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.