,000 life insurance policy cost?

A $500,000 term life insurance policy costs between $13 and $177 per month for healthy non-smokers. The exact premium will vary, with younger applicants typically qualifying for significantly lower rates. A $500,000 coverage can help replace income, pay off a mortgage, cover childcare, education costs, and other major financial obligations.

Cost of a $500,000 life insurance policy

*Illustrative monthly cost of term life insurance for a 10-year plan with $500,000 in coverage for male/female non-smoker

How much does a $1,000,000 life insurance policy cost?

The cost of a life insurance policy with $1,000,000 in coverage is between $21 and $330 per month. This coverage amount is commonly chosen by high-income earners, homeowners, parents with young children, business owners who need substantial coverage to replace income, pay off significant debts, fund future education costs, or leave a substantial financial legacy.

Cost of a $1,000,000 life insurance policy

*Illustrative monthly cost of term life insurance for a 10-year plan with $1,000,000 in coverage for male/female non-smoker

How much does a $10,000,000 life insurance policy cost?

The cost of a $10,000,000 term life insurance policy ranges from $166 to $3,276 per month. Premiums are substantially higher than those for lower-value policies because the insurer assumes a much larger financial risk. A $10,000,000 life insurance policy is suitable for high-net-worth families, business owners, executives, and professionals with significant financial obligations, business succession needs, or those with complex estate planning goals.

Cost of a $10,000,000 life insurance policy

*Illustrative monthly cost of term life insurance for a 10-year plan with $10,000,000 in coverage for male/female non-smoker

Life insurance costs by applicant category

Life insurance premiums can vary significantly depending on your personal circumstances and risk profile. In general, smokers, seniors, and individuals with health conditions tend to pay higher premiums because they present a greater insurance risk. Couples may have the option to reduce costs through certain joint life insurance policies, although individual policies may be more cost-effective in some cases.

How much is life insurance per month for smokers and non-smokers?

The cost of $500,000 in term life insurance for smokers ranges from $42 to $504 per month, while comparable coverage for non-smokers ranges from $21 to $177 per month. Smokers pay premiums that are often 2 to 4 times higher than non-smokers because tobacco and nicotine use are associated with a higher risk of serious health conditions, including heart disease, stroke, and cancer. 

The difference in premiums becomes more noticeable with age, as the combined impact of smoking and age increases an insurer’s expected risk. Quitting smoking can significantly reduce your premiums, but most insurers require you to remain tobacco-free for at least 12 months before you may qualify for non-smoker rates. The required tobacco-free period may vary by insurer. 

Cost of life insurance for smokers and non-smokers (male) for varying age groups

*Illustrative monthly costs for a male individual seeking $500,000 in life insurance coverage for a 10-year policy

How much is life insurance per month for seniors?

The cost of $100,000 in term life insurance for male seniors ranges between $18 and $267 per month, while comparable coverage for female seniors is between $15 and $179 per month. Female applicants generally pay lower premiums than male applicants because they tend to have a longer life expectancy. As you get older, the premiums for life insurance for seniors increase due to the higher likelihood of health issues and claims during the policy term.

Cost of life insurance for seniors

*Illustrative monthly costs for non-smoker seniors in various age ranges seeking a term life insurance policy with $100,000 in coverage

How much is life insurance per month for children?

Children’s whole life insurance typically starts at around $100 per month. Whole life insurance policies for children provide lifelong coverage and can build cash value over time, making them a long-term financial planning tool as well as a source of insurance protection.

Cost of whole life insurance for a female child

*Illustrative accumulated cash value and death benefit for a $100/month, 20-pay participating whole life insurance policy issued to a healthy 5-year-old girl. Projected cash values and death benefits assume current dividend scales and are not guaranteed; the actual policy values may vary

Cost of whole life insurance for a male child

*Illustrative accumulated cash value and death benefit for a $100/month, 20-pay participating whole life insurance policy issued to a healthy 5-year-old boy. Projected cash values and death benefits assume current dividend scales and are not guaranteed; the actual policy values may vary

How much is life insurance per month for couples?

