What does critical illness insurance cover in Canada?

Understanding what conditions are covered by critical illness insurance is crucial before purchasing a policy. While it provides a tax-free lump sum payment for serious health conditions like heart attack, cancer, and stroke, not all conditions qualify for a claim.

In this post, we’ll examine what critical illness insurance covers in Canada and what constitutes a valid claim.

But first, let’s take a closer look at how it works.

How does critical illness insurance work?

Critical illness insurance offers financial protection by paying out a tax-free lump sum if you are diagnosed with a covered condition. To activate the policy, you must:

  • Be diagnosed with a specific illness listed in your plan (e.g., cancer, heart attack)
  • Submit a claim with medical documentation
  • Meet the waiting period requirements (if applicable)

The payout can be used for any purpose, including medical expenses, income replacement, or lifestyle adjustments during recovery.

Commonly covered critical illnesses and conditions

In 2018, the Canadian Life and Health Insurance Association (CLHIA) updated its Critical Illness Benchmark Definitions in order to help standardize the language around common conditions and afflictions across the industry.

CLHIA listed and defined 26 common illnesses, conditions or health events in their publication, but that is not the maximum number of conditions that can or will be covered by an insurance provider. Some insurers may offer coverage for illnesses not defined by the CLHIA and some may even use their own qualifying language.

However, these definitions are commonly used and adhered to by many insurers, so you should familiarize yourself with them before choosing a provider. This is true whether you have a critical illness insurance policy or riders. There are some important distinctions in their descriptions. Whether it’s as broad as specifying coverage is only for bacterial meningitis and not viral, or as specific as the hourly length of time of a coma and its grade on the Glasgow coma scale, this language is ultimately used to determine the validity of your claim and therefore vital to understand.

The 26 conditions that most common carriers cover are:

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Please note that not all of these are included in every insurance policy, unless explicitly stated. If you have an existing policy or intend to buy one, please refer to the policy documents for full terms, conditions, and definitions.

What critical illness insurance is offered by Canada’s biggest insurers?

Critical illness insurance in its current form was introduced in Canada in the 1990s and is still a developing sector in the insurance industry today. Most of the major companies do offer some kind of policy though.

Some plans feature coverage for just one ailment, like cancer (and its many forms), whereas others cover the full 26 illnesses listed above, and sometimes even more. More commonly, carriers will cover the big three—cancer, heart attack, and stroke. The number of covered conditions varies somewhat from company to company. So if you’re looking to cover a specific illness, it’s worth exploring products from a variety of providers.

Putting cost aside, a quick glance at the offerings from most providers shows that critical illness products are often offered in a similar fashion no matter the company, with the biggest differentiator being the number of illnesses covered. However, there are some additional features and benefits you can look for when deciding which policy is best for you.

Partial payouts and non-life-threatening illnesses

An interesting feature included in some policies is the partial payout option or—as some companies may call it—“an early discovery benefit”. What this means is that you can receive a small amount of money if you contract a non-life threatening or less-critical illness/condition while insured.

An example of this would be if you develop treatable skin cancer. To the average person this definitely still means the big “C” cancer, however you will not qualify for full payment of the policy benefit amount as most policies do not consider it a “critical illness”. However, if you had a partial payout clause, you’d still receive some money as you did contract a form of cancer listed as eligible, and your policy would carry on through the length of your term.

These partial payout clauses typically payout between 10 to 25 percent of your policy’s value (though generally there is a maximum payout) and most importantly it doesn’t void your policy or reduce your final payout if you do end up subsequently contracting a defined life-threatening critical illness.

So, what illnesses qualify for partial payout?

These vary between provider and policy, but partial payouts often cover forms of non-life-threatening cancer and coronary angioplasty. The number of covered conditions will typically range between 4 and 16. Some companies will allow for one partial payout while others may allow for multiple partial payouts.

What are the most claims for critical illness?

In Canada, the majority of critical illness insurance claims are made for cancer, heart attack, and stroke. According to Health Risk Services Inc., approximately 67% of all critical illness claims are for cancer!
Cancer, followed by heart attack and strokes are conditions that dominate the landscape of critical illness insurance claims due to their high prevalence, severe impact on individuals’ health, and the significant financial burden they can cause.

Most claimed critical illnesses

How to claim critical illness insurance?

To claim your critical illness insurance, you need to submit a claim form to your provider within their specified timeframe. For instance, companies like Canada Life and RBC require you to submit your claim form along with satisfactory proof of diagnosis within 30 to 90 days of the diagnosis date or surgery.

How to get critical illness insurance?

There are several ways to obtain critical illness insurance, depending on your requirements. Here are the most common options:

  • Individual policy: Can be purchased through an agent or online, and usually requires medical underwriting to determine your eligibility and premium costs
  • Group plan: Available through your employer or association you’re enrolled with. These plans are either partially or fully paid for by the entity providing them (as they’re considered the policyholders). Coverage usually ends when you leave the employer or association
  • Special purpose plan: This type of critical illness insurance covers your loan payments for a specific period, if you’re diagnosed with a critical illness. You can apply for a special purpose policy by checking a box on your loan application or submitting an insurance application after your loan’s approval

Note that you can have multiple types of critical illness insurance simultaneously. To determine the right coverage for your needs, schedule a free consultation with our licensed advisors.

Insurance can be affordable

Find the lowest quotes from the best critical illness insurance providers in Canada 

Comparison with other health insurance products

While it provides coverage for specific medical conditions, critical illness insurance shouldn’t be confused with health insurance, which reimburses certain medical expenses, or disability insurance, which replaces your income if you become disabled. Each of these products serves a distinct purpose, as explained below:

Category Critical illness insurance Health insurance Disability insurance
Definition Provides a one-time lump-sum payment if you’re diagnosed with a covered condition Covers medical expenses not covered by provincial healthcare Replaces 60 to 85 percent of your income if you become disabled
Payout type One-time tax-free benefit Reimburses covered medical expenses (upon submission of required documents) Pays monthly or weekly benefit until you return to work
Coverage duration Limited period (10 or 20 years) or lifetime (up to age 100) As long as premiums are paid Until the age of 65
What is covered?
  • Cancer 
  • Heart attack,
  • Stroke
  • Major organ failure
  • Other critical health conditions
  • Prescription drugs
  • Dental and vision care
  • Paramedical expenses
  • Medical equipment
  • Emergency travel medical insurance
Illness or injury that leads

to a loss of income

Maximum coverage limit $2-$3 million No maximum coverage limit Depends on age, occupation, income, and other limitations
Triggered by Diagnosis of a covered condition Medical treatment or hospitalization Illness or injury that keeps you from working

Definitions of critical illnesses in Canada

In 2013, the Canadian Life and Health Insurance Association published standardized definitions of critical illnesses to help create consistency around common conditions and afflictions across the insurance industry. Let’s look at 26 critical illness definitions used widely by Canadian insurance companies:

Cancers and Tumours

Benign Brain Tumour

Benign Brain Tumor is a definite diagnosis of a non-malignant tumor located in the cranial vault and limited to the brain, meninges, cranial nerves, or pituitary gland. The tumor must require surgical or radiation treatment or cause Irreversible objective neurological deficit(s).

Exclusions: No benefit will be payable under this condition for:

  • Pituitary adenomas less than 10 mm;
  • Vascular malformations;
  • Cholesteatomas; or
  • Infectious or inflammatory tumors

Cancer (life-threatening)

Cancer (life-threatening) means the definite diagnosis of a malignant tumor. This tumor must be characterized by the uncontrolled growth and spread of malignant cells and the invasion of tissue. Types of cancer include carcinoma, melanoma, leukemia, lymphoma, and sarcoma.

Exclusions: No benefit will be payable under this Covered Condition for the following:

  • Lesions described as benign, non-invasive, pre-malignant, of low and/or uncertain malignant potential, borderline, carcinoma in situ, or tumors classified as Tis or Ta
  • Malignant melanoma of skin that is less than or equal to 1.0mm in thickness, unless it is ulcerated or is accompanied by lymph node or distant metastasis
  • Any non-melanoma skin cancer, without lymph node or distant metastasis. This includes but is not limited to, cutaneous T cell lymphoma, basal cell carcinoma, squamous cell carcinoma, or Merkel cell carcinoma
  • Prostate cancer classified as T1a or T1b, without lymph node or distant metastasis
  • Papillary thyroid cancer or follicular thyroid cancer, or both, that is less than or equal to 2.0cm in greatest dimension and classified as T1, without lymph node or distant metastasis
  • Chronic lymphocytic leukemia classified as Rai stage 0 without enlargement of lymph nodes, spleen, or liver and with normal red blood cell and platelet counts;
  • Gastro-intestinal stromal tumors classified as AJCC Stage 1
  • Grade 1 neuroendocrine tumors (carcinoid) confined to the affected organ, treated with surgery alone, and requiring no additional treatment, other than perioperative medication to oppose effects from hormonal oversecretion by the tumor 
  • Thymomas (stage 1) confined to the thymus, without evidence of invasion into the capsule or spread beyond the thymus

Cardiovascular

Aortic Surgery

Aortic Surgery means the undergoing of surgery for disease of the aorta requiring excision and surgical replacement of any part of the diseased aorta with a graft. Aorta means the thoracic and abdominal aorta but not its branches. 

Exclusions: No benefit will be payable under this condition for:

  • Angioplasty
  • intra-arterial procedures
  • percutaneous trans-catheter procedures
  • non-surgical procedures

Coronary Artery Bypass Surgery

Coronary Artery Bypass Surgery means the undergoing of heart surgery to correct narrowing or blockage of one or more coronary arteries with bypass graft(s). 

Exclusions: No benefit will be payable under this Covered Condition for:

  • Angioplasty
  • Intra-arterial procedures
  • Percutaneous trans-catheter procedures
  • Non-surgical procedures

Heart Attack

Heart Attack means a definite diagnosis of the death of heart muscle due to obstruction of blood flow, that results in a rise and fall of biochemical cardiac markers to levels considered diagnostic of myocardial infarction, with at least one of the following:

  • Heart attack symptoms
  • New electrocardiogram (ECG) changes consistent with a heart attack
  • Development of new Q waves during or immediately following an intra-arterial cardiac procedure including, but not limited to, coronary angiography and coronary angioplasty

Exclusions: No benefit will be payable under this covered condition for:

  • ECG changes suggestive of a prior myocardial infarction
  • Other acute coronary syndromes, including angina pectoris and unstable angina
  • Elevated cardiac biomarkers and/or symptoms that are due to medical procedures or diagnoses other than heart attack

Heart Valve Replacement or Repair 

Heart Valve Replacement or repair means the undergoing of surgery to replace any heart valve with either a natural or mechanical valve or to repair heart valve defects or abnormalities. 