The cost of $500,000 in term life insurance for couples typically ranges from $33 to $550 per month for non-smoking couples and from $76 to $1,283 per month for smoking couples. Couples can choose between two individual life insurance policies or a joint life insurance policy, with the latter potentially offering lower premiums in certain situations. Joint policies also simplify policy management by covering both partners under a single contract. However, individual policies may provide greater flexibility and, in some cases, better value depending on the couple’s coverage needs.

Cost of life insurance in Canada for smoking and non-smoking couples

*Quotes based on a $500,000 joint term policy in coverage for smoker and non-smoker couples in regular health seeking coverage for a 10-year term

Life insurance costs by insurance company

The cost of term life insurance from Canada’s leading insurers typically charges between $14 to over $230 per month for the sample policy shown below. Premium differences occur because each insurer uses its own underwriting guidelines, pricing models, and risk assessment criteria. As a result, two insurers may offer different premiums for the same applicant and coverage amount.

The table below compares illustrative monthly premiums from some of Canada’s leading insurance companies for the same applicant profile.

Life insurance monthly costs by insurer

*Illustrative monthly cost of a 10-year term with $500,000 in coverage for a male/female non-smoker

How does term length affect life insurance premiums?

The cost of term life insurance ranges from about $22 to $144 per month in the example below, depending on your age and the length of the policy. For the same applicant and coverage amount, 10-year term policies are the most affordable, while 20-year and 30-year terms cost more because they provide coverage for a longer period and increase the likelihood of a claim during the term.

Cost of life insurance as per term length

*Illustrative monthly cost of a 10-year, 20-year, and 30-year term life insurance with $500,000 in coverage for a male non-smoker

Do individuals with pre-existing health issues pay higher life insurance premiums?

Yes, individuals with pre-existing health conditions generally pay higher life insurance premiums because they pose a greater risk to insurers. The exact increase depends on the type and severity of the condition, how well it is managed, your age, and the insurer’s underwriting guidelines. In some cases, applicants may still qualify for standard premium rates if their condition is stable and well-managed.

Depending on your medical history, insurers typically make one of the following underwriting decisions:

• Standard premiums: If your condition is minor, stable, and well-managed, you may qualify for standard rates
• Higher (rated) premiums: If your condition increases the insurer’s risk, you may be approved with a higher premium or an additional rating applied to your policy
• Guaranteed issue or no-medical life insurance: If you are declined for traditional life insurance due to a serious medical condition, you may still qualify for guaranteed issue or no-medical life insurance. These policies don’t require a medical exam but generally come with higher premiums and lower coverage limits

How to lower your life insurance premiums?

There are several ways to reduce the cost of your life insurance premiums, such as maintaining a healthy lifestyle, choosing the right policy, comparing quotes from multiple insurers, and more. Listed below are the factors that will help you lower life insurance premiums:

• Buy life insurance early: Purchasing a policy when you are younger and in good health can help you lock in lower premiums for the duration of your coverage.
• Quit smoking: Most insurers offer significantly lower premiums to applicants who have remained tobacco-free for at least 12 months
• Maintain good health: Managing your weight, blood pressure, and other health conditions can improve your eligibility for preferred rates
• Choose the right coverage amount: Buy enough coverage to meet your financial needs without paying for more insurance than necessary
• Opt for term life insurance: If you only need coverage for a specific period, term life insurance is generally much more affordable than permanent life insurance
• Consider laddering life insurance policies: Instead of purchasing one large policy, you can combine multiple term life policies with different coverage amounts and durations. This allows your coverage to decrease as your financial obligations reduce, helping lower overall premium costs.
• Choose riders carefully: Only add optional riders, such as critical illness, child, or disability riders, if they meet a specific need. Unnecessary riders can increase your premium
• Select a shorter policy term: Shorter term lengths usually cost less than longer-term policies with the same coverage amount
• Pay your premiums annually: You may reduce your overall cost when you pay annually instead of making monthly payments
• Compare quotes from multiple insurers: Compare and find the best life insurance policy for your needs

To get the most affordable life insurance quotes, reach out to our expert advisors at PolicyAdvisor. Our advisors will help you get quotes from the top life insurance providers in Canada and choose the one that best fits your needs and budget.