Exclusions: No benefit will be payable under this condition for:

  • Angioplasty
  • Intra-arterial procedures
  • Percutaneous trans-catheter procedures
  • Non-surgical procedures

Stroke 

Stroke (cerebrovascular accident) means a definite diagnosis of an acute cerebrovascular event caused by intra-cranial thrombosis, hemorrhage, or embolism from an extra-cranial source, with:

  • Acute onset of new neurological symptoms, and
  • New objective neurological deficits on clinical examination,
  • Persisting for more than 30 days following the date of diagnosis. These new symptoms and deficits must be corroborated by diagnostic imaging testing. The diagnosis of stroke must be made by a Specialist

Exclusion: No benefit will be payable under this covered condition for:

  • Transient Ischaemic Attacks
  • Intracerebral vascular events due to trauma
  • Lacunar infarcts that do not meet the definition of stroke as described above

Neurological

Bacterial Meningitis

Bacterial Meningitis means a definite diagnosis of meningitis, confirmed by cerebrospinal fluid showing the presence of pathogenic bacteria.  The presence of pathogenic bacteria must be confirmed by culture or other generally medically accepted microbiological testing.  The Bacterial Meningitis must result in neurological deficits persisting for at least 90 days from the date of diagnosis.

Exclusion: No benefit will be payable under this condition for viral meningitis.

Dementia, including Alzheimer’s Disease

Dementia, including Alzheimer’s Disease, means a definite diagnosis of dementia, which must be characterized by a progressive deterioration of memory and at least one of the following areas of cognitive function:

  • Aphasia (a disorder of speech)
  • Apraxia (difficulty performing familiar tasks)
  • Agnosia (difficulty recognizing objects)
  • Disturbance in executive functioning (e.g. inability to think abstractly and to plan, initiate, sequence, monitor, and stop complex behavior), which is affecting daily life

Exclusion: No benefit will be payable under this Covered Condition for affective or schizophrenic disorders, or delirium.

Motor Neuron Disease 

Motor Neuron Disease means a definite diagnosis of one of the following: amyotrophic lateral sclerosis (ALS or Lou Gehrig’s disease), primary lateral sclerosis, progressive spinal muscular atrophy, progressive bulbar palsy, or pseudo bulbar palsy, and limited to these conditions

Multiple Sclerosis 

Multiple Sclerosis means a definite diagnosis of one of the following occurring after the later of the issue date of an insured person’s coverage, or the last reinstatement date of an insured person’s coverage:

  • Two or more separate clinical attacks, confirmed by magnetic resonance imaging (MRI) of the nervous system, showing multiple lesions of demyelination
  • A single attack, with objective neurological deficits lasting more than 6 months, confirmed by MRI of the nervous system, showing multiple lesions of demyelination
  • A single attack, confirmed by repeated MRI of the nervous system, which shows multiple lesions of demyelination that have developed at intervals at least one month apart

Exclusion: No benefit will be payable for the following:

  • Solitary sclerosis
  • Clinically isolated syndrome
  • Radiologically isolated syndrome
  • Neuromyelitis optica spectrum disorders
  • Suspected multiple sclerosis or probable multiple sclerosis

Parkinson’s Disease and Specified Atypical Parkinsonian Disorders

Parkinson’s Disease and Specified Atypical Parkinsonian Disorders means a definite diagnosis of either A) Parkinson’s Disease or B) Specified Atypical Parkinsonian Disorders, as defined below.

  • Parkinson’s Disease means a definite diagnosis of primary Parkinson’s Disease, a permanent neurological condition that must be characterized by bradykinesia (slowness of movement) and at least one of the following: muscular rigidity or rest tremor. The insured person must exhibit objective signs of progressive deterioration in function for at least one year, for which the treating neurologist has recommended dopaminergic medication or other generally medically accepted equivalent treatment for Parkinson’s Disease
  • Specified Atypical Parkinson’s Disorders means a definite diagnosis of progressive supranuclear palsy, corticobasal degeneration, or multiple system atrophy

Exclusions: No benefit will be payable for Parkinson’s Disease or Specified Atypical Parkinsonian Disorders if, within the first year following the later of the issue date or the latest reinstatement date of an insured person’s coverage, such insured person has any of the following:

  • Signs, symptoms, or investigations that lead to a diagnosis of Parkinson’s Disease, a Specified Atypical Parkinsonian Disorder, or any other type of Parkinsonism, regardless of when the diagnosis is made
  • A diagnosis of Parkinson’s Disease, a Specified Atypical Parkinsonian Disorder, or any other type of Parkinsonism

Vital Organs

Kidney Failure

Kidney Failure means a definite diagnosis of chronic irreversible failure of both kidneys to function, as a result of which regular hemodialysis, peritoneal dialysis, or renal transplantation is initiated.

Major Organ Failure on Waiting List 

Major Organ Failure on Waiting List means a definite diagnosis of Irreversible failure of the heart, both lungs, liver, both kidneys, or bone marrow, and transplantation must be medically necessary.

Major Organ Transplant 

Major Organ Transplant means a definite diagnosis of the irreversible failure of the heart, both lungs, liver, both kidneys, or bone marrow, and transplantation must be medically necessary. To qualify under Major Organ Transplant, the insured person must undergo a transplantation procedure as the recipient of a heart, lung, liver, kidney, or bone marrow, and limited to these entities.

Accident and Functional Loss

Acquired Brain Injury

Acquired brain injury means a definite diagnosis of new damage to brain tissue caused by traumatic injury, anoxia, or encephalitis, resulting in signs and symptoms of neurological impairment that:

  • Are present and verifiable on clinical examination or neuropsychological testing,
  • Are corroborated by imaging studies of the brain such as Magnetic Resonance Imaging (MRI) or Computerized Tomography (CT) showing changes that are consistent in character, location, and timing with the new damage, and
  • Persist for more than 180 days following the date of diagnosis

Exclusion: No benefit will be payable under this condition for:

  • An abnormality seen on brain or other scans without definite related clinical impairment
  • Neurological signs occurring without symptoms of abnormality.

Blindness

Blindness means a definite diagnosis of the total and irreversible loss of vision in both eyes, evidenced by:

  • The corrected visual acuity being 20/200 or less in both eyes
  • The field of vision being less than 20 degrees in both eyes

Coma

Coma means a definite diagnosis of a state of unconsciousness with no reaction to external stimuli or response to internal needs for a continuous period of at least 96 hours, and for which period the Glasgow coma score must be 4 or less. 

Exclusion: No benefit will be payable under this covered condition for:

  • A medically induced coma
  • A coma which results directly from alcohol or drug use
  • A diagnosis of brain death

Deafness 

Deafness means a definite diagnosis of the total and irreversible loss of hearing in both ears, with an auditory threshold of 90 decibels or greater within the speech threshold of 500 to 3,000 hertz.

Loss of Independent Existence 

Loss of Independent Existence means a definite Diagnosis of the total inability, due to disease or injury, to perform independently, with or without the aid of assistive devices, at least 2 of 6 Activities of Daily Living listed below for a continuous period of at least 90 days with no reasonable chance of recovery. 

Activities of Daily Living are as follows:

  • Bathing: washing oneself in a bathtub, shower, or by sponge bath
  • Dressing: putting on and removing necessary clothing, braces, artificial limbs, or other surgical appliances
  • Toileting: getting on and off the toilet and maintaining personal hygiene
  • Bladder and bowel continence: managing one’s bladder and bowel function with or without protective undergarments or surgical appliances so that hygiene is maintained
  • Transferring: moving in and out of a bed, chair, or wheelchair
  • Feeding: consuming food or drink that already has been prepared and made available

Loss of Limbs

Loss of Limbs means a definite diagnosis of the complete severance of two or more limbs at or above the wrist or ankle joint as the result of an accident or medically required amputation.

Loss of Speech

Loss of Speech means a definite diagnosis of the total and Irreversible loss of the ability to speak as a result of physical injury or disease, for a period of at least 180 days.

Exclusion: No benefit will be payable under this Covered Condition for all psychiatric-related causes.

Paralysis 

Paralysis means a definite diagnosis of the total loss of muscle function of two or more limbs as a result of injury or disease to the nerve supply of those limbs, for a period of at least 90 days following the precipitating event.

Severe Burns 

Severe Burns means a definite diagnosis of third-degree burns over at least 20% of the body surface. 

Other

Aplastic Anemia 

Aplastic Anemia means a definite diagnosis of a chronic persistent bone marrow failure, confirmed by biopsy, which results in anemia, neutropenia, and thrombocytopenia requiring blood product transfusion, and treatment with at least one of the following:

  • Marrow stimulating agents
  • Immunosuppressive agents
  • Bone marrow transplantation

Occupational HIV Infection 

Occupational HIV Infection means a definite diagnosis of infection with Human Immunodeficiency Virus (HIV) resulting from accidental injury during the course of the insured person’s normal occupation, which exposed the person to HIV-contaminated body fluids.

The accidental injury leading to the infection must have occurred after the later of the issue date or the latest reinstatement date of such insured person’s coverage.

Exclusion: No benefit will be payable under this covered condition if:

  • The Insured Person has elected not to take any available licensed vaccine offering protection against HIV
  • A licensed cure for HIV infection has become available prior to the accidental injury
  • HIV infection has occurred as a result of non-accidental injury including, but not limited to, sexual transmission and intravenous (IV) drug use

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Frequently asked questions

How quickly can I receive a payout after being diagnosed with a critical illness?

The speed at which you would receive your critical illness payout depends on your provider and policy terms. However, most providers, like RBC Insurance, will pay your benefit within 60 days of receiving completed claim forms and all the documents requested from your medical specialist.

Can I purchase critical illness insurance if I have a pre-existing condition?

Yes, you can purchase critical illness insurance in Canada if you have a pre-existing condition. However, you must disclose your condition details, ongoing treatments, and recent diagnoses during your application. Depending on the severity of your condition, the insurer may respond in one of these ways:

  • Decline: The insurer may automatically decline your application, particularly for serious conditions like advanced cancer, cystic fibrosis, and multiple sclerosis
  • Rated Policy: If your condition presents a higher risk, you may be offered a “rated” policy with higher premiums
  • Standard Approval: If your condition isn’t considered high-risk, your application may be approved with standard terms

Is critical illness insurance worth it for individuals with a family history of covered illnesses?

Yes, individuals with a family history of critical illnesses, such as cancer, heart attack, and stroke, should strongly consider critical illness insurance, as they have a higher susceptibility to these conditions.

How does critical illness insurance coverage change as I age?

As you age, critical illness insurance coverage becomes more expensive, since premiums tend to increase with age. Coverage availability also becomes limited, particularly for individuals over the age of 60.

Additionally, you may become more susceptible to pre-existing conditions such as arthritis, osteoporosis, and diabetes, or may already have them, which can make obtaining coverage more difficult.

Can I renew my critical illness insurance policy, and are there any changes on renewal?

Yes, you can renew your critical illness insurance policy at the end of its term. Some companies, like Sun Life, automatically renew 10-year term policies at guaranteed renewal premiums. You may also have the option to increase your coverage; however, this might require additional medical underwriting.

What is the difference between critical illness insurance and terminal illness benefit in life insurance?

Critical illness insurance covers serious health conditions like cancer, heart attack, and stroke, and provides a tax-free lump sum payment upon diagnosis. A terminal illness benefit, typically included in permanent life insurance plans, pays 50-75% of the insurance amount if you’re diagnosed with a terminal illness and have two years or less to live.

 Are children covered under my critical illness insurance plan?

No, you can’t add children to your own critical illness insurance. However, you can buy a separate children’s critical illness policy that covers over 30+ health conditions and provides a lump sum payment if your child is diagnosed with a covered condition. Children’s critical illness insurance can be purchased anytime from birth until age 25.

What happens if I move out of Canada? Does my critical illness insurance still cover me?

Yes, your critical illness insurance remains in effect if you relocate from Canada, as long as you continue paying your premiums. However, there may be additional requirements when filing a claim. For instance, your insurer might need to verify that your diagnosis and treatment meet Canadian standards.

Is COPD covered by critical illness insurance? 

No, critical illness insurance is specifically designed for severe health conditions, such as cancer, heart attack, and stroke, and usually doesn’t cover COPD, or chronic respiratory illnesses. 

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What is whole life insurance and how does it work in Canada? (2025)

Whole life insurance is a type of permanent life insurance that offers lifelong coverage and a cash value component, making it both a protective and investment tool.

Unlike term life insurance, which lasts for a set period, whole life insurance remains in force as long as premiums are paid. This article explains whole life insurance and how it works so you can invest in a policy that keeps you and your loved ones protected.

What is a whole life policy in insurance?

A whole life insurance policy is a permanent life insurance plan that provides coverage for the insured’s entire lifetime, as long as premiums are paid. It offers both a death benefit and a cash value component.

The death benefit is the amount paid to beneficiaries upon the insured’s death, while the cash value is a savings feature that grows over time, offering guaranteed returns. In Canada, whole life insurance is popular because it combines protection with a form of savings or investment.

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What can whole life insurance be used for?

Whole life insurance can be used for a variety of purposes such as to cover funeral expenses, build wealth, pay for premiums, estate planning and more.

  • Cover funeral expenses
  • Build wealth
  • Pay premiums
  • Support a family
  • Protect your children
  • Leave a legacy
  • Preserve an inheritance
  • Support a business
A whole life insurance policy can be used during your lifetime and can help benefit your beneficiaries after you pass away.

How does whole life insurance work?

A whole life insurance policy requires you to pay a fixed premium amount to keep the policy active. A portion of these premiums goes toward the death benefit, while the rest is invested in the policy’s cash value. 

Over time, the cash value grows on a tax-deferred basis. You can borrow against it or withdraw funds under certain conditions. The policy remains in force as long as premiums are paid, ensuring that the death benefit is paid out when the insured passes away.

What are cash value and cash surrender value?

Cash value and cash surrender value are both “living benefits” that you can access from your whole life policy while you are alive.

Cash value is the amount of money that builds in a whole life insurance policy through the investment component. You can access this in multiple ways but only when you’re alive. Simply put, it is the policyholder’s share of the death benefit that can be claimed during the policyholder’s lifetime.

Cash surrender value is the actual amount of money you get from cash value after fees if you cancel or surrender your whole life policy.

what is cash surrender value

Types of whole life policies

Whole life insurance policies can be broadly categorized into participating and non-participating types. Participating policies allow policyholders to receive dividends, which can be used to reduce premiums, purchase additional coverage, or be taken as cash.

These dividends are not guaranteed but depend on the insurer’s financial performance. In contrast, non-participating policies do not offer dividends but often come with fixed premiums and guaranteed benefits, providing more predictable coverage.

Both types offer lifelong protection and a cash value component, but the choice depends on individual financial goals and risk preferences.

1 Participating

  • Covers you for your entire life
  • Has a cash value component
  • Pays annual dividends
  • Has more growth potential
  • Has level premiums that don’t change
  • Guaranteed to pay out a death benefit
  • Can increase the death benefit amount

2 Non-participating

  • Covers you for your entire life
  • Has a cash value component
  • Has level premiums that don’t change
  • Guaranteed to pay out a death benefit
  • Does not pay dividends
  • Has limited growth potential

Advantages of whole life insurance

The main benefits of whole life insurance Canada are that it offers lifelong coverage, builds cash value, and pays a guaranteed death benefit.

  • Lifelong coverage – Your policy will never expire once premiums are paid
  • Cash value – Premium payments are reinvested and grow cash value that you can access during your lifetime by borrowing against it, using it as collateral, withdrawing it, or more
  • Dividends (participating policies only) – Annual dividend payments can be used to reinvest, withdraw, buy more insurance, or more
  • No market volatility – The investment component is managed by the insurance company and it does not fluctuate with the market
  • Guaranteed death benefit – Life insurance will pay out when you pass away no matter what
  • Stable, growing death benefit – Your death benefit or coverage amount can grow over time with cash value or dividends
  • Level premiums – The amount you pay will stay the same for the duration of the entire life insurance policy
  • Limited pay options – Your policy can be paid off in a short time frame so you don’t have to worry about it later
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Disadvantages of whole life insurance

The disadvantages of whole life policies are they are expensive and have limited flexibility in choosing the coverage period.

  • Premiums can be expensive – Whole life policies can cost more than other types of life insurance
  • You can’t choose a coverage period – You cannot select coverage for just a set period; it can only last forever
  • Investment potential may not be as large as with other investments – Growth from a portfolio managed by the insurer will be moderate

What is the downside of whole life insurance?

While whole life insurance provides lifelong coverage and a cash value component, it comes with high premiums and limited flexibility. Some disadvantages of whole life insurance are:

  1. High premiums: Whole life insurance is significantly more expensive than term life insurance
  2. Complexity: The policy structure can be complicated, involving fees, cash value accumulation, and investment components
  3. Limited flexibility: Once set, premiums and coverage amounts are often fixed

Cost of whole life insurance in Canada

The cost of whole life insurance ranges between $40 and $450, depending on personal factors like your age, sex, and health, and also on your policy’s details. Check the chart below for some sample quotes.

Whole Life Insurance Quotes in Canada (2024)

Age $100K Coverage – Non-Participating (Female) $100K Coverage – Participating (Female) $100K Coverage – Non-Participating (Male) $100K Coverage – Participating (Male)
20 $42/month $44/month $47/month $54/month
30 $57/month $63/month $65/month $75/month
40 $85/month $92/month $92/month $110/month
50 $127/month $138/month $149/month $164/month
60 $202/month $217/month $245/month $263/month
70 $376/month $376/month $462/month $444/month

*Quotes based on $500k in coverage on a life-pay plan. Quotes based on average prices from leading insurance companies in Canada.

How many years do you pay on a whole life policy?

The number of years you pay for a whole life insurance policy depends on the payment structure chosen at the time of purchase. Typically, whole life policies offer lifetime payments, limited payments, or single-premium policies.

  1. Lifetime payments: You pay premiums throughout your entire life to keep the policy active. This option spreads the cost over time, resulting in lower annual premiums
  2. Limited payment policies: You pay premiums for a set number of years, such as 10, 20, or 30 years, or until a specific age (like 65). After this period, the policy is fully paid, but coverage continues for life
  3. Single premium: You make a one-time lump sum payment upfront, and the policy remains active for your lifetime without any further premiums

Do you get your money back at the end of a whole life insurance? 

No, you don’t get your premiums back at the end of a whole life insurance. Instead, you get a cash surrender value that depends on the total cash value minus any applicable charges that the insurer may levy.  

If your policy has a cash value of $50,000 and has accumulated $5,000 in dividends, but has $2,000 as surrender charges, your cash surrender value would be $53,000. This is calculated in the following way:

$50,000 + $5,000 – $2,000 = $53,000.

The cash value can be withdrawn or used as collateral for a loan. The death benefit is paid to beneficiaries upon your passing provided the policy remains active.

Does your money grow in whole life insurance?

Yes, your money grows in a whole life insurance policy through its cash value component. In Canada, whole life insurance not only provides lifelong protection but also builds cash value over time.

A portion of your premiums is allocated to this cash value, which grows at a guaranteed rate, often supplemented by dividends if you have a participating policy.

The cash value can serve as a valuable financial resource—you can borrow against it, use it for future premiums, or even access it for retirement or other expenses.

This growth is tax-advantaged, meaning you won’t pay taxes on the cash value growth as long as it remains within the policy. Whole life insurance offers both security and a way to build wealth over time, making it a popular choice for Canadians seeking long-term financial planning.

Can you cash out life insurance before death?

Yes, you can cash out life insurance before death if the policy has a cash value component. You can do so through a policy loan, partial withdrawal, or complete policy surrender.

  • Policy loan: Borrow against the cash value, usually at a competitive interest rate
  • Partial withdrawal: Take out part of the cash value without cancelling the policy
  • Surrender: Cancel the policy and receive the full cash value minus fees

How much whole life insurance should I buy?

Choosing the right amount of whole life insurance depends on your financial goals and the needs of your loved ones. While whole life insurance offers lifelong coverage and cash value growth, it’s essential to determine how much coverage will adequately protect your family.

Two common strategies to help you decide are the ‘Ten times salary’ and the ‘Years to retirement’ rules.

The ‘Ten Times Salary’ Rule: This rule suggests buying a policy with a death benefit equal to ten times your annual salary. For example, if you earn $80,000 per year, you would aim for a policy with an $800,000 death benefit. This method ensures that your family can maintain their current lifestyle, cover debts, and manage expenses in the event of your passing. It’s a straightforward approach that offers a solid financial cushion.

The ‘Years to Retirement’ Rule: This strategy focuses on covering your income until retirement. Multiply your annual income by the number of years left until you retire. If you earn $80,000 annually and plan to retire in 20 years, you’d need $1.6 million in coverage. This method ensures that your family can replace your income until you’re no longer working.

What are the payment options for whole life policies?

Whole life insurance offers several flexible payment options to fit different financial needs. You can opt for lifetime payments, where premiums are spread across your entire life, keeping the annual cost lower.

Alternatively, limited payment plans allow you to pay off the policy within a set timeframe, such as 10, 20, or 30 years, or by a specific age like 65. For those looking for convenience, a single premium option is available, where a lump sum is paid upfront, securing lifetime coverage without any further payments.

Children’s whole life insurance

Whole life insurance for children provides lifelong protection with added financial benefits such as growing cash value over time. Here’s why whole life insurance for children can be a smart choice:

Cost-effective payments: Premiums for children’s whole life policies are generally lower, making it an affordable way to secure coverage for life. Since rates are locked in early, you avoid higher costs later

Guaranteed lifetime coverage: Once a policy is in place, the child is covered for life, regardless of future health changes. As long as premiums are paid, the policy cannot be canceled by the insurer.