What are life insurance premiums?

Life insurance premiums are the payments policyholders make to maintain their coverage. They can be paid monthly, quarterly, or annually, depending on the policy. The cost of your premium will be based on factors like age, health, smoking status, coverage amount, policy type, and the insurer.

What is the average cost of life insurance in Canada?

The cost of life insurance in Canada starts at around $7 per month for a healthy young adult purchasing a basic term insurance policy. The premiums can range from $7 to over $3,276 per month, depending on your age, health, coverage amount, policy type, and insurer.

What is the cheapest life insurance in Canada?

Term life insurance is generally the cheapest life insurance in Canada. Because it provides coverage for a fixed period and does not build cash value, premiums are significantly lower than those for whole life or universal life insurance.

Why are life insurance premiums different for men and women?

Life insurance premiums are generally higher for men because, on average, men have a shorter life expectancy than women. Insurers use actuarial data to estimate risk, which results in lower premiums for female applicants with similar health and lifestyle profiles.

Is it cheaper to buy life insurance when you are younger?

Yes, buying life insurance at a younger age usually results in lower premiums because younger applicants generally have fewer health risks and a longer life expectancy. Purchasing coverage early can help lock in lower rates for the duration of your policy.

Can I get life insurance without a medical exam?

Yes, many insurers offer no-medical or simplified issue life insurance that does not require a medical exam. These policies are easier and faster to obtain but usually have higher premiums and lower coverage limits than fully underwritten life insurance.

How much life insurance do I need?

The amount of life insurance you need depends on your income, financial obligations, and future goals. While it is recommended to get coverage equal to 10-15 times your annual income, the ideal amount varies based on factors such as your mortgage, outstanding debts, living expenses, your children’s future education costs, and any existing savings or life insurance coverage. The easiest way to determine the right amount is to use our life insurance calculator, which estimates your coverage needs based on your unique financial situation and helps you choose a policy that provides adequate protection for your loved ones.

Frequently asked questions

How can I use the cash value of my whole life insurance policy to fund my retirement?

The cash value of your whole life policy can supplement your retirement income and help meet immediate financial goals. It can be accessed through loans or withdrawals to maintain your lifestyle post retirement, travel, and more. 

What are the best strategies to create generational wealth with whole life insurance?

Whole life insurance can create generational wealth by providing a guaranteed, tax-free death benefit to your heirs. You can also use it to fund trusts or cover estate taxes, ensuring your assets are passed on intact. Additionally, reinvesting dividends and growing the cash value increases the policy’s long-term financial benefits, securing wealth for future generations.

How does whole life insurance compare to other investment options for wealth building?

Whole life insurance offers guaranteed returns, tax advantages, and lifelong coverage, making it a low-risk, stable component of a diversified financial plan. Unlike stocks or real estate, it is not subject to market volatility and provides a predictable way to build wealth.

Can I use whole life insurance to fund my children’s education expenses?

Yes, the cash value of a whole life insurance policy can be accessed to fund education expenses. You can withdraw or borrow against the cash value to pay for tuition, books, or other costs.

What are the tax implications of borrowing against the cash value of a whole life insurance policy?

Borrowing against the cash value is generally tax-free as long as the policy remains in force. However, if the policy lapses or is surrendered, the loan amount exceeding the adjusted cost basis may become taxable as income. 

Sun Life whole life insurance is one of Canada’s most trusted permanent coverage options. Founded in 1865, Sun Life has grown into a top-rated global insurer. With over 160 years of experience, Sun Life offers Canadians coverage that balances predictable growth, reliable cash value accumulation, and flexible options for long-term financial goals. It manages $1.62 trillion in assets and holds strong financial ratings, including A+ from A.M. Best and AA from S&P.

A key strength of Sun Life’s whole life insurance is its Participating Account, which holds approximately $21.2 billion in assets and supports over 400,000 active policies, one of the strongest par fund structures in Canada. In this review, we cover Sun Life’s key features, plan options, financial strength, and what makes it stand out among Canadian insurers.