Securing insurability: Buying insurance early ensures that the child has coverage even if they develop health issues later. This helps avoid challenges in obtaining insurance as an adult

Cash value that builds over time: Children’s whole life policies build cash value over time, offering a financial asset they can access later for education, a home, or other needs. The cash value grows tax-deferred, adding long-term benefits

Learn more about life insurance for children

Case study: A whole life insurance example

Let’s look at how whole life coverage works in a case study. In this example we’ll look at John, a 30-year-old Canadian who’s thinking about estate planning. He wants a lifetime insurance policy so he can leave something behind for his family after he passes away.

The chart below shows his projected cash value over time.

Age: 30

Gender: Male

Policy type: Whole life (non-par)

Death benefit: $250,000

Annual premiums: $1,565

Payment type: Life pay (premiums paid every year for entire life)

Feature Whole life insurance Universal life insurance
Cash value Yes Yes
Dividends No (for participating policy) Yes
Investment choice No Yes (limited to select portfolios)
Premiums Steady for the entire policy Varies (depending on investment returns)
Tax advantages Tax-free death benefit for your estate Tax-free death benefit for your estate
Policy disadvantages Lower returns than traditional investing Generally more expensive premiums

*Figures from an insurance illustration for a Desjardins non-participating whole life insurance policy purchased through PolicyAdvisor.com for a 30-year-old male in normal health.

Remember, John can use the cash value from his policy to build up his savings while still making sure his family would have enough money to carry on when he’s no longer around.

Protect your loved ones for life, and beyond.

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Can you borrow from whole life insurance?

Yes, you can borrow against the cash value of a whole life policy. This is called a policy loan and comes with several benefits like a no credit check and flexible repayment.

  • No credit check: The loan is secured by your cash value
  • Flexible repayment: You can choose when and how to repay the loan. However, if the loan is not repaid, it will reduce the death benefit. Interest also accrues on the borrowed amount
  • Tax-free loan: A whole life policy loan remains tax-free as long as you do not exceed the amount you have paid in premiums

How to find the right whole life insurance policy?

Choosing the right whole life insurance policy requires careful consideration of several factors to ensure it aligns with your financial goals. Here’s a step-by-step guide to help you make an informed decision:

Choose the amount of coverage you need: Determine how much coverage will adequately protect your family. Consider factors like income replacement, debt, future expenses, and long-term financial goals

Examine riders: Riders are optional add-ons that enhance your policy. Popular options include critical illness coverage, waiver of premium, and accelerated death benefits. Assess which riders suit your needs

Look at the rate of return on cash value: Whole life policies build cash value over time. Evaluate the guaranteed rate of return and any potential dividends if you’re considering a participating policy

Be aware of surrender charges
If you cancel your policy early, surrender charges may apply. Understand these fees and how long they last to avoid surprises

Understand the different approval processes: Some policies require a medical exam, while others offer simplified or guaranteed issue options. Choose the process that best suits your health status and preferences

Check the insurer’s financial strength: A financially strong insurer is more likely to meet its long-term obligations. Review ratings from agencies like AM Best or Moody’s to gauge stability

Speak with our advisors: Our experienced advisors help you compare life insurance quotes from 30+ top insurers across Canada so you can choose a plan that best meets your needs

What other types of life insurance can I get in Canada?

If you’re looking for alternatives to whole life insurance, these are the other types of life insurance that you can get in Canada, such as term life insurance, term-to-100 insurance, universal life insurance, funeral insurance, and no-medical life insurance.

  • Term life insurance
    A type of life insurance that lasts for a certain number of years, called a term. Usually inexpensive and great for short-term needs.
  • Term-to-100 life insurance
    A type of life insurance policy that covers you for your entire life, but does not have a cash value or investment component like whole life does.
  • Universal life insurance
    A type of permanent life insurance that gives the policyholder more control over the investment part of the policy.
  • Funeral insurance
    A type of permanent life insurance that is designed specifically to cover end-of-life expenses. Also called Final Expense Insurance.
  • No-medical life insurance
    A type of insurance coverage that does not require a medical exam, and can ask just a few or no health questions at all. Usually gives lifelong coverage but comes with a lot of downsides.
Learn more about the different types of life insurance in Canada

Difference between universal and whole life insurance?

Universal and Whole are both types of permanent life policy. But one of the main differences between a universal policy and a whole life policy is that universal gives you more control over your investments. This means it has greater growth potential, but it’s also more risky.

Feature Whole life insurance Universal life insurance
Cash value Yes Yes
Dividends No (for participating policy) Yes
Investment choice No Yes (limited to select portfolios)
Premiums Steady for the entire policy Varies (depending on investment returns)
Tax advantages Tax-free death benefit for your estate Tax-free death benefit for your estate
Policy disadvantages Lower returns than traditional investing Generally more expensive premiums

What age to get whole life insurance?

Although there is no ideal age to get a whole life insurance, the sooner you buy one, the better it will be for you. The youngest age limit to get life insurance in Canada is 18 years. Starting early on whole life insurance can have certain benefits such as: 

  • Lower premiums: Premiums are significantly cheaper when you’re young and healthy
  • Guaranteed coverage: Secures lifelong coverage, even if health conditions develop later
  • Builds cash value early: More time for your policy to accumulate cash value, creating a financial safety net
  • Long-term savings: Spread costs over a longer period, making it more affordable
  • Future financial security: Provides stability for dependents and can be used for estate planning or retirement

Is whole life insurance a good investment?

We do not recommend buying life insurance exclusively as an investment strategy. Its purpose is to provide lifelong protection and financial security your family can rely on, not to provide capital gains.

The average rate of returns for whole life insurance varies, but is usually around 2-4% per year. This is not bad. But, if you’re only looking for an investment vehicle to generate high returns in a short amount of time, you would be better off with other options.

Learn more about whether life insurance is a good investment

Should I buy whole life insurance or put my money into savings?

If you’re wondering whether you should buy whole life insurance or put the money into savings, a whole life policy is a much safer bet. Here’s why:

  • Unexpected emergencies can arise and cause you to dip into savings
  • The death benefit payout your family receives is usually far greater than you would be able to save and far greater than you pay in premiums in that same amount of time
  • There are added tax advantages because the death benefit is paid out tax-free, so your family gets to hold onto more of the money

What happens if I surrender my whole insurance policy?

You can surrender your policy by ending it at any time. In that case you would get the cash surrender value and no longer have coverage. You may have some options to change your coverage into a policy with a lower death benefit, or to a term life policy.

But it depends on your provider — you should ask your insurance advisor about your options.

How soon can I cash out my whole life insurance policy?

It depends on your provider. Most Canadian companies will let you access your policy’s cash value on the anniversary after 5 or more years. This is whether you want to withdraw it, borrow against it, or access it any other way.

But you may want to wait. The longer you let whole life insurance cash value accumulate, the bigger the amount you can use and the more benefit you can have.

How much can I borrow from a whole life policy?

You can normally borrow up to 90% of your policy’s cash value if you want to take out a policy loan directly from your insurance provider. If you want to borrow from a bank or lender and just use your policy as loan collateral, you can borrow up to 100% of the premiums you paid.

How to access cash value

We’ll help you find the best whole life insurance policy!

If you’re looking for the best whole life insurance policy, speak to a PolicyAdvisor expert who will help you compare and choose the best plan based on your requirements and budget.

With PolicyAdvisor, you also get free instant quotes, the lowest rates across the market, and lifetime after-sales support. Schedule a free consultation with one of our licensed advisors today!

Need insurance help?

Give us a call at 1-888-601-9980 or book some time with our licensed experts.

Frequently asked questions

How can I find cheap whole life insurance quotes in Canada?

Find the cheapest whole life insurance quotes online using our free quoting tool. Our platform scans the market in seconds to show you your best life insurance match instantly.

You can also check out our listing of current life insurance promotions in Canada. Or book a free consultation call with one of our licensed advisors.

How long does it take to build cash value?

It usually takes years to build up a substantial amount of cash value — anywhere from 10 years or more. You can also help speed things up by paying more into the policy.

Alternatively, some policies are made to help you build cash value as quickly as possible. UV Insurance Company is a great example of this with their Whole Life High Values permanent policy.

Can I get life insurance riders with whole life insurance?

Yes, you can enhance a whole life insurance policy by adding riders, depending on the options your insurance provider offers. Commonly available riders include a term rider, child rider, accidental death and dismemberment benefit rider, guaranteed insurability rider, return of premiums rider, critical illness rider, and disability waiver of premiums rider, among others.

Do I need a medical test to get a whole insurance policy?

It depends, but a medical exam is not needed in many cases. In general, if you’re a Canadian citizen or resident in good health and you’re getting under $500K in coverage, you will probably not be asked to take a medical exam.

Are whole life insurance policies taxable?

The relationship between taxes and whole life insurance can be viewed from various perspectives. Generally, certain aspects of whole life insurance are non-taxable, such as death benefit payouts, dividends if reinvested in the policy, policy loan proceeds below the adjusted cost basis, and third-party collateral loans using the cash value.

On the other hand, some elements are taxable, including cash dividends, policy withdrawals exceeding the adjusted cost basis, and policy loans that go beyond the adjusted cost basis. It is essential to consult a licensed insurance advisor or tax professional to understand how these rules pertain to your specific situation.

Can I use a whole life policy to “be my own bank”?

No, you cannot use your insurance policy to become your own bank.

You may have seen this claim on social media platforms like TikTok, where some people claim you can use whole life insurance for “infinite banking.” But if something seems too good to be true, it usually is.

The concept of “infinite banking” does exist, but it’s very complicated. And it doesn’t work the way some catchy videos suggest.

Can I convert my term life insurance policy to a whole life policy in Canada?

Yes, many Canadian term life insurance policies offer a conversion option, allowing you to switch to whole life insurance without a medical exam. This is beneficial if you want permanent coverage or have developed health issues that might make it difficult to qualify for a new policy. Converting ensures lifelong protection and the added benefit of cash value growth. However, premiums will likely be higher after conversion.

What happens if I miss a premium payment on my whole life insurance policy?

Missing a premium payment on your whole life policy can have varying consequences depending on the policy’s terms. Many policies include a grace period, typically 30 days, during which coverage remains active. If you fail to pay within this window, the insurer may use the policy’s cash value to cover premiums. If no cash value is available, the policy may lapse, leading to a loss of coverage. Some policies offer options like automatic premium loans to prevent lapses.

How does whole life insurance affect my eligibility for government benefits in Canada?

The cash value of a whole life insurance policy can affect eligibility for certain government benefits. For programs like Old Age Security (OAS) and the Guaranteed Income Supplement (GIS), only income is assessed, not assets. However, if you withdraw cash from your policy, it may count as income, potentially reducing your GIS benefits. Proper planning can help minimize any impact on government assistance.

Can I use my whole life insurance policy as collateral for a loan in Canada?

Yes, you can use your whole life insurance policy as collateral for a loan, thanks to its cash value component. Many Canadian lenders accept this arrangement, allowing you to borrow against your policy. Alternatively, you can take a policy loan directly from the insurer. In both cases, it’s important to maintain the policy and repay the loan to avoid reducing the death benefit or risking a policy lapse.

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Life Insurance Age Limit in Canada – Comprehensive Guide to Rates and Coverage

What is the age limit for life insurance in Canada?

In Canada, the maximum age limit for purchasing life insurance is between 75 and 85. For term life insurance, you can continue to renew your policy until you reach 85 years of age.

For whole life or universal life insurance, you can purchase a life insurance policy until you reach the company-approved age limit.

However, the exact age limit may vary from one company to another based on their underwriting guidelines. For instance, companies like Sun Life and Desjardins can offer life insurance to individuals up to 85 years of age.

Types of life insurance policies and their age limits

Although the age limit varies from one insurance provider to another, here are a few general age limits based on various types of life insurance. Take a look:

  • Term life insurance: Applicants may qualify for term life insurance up to around 70 or 75 years old. After this age, options may become limited, and insurers often restrict the length of coverage available
  • Whole life insurance: This type of insurance generally allows applicants up to 85 years old. Whole-life policies provide lifelong coverage and can be a viable option for older individuals seeking insurance
  • Guaranteed issue life insurance: This type of policy is specifically designed for seniors and usually has an age limit of about 75 years old. It is accessible even for those with pre-existing conditions, though it may come with higher premiums

Find out more about the various types of life insurance in Canada through our detailed blog.

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How age limit impacts life insurance policy premiums

Life insurance premiums increase with age due to the higher risks associated with older individuals. As people age, the likelihood of developing health issues or facing mortality increases. As a result, insurers raise premiums to cover potential claims. 

The risk of chronic conditions, hospitalization, and other health-related expenses grows over time. These risk factors prompt insurers to adjust premiums accordingly to ensure their own financial stability.

Factors influencing premium rates of life insurance policies

Here are a few factors influencing life insurance premium rates:

  • Age: Younger individuals generally pay lower premiums since they are considered less risky and likely to live longer
  • Health status: Pre-existing conditions, family’s medical history, and lifestyle choices like smoking can significantly impact premium rates
  • Policy type and coverage amount: Whole life insurance typically has higher premiums than term life insurance. Higher coverage amounts also lead to higher premiums
  • Occupation: High-risk jobs can result in higher premiums due to the increased likelihood of accidents and injury

Cost of life insurance by age

Life insurance premiums may vary according to an individual’s age. The older a person gets, the higher the cost of life insurance may become. 

Check out our detailed table depicting the average monthly premiums paid by men and women of different age groups:

Term life insurance for ages 25-65

Age Group Non-smoker Male Non-smoker Female Smoker Male Smoker Female
25-34 $15 $13 $30 $25
35-44 $20 $18 $45 $35
35-44 $50 $40 $100 $80
55-64 $100 $80 $180 $150
65+ $200 $150 $350 $300

Whole life insurance for ages 25-65

Age Group Non-smoker Male Non-smoker Female Smoker Male Smoker Female
25-34 $275 $250 $350 $300
35-44 $350 $300 $475 $400
35-44 $500 $425 $700 $575
55-64 $750 $625 $1,100 $900
65+ $1,200 $1,000 $1,800 $1,500

Why age limits matter in life insurance policies

Knowing about the age limit of life insurance can be beneficial for most individuals seeking coverage. Here are a few reasons why age limit matters:

Risk assessment

Companies assess risk based on an individual’s age. As individuals age, their likelihood of health issues and mortality increases, which directly impacts premium rates. 

Insurers set age limits to manage their risk exposure effectively and ensure financial stability.

Financial planning and security

The true purpose of life insurance is to provide a financial safety net to the insured’s family. Prioritizing the age limit ensures that the insured can secure coverage while they’re financially stable. 

By planning ahead and getting life insurance within the standard age limit, the insured individual can ensure the overall financial security of their loved ones in their absence.

Long-term financial commitment

Since life insurance is usually a long-term investment, it requires the insured individual to have the financial stability and affordability for paying premiums. 

Getting life insurance at the right time ensures longer coverage periods with lower premiums. On the other hand, late applicants may only receive shorter coverages at a much higher premium.

If you’re a senior looking for the right life insurance fit, we’ve got you covered. Read our blog to find out more.

Types of life insurance for seniors

Seniors in Canada can avail life insurance options tailored to their unique health conditions and coverage needs:

1 Term life insurance

Term life insurance is ideal for seniors under 75 who seek coverage for a specific period. It provides a death benefit if the policyholder passes away within the term but doesn’t build cash value. Premiums are generally lower than permanent life insurance.

2 Whole life insurance

This is a type of permanent insurance that covers the policyholder for life, provided premiums are paid. 

It also accumulates cash value over time, which can be borrowed against or withdrawn. Whole life insurance can be availed by seniors up to 85 years of age.

3 Simplified issue life insurance

Simplified issue life insurance involves a simple health questionnaire without a medical exam. It’s a good option for seniors with minor health concerns. This insurance provides faster approval and moderate coverage.

4 Guaranteed issue life insurance

Guaranteed-issue life insurance is ideal for seniors with significant health issues. This policy provides guaranteed approval regardless of health status. However, these insurance policies have higher premiums with lower coverage amounts.

Finding the best life insurance rates for seniors

Getting a competitive life insurance rate for seniors can be quite tricky but not impossible. For individuals over 50, a detailed comparison of multiple insurance policies and their quotes can help them find the right coverage at the most affordable price.

Tips for obtaining competitive quotes

Here are a few effective tips for obtaining the most competitive life insurance rates in Canada. Take a look:

  • Choose the right type of insurance: Depending on your health and financial needs, select a policy type that offers the best balance of coverage and cost, such as term life, whole life, or guaranteed issue life insurance
  • Consider a medical exam: If you’re in good health, opting for a traditionally underwritten policy with a medical exam may result in lower premiums compared to no-medical or guaranteed issue policies
  • Review policy features: Pay attention to policy features like renewal options, cash value accumulation, and additional riders (e.g., critical illness or long-term care). These can add value to your policy or adjust it to better fit your needs
  • Work with an insurance broker: An experienced broker can provide personalized advice, help you navigate different options, and negotiate better rates with insurers on your behalf

Is there a type of life insurance where premiums do not increase with age?

Yes, some life insurance policies such as participating whole life insurance and group benefits, have fixed premium rates. 

Participating whole life insurance policies have level premiums — the premiums do not change for the entirety of the policy duration. 

Group life insurance policies typically have level premiums for all members regardless of age, gender, or health status. 

Gender differences in life insurance costs

Gender differences significantly impact life insurance costs. This usually occurs due to varying life expectancies and health risks associated with each gender.

Some of the key factors that influence the costs of life insurance are as follows:

  • Life expectancy: Women generally live longer than men.  This indicates the fact that women are perceived as lower risk, leading to lower life insurance rates
  • Health risks: Men are statistically more prone to certain health conditions, such as heart disease and hypertension, which can increase mortality risk. Insurers also consider lifestyle choices. Men are more likely to engage in risky behaviors, such as smoking and heavy drinking. These factors further influence premium costs
  • Occupational hazards: Men often work in higher-risk occupations, such as construction or mining. This may lead to higher insurance premiums compared to women, who are more likely to work in lower-risk jobs

Do women pay more by age for life insurance?

Women generally pay less for life insurance compared to men, even as they age. However, premiums for women still increase with age as the risk of health issues and mortality rises. 

Younger women pay comparatively lower premiums than older women for the same amount of coverage.

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Frequently asked questions (FAQs)

Should a 75-year-old have life insurance?

Yes, a 75-year-old individual should have life insurance. Having life insurance can ensure that the individual’s family remains protected in their absence.

It can also help the family pay for their loved one’s funeral and cover any remaining mortgage amount.

Can I be denied life insurance because of age?

Yes, you can be denied life insurance because of age, especially if you’re applying for a new policy later in life. Many insurers have maximum age limits for certain types of life insurance policies, like term life insurance, and may decline coverage if you’re above that age. 

As you age, insurers may consider you a higher risk due to health concerns, leading to potential denial or higher premiums for coverage. 

Does life insurance expire with age?

If you have term life insurance, the policy will expire once the specified term period is over. However, whole life insurance ensures lifetime coverage as long as the insured individual continues to pay the premiums.

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How much does life insurance cost in Canada in 2025?

Life insurance can cost anywhere from $10-70 per month on average. But it also depends a lot on your personal factors and on your policy details.

In this article, we provide specific quotes for life insurance based on some of the most common factors, like age, amount of coverage, and policy type. And, we tell you how you can lower your premium costs.

The cost of life insurance in Canada

The cost of life insurance in Canada varies based on factors like age, health, coverage amount, and policy type. In general, you can expect to pay around $10 a month for $100,000 in coverage for a 10-year term policy. A participating whole life policy can cost between $44 to $54 for a $100,000 coverage for a 20-year-old Canadian. 

Life insurance rates by age in Canada

Age is one of the biggest factors in the cost of life policies, because it’s directly linked to your life expectancy.

Check out our life insurance rates by age charts for Canada below to see the average life insurance cost per month for someone in their 30s, 40s, 50s, and 60s.

Average Term Life Insurance Premium Costs by Age

Age Gender $250K $500K $1M
30 Male $18/month $30/month $52/month
30 Female $14/month $22/month $35/month
40 Male $27/month $45/month $84/month
40 Female $20/month $34/month $60/month
50 Male $70/month $124/month $236/month
50 Female $48/month $83/month $154/month
60 Male $224/month $403/month $787/month
60 Female $151/month $281/month $547/month

This quote is for a 20-year term for an individual in good health and a non-smoker, organized by gender. Please note that coverage for a 20-year term is only available up to age 65. 

Life insurance rates by coverage amount

Canadian life rates vary a lot based on the amount of coverage you buy. This is how much your family would get when you pass away, and is usually the same thing as the life insurance death benefit amount.

Check out the quotes prices below to see rates for insurance by coverage amount at different ages.

Average Term Life Insurance Premium Costs by Coverage Amount

Age Gender $50K $500K $1M
30 Male $10/month $30/month $52/month
30 Female $9/month $22/month $35/month
40 Male $12/month $45/month $84/month
40 Female $12/month $34/month $60/month
50 Male $21/month $124/month $236/month
50 Female $20/month $83/month $154/month
60 Male $58/month $403/month $787/month
60 Female $45/month $281/month $547/month

This quote is for a 20-year term for an individual in good health, organized by gender and smoking status. Please note that coverage for a 20-year term is only available up to age 65. 

How much life insurance coverage do I need to buy?

In general, you should get at least 10-15x your annual income in coverage. But, the amount you need depends a lot on your individual circumstances and needs. You should think about how much your family would need for things like:

  • Your outstanding debts like student loans, credit card bills, etc.
  • Your end-of-life expenses like funeral costs and other final expenses
  • Future estate taxes or capital gains taxes on your assets
  • Their everyday household expenses and other long-term financial goals
  • Childcare costs and future education funds
  • Replacing your income
  • Supplementing any other existing insurance coverage
  • Any other special factors unique to your family

Use our free calculator to help figure out how much coverage you should buy, or book some time with one of our licensed advisors for personal help.

Check out PolicyAdvisor's life insurance calculator.

Life insurance rates by policy type

Different types of life insurance policies have different premium costs. How much you pay will vary based on if you have:

  • Term
  • Whole (permanent)
  • No-medical
  • Children’s insurance
  • Seniors’ insurance
  • Couple’s insurance (joint policies)
  • Smokers’ insurance

Keep reading to see costs for each of these below.

1 How much does term life insurance cost?

As mentioned above, term life insurance plans generally cost about $10 a month for $100,000 in coverage if you are young and healthy. But this can depend on your term length, how much coverage you have, and other factors.

Check out the table below for general term life insurance policy rates, based on age and term length.

How much does life insurance cost?

Term life insurance quotes in Canada*

Age Gender 10-Year Term 20-Year Term 30-Year Term
20 Male $22/month $29/month $34/month
20 Female $14/month $20/month $24/month
30 Male $22/month $30/month $45/month
30 Female $15/month $22/month $33/month
40 Male $28/month $45/month $88/month
40 Female $20/month $34/month $64/month
50 Male $62/month $117/month $239/month
50 Female $45/month $83/month $166/month
60 Male $180/month $380/month Not available
60 Female $127/month $267/month Not available

*Quotes based on $500k in coverage for a non-smoker in regular health.

Whole life insurance quotes in Canada*

2 How much does whole life insurance cost?

Whole life insurance, which is a type of permanent insurance, usually costs more because it covers you for your entire life. It also has a cash value component that you can use in your lifetime.

To get an idea of average whole life insurance rates, check out these whole life quotes below.

Age Gender $100K Coverage

(Non-Participating)

$100K Coverage

(Participating)

20 Male $47/month $54/month
20 Female $42/month $44/month
30 Male $65/month $75/month
30 Female $57/month $63/month
40 Male $92/month $110/month
40 Female $85/month $92/month
50 Male $149/month $164/month
50 Female $127/month $138/month
60 Male $245/month $263/month
60 Female $202/month $217/month

*Quotes based on $100k in coverage for a non-smoker in regular health. Participating policies have cash value and dividends. Non-participating policies only have cash value.

3 How much does no-medical life insurance cost?

The cost of life insurance policies that do not need a medical exam, also called no-medical insurance, tend to be higher than both term and whole insurance. This type of policy is popular for people who have poor health, or who want to get coverage quickly. But it has a lot more downsides.

  • Premiums for no-medical insurance can be more than double the amount term life costs
  • Coverage is also usually limited, so you can pay a lot more for a lot less protection

4 How much does life insurance for kids cost?

The price for children’s life insurance is cheaper than if you bought it as an adult—in some cases children’s insurance costs a little as $3 per month. You can purchase life insurance for a newborn child and older children either by:

  1. Adding it as a rider to your life policy for a few extra dollars per month
  2. Buying your child their own whole life policy

5 How much does life insurance for seniors cost?

The average life insurance rates for seniors in Canada is around $100/month. The cost increases as you age, so seniors can expect to see higher premiums. But it also depends on other details.

  • A 10-year term for a healthy 60-year-old may only cost $35/month
  • A permanent policy could cost around $110/month

Learn more about life insurance for seniors in Canada

6 How much does life insurance for couples cost?

The average cost of life insurance for couples is around $30/month if they purchase a joint policy that covers both of them together and they’re both fairly young and healthy. The price doesn’t differ that much from individual term life insurance quotes, and it covers both partners at once.

7 How much does life insurance for smokers cost?

Premiums for smokers can cost almost twice as much as non-smoker rates. This is because smoking can lower your life expectancy.

  • A 30-year-old smoker in normal health can expect to pay upwards of $60/month for $500,000 in coverage for a 20-year term
  • Compare that to the $30/month in premiums a non-smoker would have to pay for the same amount of coverage

Average cost for life insurance for couples

The average cost of life insurance for couples can vary depending on the combined coverage and whether the policy is joint or separate. Below are some sample premium costs based on a $500,000 term life insurance policy.

Age group Monthly premium (Non-smoking couples) Monthly premium (Smoking couples)
25-35 years $35 – $60 $70 – $110
36-45 years $60 – $90 $120 – $170
46-55 years $90 – $140 $180 – $250
56-65 years $140 – $220 $280 – $400

*Sample quote: Actual premiums, coverage options, terms, and conditions may vary based on factors including, but not limited to, group size, demographics, geographic location, industry, and underwriting criteria.

Average cost of life insurance for seniors

Life insurance for seniors tends to be more expensive due to increased risk factors. Here’s a look at the typical costs for a $250,000 term life insurance policy.

Age group Monthly premium
60-65 years $90 – $150
66-70 years $150 – $250
71-75 years $250 – $400
76-80 years $400 – $650

How much does life insurance cost for kids?

Life insurance for children is generally inexpensive, as the coverage amount is low and the risk factors are minimal. 

Coverage amount Monthly premium
$10,000 – $25,000 $5 – $10
$50,000 $10 – $15
$100,000 $15 – $20

Life insurance rates by health and lifestyle factors

Your health, lifestyle, and job can significantly impact the cost of your life insurance premium. Below are some key factors that affect rates.

How smoking affects the cost of life insurance

Smoking is a significant factor that can significantly increase life insurance premiums. Insurers view smoking as a major health risk, leading to higher rates for smokers compared to non-smokers. The difference in premiums can be substantial, often doubling or more, especially as you age.

How health and family history affect the cost of life insurance

Your personal health and family medical history are critical factors in determining your life insurance premiums. 

Insurers assess your health status and look at your family’s medical history to gauge potential risks. If you have pre-existing conditions or a family history of serious illnesses, you can expect higher premiums.

High-risk activities and lifestyles that affect the cost of life insurance

Engaging in high-risk activities or having a lifestyle that includes extreme sports or dangerous hobbies such as skydiving, scuba diving, or mountain climbing, can lead to higher life insurance premiums. Insurers consider such activities as increased risks, which directly affect the cost of your policy.

How your job impacts the cost of life insurance

Your occupation is an important factor that insurers consider when determining life insurance premiums. Jobs that are considered high-risk due to the nature of the work, such as construction, mining, or aviation, typically lead to higher insurance costs.

Check out PolicyAdvisor's life insurance calculator.

How do insurance companies calculate the cost of your life insurance premiums?

Insurance companies base your premiums on your risk profile — this is their assessment of how risky it would be for them to cover you.

  • Insurance companies want to avoid risk as much as possible
  • The shorter your life expectancy, the higher the chance that they will have to pay out a lot of money soon — and that’s a risk for them
  • Insurers look at personal information about you and your lifestyle to gauge your life expectancy
  • They then compare your life expectancy against how much you’re asking them to cover you for, and use that to decide how much it will cost you — and whether to cover you at all
what affects life insurance cost

What affects life insurance prices?

The key factors insurance companies look at to determine the cost of your life insurance premiums can be separated into two categories:

Your personal health and lifestyle

Age and birthday: The younger you are, the cheaper your premiums will be. And, if your birthday is in less than 6 months, the insurance company will consider you to be that age instead of your current one.

Gender: Canada’s statistics show women have a life expectancy around 4 years higher than men. This means rates for women are usually lower than for men.

Smoking status: As we showed above, smokers have much higher premiums because it’s not healthy. This includes marijuana, vaping, and e-cigarettes.

Current health status: The healthier you are, the better your insurance rates will be. Insurance providers look at things like your weight and BMI, previous illnesses, history of drug use and more.  

Family medical history: Some health conditions can be passed down through your family. So, insurance companies look at your family’s health history to see how likely it is you might get certain illnesses and pass away sooner than expected.

Occupation: Some jobs are considered more risky than others. Think of firefighters, police officers, pilots, and even fishermen whose lives can be at risk on the job. They also have higher premiums.

Foreign travel: If you travel a lot to high-risk countries, you may also be charged more. Or, you could be denied completely.

The details of your insurance policy

Type of policy: In general, term life is the cheapest type of life insurance plan. Term life insurance policy quotes are the lowest, then whole life, and no-medical costs the most.

Term length (for term life plans): In many cases, a longer term costs more than a shorter term. A 20-year term usually costs more than a 30-year term. But, bear in mind that this isn’t always the case.

Coverage amount: The more coverage you get usually means you pay more for premiums. This is why it’s important to use a calculator to make sure you’re not buying more than you actually need.

Policy options and riders: You can buy optional life insurance riders to give you more coverage, like insurance for critical illness or disability. But it will cost you a bit more.

How can I lower the cost of my life insurance premiums?

There are some ways you can lower your insurance premium.

  • Change your payment method: Insurance premiums are usually paid monthly. But, many providers give you a discount if you pay yearly instead
  • Don’t skip the medical exam: Some policies and options let you skip doing a medical exam. But, policies that are fully underwritten, meaning they require a health test, often cost less than other types
  • Compare quotes: You’re allowed to shop and find a better policy. And, trustworthy, reliable life insurance professionals like us will encourage you to do so!
  • Improve your health: Committing to a healthy lifestyle can help you save on insurance costs, such as quitting smoking, losing weight, lowering your cholesterol to bring your blood pressure down, etc
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Frequently asked questions

What are life insurance premiums?

Premiums are the amount you pay for your insurance policy. This is the same thing as your rate, price, cost, etc.

Is life insurance paid monthly?

Life insurance payments can be made either monthly or annually. Most people choose monthly payments. But, you can get lower prices by switching to a yearly plan.

For permanent insurance, you also have the option to condense your payments so you only pay for a certain amount of years. This is called a limited-pay plan.

What is the cheapest life insurance?

The cheapest form of coverage is term life insurance. This type of insurance policy provides coverage for a set period of time or term. So, term life insurance rates tend to be less than permanent coverage that lasts your entire life.

Learn more about the cheapest life insurance in Canada.

How can I get preferred rates for life insurance?

Preferred rates are only offered to people who have a low-risk profile. This usually means they:

  • Maintain excellent health
  • Don’t smoke or have quit smoking
  • Don’t participate in risky activities like extreme sports
  • Have regular checkups

Learn more about how life insurance ratings work.

Is life insurance worth the cost in Canada?

Yes, life insurance is well worth the cost. Especially since premiums are often very affordable. You get the benefit of:

  • Financial security for your family
  • Peace of mind in knowing that they’ll be provided for
  • Reliable estate planning
  • A way to clear outstanding debts
  • Future college funding for young children
  • A business continuity strategy
  • Tax-free savings

Does inflation affect the price of life insurance premiums in Canada?

Yes, inflation can affect life insurance rates by:

  • Increasing the cost of new premiums
  • Making the death benefit have less buying power
  • Making your whole life cash value increase

Learn more about how inflation affects your life insurance.

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Best Life Insurance for Smokers in Canada 2025: The Ultimate Guide

One of the biggest barriers for Canadians considering life insurance is what they perceive as the high price of insurance premiums. This is especially true for smokers. Those who are addicted to cigarettes often assume the price of life insurance premiums is so prohibitively high that they shouldn’t even attempt to apply.

The truth about term life insurance for smokers lies somewhere in the middle. While there are situations where the price of life insurance for a smoker can give one pause for thought, there are alternatives. This guide will shed light on how smoking affects life insurance premiums, and what a smoker can expect when searching and applying for life insurance.

Can you get life insurance if you smoke in Canada?

Yes, of course, you can get life insurance if you smoke or consume tobacco. That smokers don’t qualify for life insurance is and incorrect assumption. This assumption stems from the fact that coverage for term life insurance is much more expensive for those who smoke than those who do not.

Types of life insurance for smokers

Smoking is a known risk factor for many health conditions, leading to higher premiums. However, several types of life insurance policies are available to smokers, each with distinct features, pros, and cons.

Type of insurance Features Pros Cons Cash value
Term life insurance Coverage for a specific period (10-30 years). Affordable premiums for a set term. Lower premiums, straightforward coverage No cash value, higher premiums for smokers None
Whole life insurance Lifelong coverage with a cash value component that grows over time. Lifelong coverage, cash value can be borrowed or withdrawn Higher premiums, fixed cost Builds over time
Universal life insurance Flexible premiums and coverage amounts, combining death benefit with a savings component. Flexible payments, interest-earning cash value Complex policy structure, higher premiums for smokers Builds over time, earns interest
Guaranteed issue insurance No medical exam, limited questions; accessible to those with health issues due to smoking. Easy to obtain, no medical exam Lower coverage amounts, higher premiums None

How does smoking affect life insurance?

The stress that cigarette smoking inflicts on one’s body has lasting detrimental health effects. Tobacco consumers are much likelier to have a health condition later in life like cancer, heart disease, and stroke.

While there are many more repercussions to smoking, it is these deadly medical conditions that make a smoker’s life riskier to insure. Thus, life insurance for smokers, especially those past the age of 40, is more expensive than that for non-smokers due to these health risks.

What counts as smoking by life insurance providers?

Unfortunately, there is no sliding scale for what is considered smoking. Life insurance companies do not believe in an occasional smoker. If you have had a single cigarette in the past 12 months, you are considered a smoker in the eyes of any potential insurance provider.

There are also other tobacco and nicotine products that will affect your life insurance premiums. The use of cigars, cigarillos, chewing tobacco, nicotine gum, and a nicotine patch can all be considered the same as smoking by some Canadian insurance companies.

There is some leeway for a tobacco user that smokes cigars or cigarillos. The classification depends on how many you consume. An occasional cigar or cigarillo may be classified as a non-smoker as long as it averages out to one a month or less.

As advisors, we have observed more flexibility on cigar usage by insurance providers than any other form of tobacco consumption when it comes to determining smoking status. So if you enjoy the rare stogie, you can still get affordable life insurance.

how life insurance companies classify smokers

Will I have to take a medical exam to test for tobacco or nicotine?

In your application for life insurance, you will be asked if you smoke. You must answer this honestly. Depending on your age and the amount of insurance you are seeking, insurance companies may require you take a medical exam (that requires urine and blood testing). Among other things, the blood test will also help them determine your smoking habits.

Even without a medical exam, it is extremely important that you do not lie in your life insurance application. Insurance policies have a “contestability period.” This is basically a two-year period in which a provider can rescind your life insurance policy and refund the premiums if there is a material misrepresentation during the application process.

This period begins from the time your policy goes into effect. If you die within this period and the insurance company finds out that you lied about your tobacco usage, they have the right to rescind the policy and/or deny the death benefit to your beneficiary. 

Even after the 2 year incontestability period, insurance companies have the right to deny a claim. If they can establish that you had not correctly classified yourself as a smoker at the time of the application and paid a non-smoker rate, your claim could also be denied.

Can I quit smoking to lower my life insurance premium?

Yes, you can, but it’s not as simple as flipping a light switch. If you decide to quit smoking  there is no immediate effect on the price of your life insurance premium.

How long do you have to quit smoking to be considered a non-smoker for life insurance?

You would have to verify you have not smoked cigarettes or consumed any other tobacco products for 12 months. First, you have to sign a declaration stating that you have not consumed tobacco products in that time period. Then you would need to confirm your status through medical underwriting.

This underwriting would most likely include providing a urine sample to ensure there is no trace of nicotine or cotinine (a nicotine byproduct) in your system. At that time, the insurance company would also need confirmation of no adverse change in your health. Then you may be eligible for a non-smoker rate.

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What challenges do smokers face with life insurance?

Due to the health risks associated with smoking, insurers often impose higher premiums and stricter conditions. Here are some of the key challenges smokers face:

Higher premiums

One of the most significant challenges for smokers is the increased cost of premiums. Smoking is linked to numerous health issues, such as heart disease, lung cancer, and respiratory illnesses, which increase the likelihood of claims. As a result, insurers charge smokers higher premiums to offset the risk.

Limited policy options

Smokers may find fewer policy options available to them. Some insurers may be reluctant to offer coverage or may exclude certain benefits. Available policies often come with higher costs and more stringent terms.

Stricter underwriting

The underwriting process in a life insurance policy for smokers is typically more rigorous. Insurers may require detailed medical examinations and health questionnaires to assess the extent of smoking-related health risks. This can lead to delays in obtaining coverage and sometimes even denials.

Lower coverage amounts

In some cases, smokers might be offered lower coverage amounts compared to non-smokers. This is because the increased risk associated with smoking makes it less attractive for insurers to provide large sums of coverage without charging prohibitively high premiums.

Impact on existing policies

Smokers who start smoking after obtaining a life insurance policy may face challenges if their smoking status changes. While most policies are based on the applicant’s status at the time of application, any changes in health or lifestyle can still impact the policy’s terms, potentially leading to increased premiums or reduced benefits.

How much does life insurance cost for smokers?

The cost of life insurance for tobacco users varies based on factors such as age, health, and the type of policy. Generally, smokers pay significantly higher premiums compared to non-smokers.

Let us understand this with an example:

If you are a 35-year-old female in Ontario and a non-smoker, here’s how much you pay for a 20-year term policy for $500,000 coverage:

  • Monthly premium: $25.17
  • Annual premium: $279.72

Now, let’s assume you are a 35-year-old female in Ontario, and you smoke. Here’s how much you pay for a 20-year term policy for $500,000 coverage:

  • Monthly premium: $61.43
  • Annual premium: $682.50

How much more do you pay if you smoke?

As a smoker, you pay about 144% more than a non-smoker for the same life insurance policy.

Smoker premiums

How much more will it cost to insure me if I smoke?

Canadian insurance companies offer rates on most of their term life insurance products specifically for smokers. These rates may have a smaller difference between those for smokers and non-smokers at early ages, but the difference is substantial as applicants age. Depending on the age of the applicant and the amount of coverage applied for, the cost of life insurance for smokers can be higher by 50 to 100% compared to those for non-smokers.

The following chart shows representative monthly premiums for a 20-year term life insurance policy with a death benefit of $500,000. The model assumes the applicant is in good health.

Life insurance premium prices: Smokers vs non-smokers

The table below provides a comparison of life insurance premiums for male and female smokers and non-smokers across different age groups:

Age Male Smoker Male Non-Smoker Female Smoker Female Non-Smoker
30 $58.41 $30.60 $40.05 $22.50
35 $80.86 $32.85 $61.65 $25.65
40 $126.45 $47.58 $88.65 $35.10
45 $205.09 $74.35 $138.15 $53.55
50 $323.95 $123.29 $215.10 $85.95
55 $535.24 $222.98 $331.17 $154.43
60 $832.22 $392.76 $522.00 $283.36
65 $1,347.30 $681.75 $875.70 $479.25

How to find an affordable life insurance policy as a smoker?

Life insurance and smoking don’t go too well together. While it can be challenging to find a policy that meets your needs as a smoker, here are some strategies to help you secure affordable coverage:

Consider quitting

One of the most effective ways to reduce your life insurance premiums is to quit smoking. Many insurers offer lower rates to individuals who have been smoke-free for at least 12 months.  

Choose a shorter term length

Opting for a shorter term length can help reduce your premiums. While a 20-year or 30-year term policy provides longer coverage, a 10- or 15-year term can be more affordable. This approach is particularly useful if you plan to quit smoking soon and can reapply for a new policy as a non-smoker after quitting.

Be honest about your smoking status

Honesty is crucial when applying for life insurance for tobacco users. Failing to disclose your smoking habits can lead to policy cancellation or denial of claims. Insurers typically verify your health status through medical exams and health records, so it’s best to be upfront about your smoking to avoid complications later.

Consider no-exam plans

No-exam life insurance policies can be a good option for smokers who prefer a simpler application process. These policies do not require a medical exam, which can expedite approval. However, premiums for no-exam policies might be higher, and coverage amounts might be lower compared to traditional policies.

Lock in rates early

The younger you are when you purchase life insurance, the lower your premiums will be. Even as a smoker, securing a policy early can result in more affordable rates compared to waiting until you are older when age-related health issues may further increase premiums.

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Top life insurance companies for smokers in Canada

The top life insurance companies for smokers in Canada are:

Best for lowest rates: Industrial Alliance (iA)

Industrial Alliance offers the most competitive rates for smokers in Canada across all age groups. Their rates are among the lowest in the market for smokers, making them an attractive option for individuals seeking affordable life insurance coverage despite their smoking status. 

Their Pick-A-Term life insurance policy allows smokers to select any term between 10 to 40 years and customize the plan according to their needs. 

Best for smokers who plan to quit: Foresters Financial

Foresters Financial offers a unique plan called the Quit Smoking Incentive Plan that provides lower rates to smokers for the first two years of their certificate. If they quit smoking within this period, they can continue to qualify for the lower premiums, incentivizing them to stop smoking and potentially save thousands of dollars. 

Best for cigar smokers: Canada Life

Canada Life offers life insurance options for smokers, although premiums may be higher than for non-smokers. They consider someone a smoker if they have smoked within the last 12 months, including cigarettes, cigars, e-cigarettes, chewing tobacco, pipes, and other tobacco and nicotine products.

Best for smokers committed to quitting: Manulife

For smokers who are committed to quitting, Manulife offers a policy where they can pay non-smoker premiums for the first 3 years. If the insured quits smoking and passes a nicotine test within this period, they can maintain non-smoker rates for the remainder of their policy.

If you have been tobacco-free for 12 months, you can submit a non-smoker application. If approved, your reduced non-smoker rates start on the 1st of the month following the approval of your application.

Can I get preferred rates as a smoker?

There is some silver lining for the smokers among us. Most life insurance providers offer preferred rates, or better than regular health rates, to individuals who demonstrate better than standard health. These more affordable rates are available both to smokers as well as non-smokers.

As you would expect, non-smoking preferred rates are substantially better than preferred rates for smokers. Nonetheless, if you are able to get preferred pricing while being a smoker, it will save you a lot of money over the term of your life insurance.

Preferred rate standards for smokers vary by company. Some companies may have easier norms for blood pressure, cholesterol, or even driving habits than others.

Some of the Canadian life insurance companies may not offer preferred pricing to those that smoke cigarettes. Instead, they are only able to offer better pricing to cigar consumers. At PolicyAdvisor we work with 25 of the best life insurance companies in Canada and can guide you to make the right choice.

How to apply for life insurance as a smoker?

Here are 5 quick steps to apply for life insurance as a smoker:

  1. Decide on the coverage amount and policy type
  2. Prepare details about your smoking history and health
  3. Speak to our licensed advisors and compare policies (consider a no-exam policy)
  4. Fill out the insurer’s form accurately and honestly (some policies require a health check-up)
  5. Check your policy’s terms before submitting your application and wait for approval to begin coverage

Frequently asked questions

How much more do smokers pay for life insurance in Canada?

Smokers typically pay 50% to 100% more in premiums compared to non-smokers. The exact amount varies by insurer, age, and health status.

Can quitting smoking lower my life insurance premiums in Canada?

Yes, quitting smoking can lead to lower premiums. Many insurers offer reduced rates to those who quit and remain smoke-free for a specified period.

Do life insurance companies test for smoking in Canada?

Yes, insurers may conduct nicotine tests, such as blood or urine tests, as part of the underwriting process to verify smoking status.

Is cannabis use classified as smoking by insurance companies?

If you vape cannabis or marijuana, insurance companies generally consider you a smoker. However, if you only use cannabis in other forms, such as edibles or tinctures, you are typically not classified as a smoker.

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The best life insurance for couples (2025)

Nobody wants to think about their death, but the hard reality is that with ageing comes questions about those you may leave behind. This goes doubly so for couples. When you have a significant other, you both are invested in finding the best life insurance policy for couples. Finding coverage for the two of you provides peace of mind should anything happen to you both.

Life insurance is readily purchased by couples for various reasons: replacement for loss of income, mortgage protection, leaving behind an inheritance for future children and grandchildren, or any other need to alleviate the financial hardship their death can have on their partners or children. These scenarios require decision-making. Do you need term life insurance or whole life insurance? Should you add child life riders? How much life insurance do you need and for how long?

Married couples and common-law partners alike need to contemplate one more big life insurance decision. Should you apply together or get individual life insurance policies? Let’s dig into your choices when it comes to life insurance for couples and whether one should get a joint policy or apply buy individual coverage for each single person.

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What are the different types of life insurance policies for couples?

There are mainly three types of life insurance policies or contract choices for couples searching for the financial security insurance offers. They are single life insurance (also known as individual policies or separate policies), joint first-to-die insurance, and joint last-to-die insurance. There is also an option for a “combined life insurance policy.” Similar to a joint life policy, this is one policy issued for both lives insured with a few differences.

Single life insurance policy

With a single life insurance policy, only one person is insured. The death benefit is paid out to a chosen beneficiary upon the death of that person – the policy owner. It is not tied in any way to a person’s marital status.

Keep in mind, if it is a term life insurance policy, the payout will be made if the death occurs during the term of the policy, the period of time you choose as your coverage length. If it is a permanent life insurance policy, there is no term, and the payout will happen whenever the life insured dies, as long as the policy is in force.

Joint first-to-die life insurance policy

Joint first-to-die life insurance covers the lives of two or more people (usually two). Under this type of life insurance policy, a single amount of coverage is placed on two or more insured lives, and the death benefit is paid out upon death.

What to choose between a single versus joint life insurance policyJoint last-to-die life insurance policy

Similar to a joint-first-to-die policy, joint last-to-die life insurance coverage is placed on two or more lives insured (typically two). The difference lies in the time of payout. For a joint- last-to-die policy, the death benefit is paid out upon the death of the last insured person to die.

Combined or Multi-life insurance policy

A combined life insurance policy covers two people, typically spouses or life partners. Both can choose separate coverage amounts or coverage terms under such a policy. An insurance company may also call it a multi-life policy. The advantage is one saves money by paying just a single policy fee. Thus you benefit from the flexibility and personalization of an individual life insurance coverage, while also obtaining a discount on the policy fee.

Both joint and combined life insurance policies for couples are good options for those with budgetary constraints or looking to cover a common need (such as mortgage debt). They can get the coverage they need to secure a debt or cover living expenses while only paying a single policy fee.

Life insurance for couples

What are the benefits of taking one life insurance policy for couples?

Lower policy fees

As discussed above, combined and joint-life insurance policies allow a couple to take coverage under a single policy, which is a less expensive way of seeking life insurance as you pay a single policy fee.

For example: you and your partner recently bought a home and have taken out a joint mortgage to cover the cost. You secure your mortgage by taking a joint-first-to-die policy and avoid paying the two policy fees.

The joint coverage includes a single coverage amount; you both can decide this amount based on the outstanding mortgage and its amortization period. The benefit is paid out upon the death of the first insured person. The survivor can then use the money to pay off the mortgage loan.

A penny saved is a penny earned; why not save the extra policy fee while comfortably getting the protection you need? While the amount may seem nominal month-to-month, it can add up to hundreds, if not thousands of dollars saved over the course of the coverage period.

And, as mentioned earlier, you can determine separate coverage amounts and terms for each insured life with a combined policy. In this case, you can also ensure that coverage continues for the surviving spouse or partner if one passes away.

One contract to manage

Keeping track of paperwork and physical contracts on top of regular financial responsibilities can be a pain. With a single policy for a couple, only one contract is issued. You have the ease of reading, managing, and storing just one policy instead of two.

Conversion to permanent insurance

Typically, joint life insurance policies let the survivor convert their term policy into a permanent policy without medical underwriting upon the death of the other life insured as long as they are within the policy term. While not strictly necessary, it gives the surviving partner the option to cover themselves for their entire life. In the case of a multi-life policy, the conversion option is available on both the coverages within the unified contract.

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What are the negatives of applying for life insurance as a couple?

We would be remiss to not mention the few disadvantages to life insurance for couples.

Joint policies do not have an option for splitting the coverage in two for any unforeseen reason. While we hope that every relationship lasts, the reality is that is not always the case. In the event you decide to end your marriage or relationship, you will not be able to split your joint policy. In such a case, you may likely have to cancel the joint policy, and both you and your partner will have to purchase new policies.

That said, most joint policies allow you to take individual life insurance coverage without undergoing medical underwriting upon divorce or dissolution. We cover the subject of joint versus single life insurance coverage in depth here if you are searching for more information about this particular situation.

Read more about life insurance and divorce.

Lastly, joint policies include only one death benefit and thus only pays out once. With a joint first-to-die insurance policy, if the survivor wishes to obtain new coverage it may not be easy to qualify later in life. And, if you do qualify, coverage will be more expensive in your later years.

Benefits of joint-life policy

When is the best time to apply for life insurance as a couple?

The best time to get a life insurance quote is always as soon as possible, as your rates will generally be less expensive in your earlier years. However, this is the easy answer. Couples have many trigger points that ad urgency to their life insurance needs. These can include moving in together, getting married, buying a home, getting a pet, or having children just to name a few.

Where can you get life insurance for couples?

While every couple’s situation and needs may vary, joint and combined policies are an excellent fit for those looking to save on money whilst getting the protection they require for their common needs.

Most of Canada’s best insurance companies offer various options for couples’ life insurance. Speak to our advisor today; they can discuss all the options at your disposal and help you choose the right policy and life insurance company for you and your partner’s needs.

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What is term life insurance and how does it work in Canada? (2025)

Term life insurance is right up your alley if you’re just getting started with #adulting — like getting your finances in order, learning how taxes work, and thinking about whether you should start investing.

Life insurance is a great way to build a better financial future for your family. And term life insurance is the most affordable and easy option for this kind of security.

This article is your handy guide to the basics of life insurance. We explain what it is and how it works. And, we answer your biggest questions, like how much does term life insurance really cost, what happens when the term ends, whether you can get your money back, and more.

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What is term life insurance?

Term life insurance is a type of life insurance that lasts for a specific period of time known as a term, which can be a fixed number of years or until you reach a certain age. This is why it’s called “term life insurance”.

Term life policies are usually offered for periods ranging from 10, 20, or 30 years to specific ages such as age 65. Some companies will also allow you to pick a term, in which case you can choose your own life insurance coverage period to meet your needs.

Check out our review of the Best Term Life Insurance Companies in Canada

Key features of term life insurance

  • Temporary
    Term life insurance lasts for a specific period of time, usually 10-30 years.
  • Affordable
    This type of policy has the lowest cost. Some policies can cost less than $20/month for young, healthy people.
  • Flexible
    You can have a term policy for 5, 10, 20, or 30 years. Some insurance companies let you pick your own number of years too. So, you can match your term length to anything you need it to cover.
  • Simple
    Term life insurance is very easy to understand because it doesn’t have an investment or savings component like some other types of life insurance do.
  • Renewable
    At the end of your term, you have the option to renew your policy for another set number of years. Although, this may not always be the most affordable option. We’ll explain more later on.
  • Convertible
    Term life insurance policies can be changed into permanent life insurance without having to take a medical exam.
  • Level premiums
    The amount you pay an insurance company every month or year is called a “premium“. Term life insurance premiums stay the same for as long as the term lasts.
WHAT IS
TERM LIFE INSURANCE?
Term life insurance is a type of insurance policy that covers you for a specific period or “term”.

Term lengths are usually 10-40 years, or until age 65 (when you retire). You can customize your term to match specific needs, like the length of your mortgage or until your children reach adulthood.

Term life insurance has a low cost because it’s temporary. It’s also flexible and easy to understand.

Question mark

Should I get term life insurance? 

You should get a term life insurance policy if you:

  • Want affordable life insurance for a set number of years
  • Are going through a major life event as a young adult, like getting married, having children, buying a home, etc.
  • Have temporary needs like supporting a financial dependent, paying school fees, paying debts, etc.
  • Have outstanding mortgage payments
  • Are on a tight budget

Term life insurance has many uses that can help your family cover the cost of temporary needs if you unexpectedly pass away in the near future and they don’t have your income to support them anymore.

For instance, most Canadians buy term policies to protect their mortgage or make sure young children can go to college in the future.

If you’re not sure about whether term insurance is a good plan for you, speak with a licensed life insurance broker. We’ll be able to assess your unique circumstances and give you personal, honest guidance to make the best choice.

Your beneficiaries can use a payout from your term life insurance policy in various ways.

What are the advantages of term life insurance?

The main advantages of term life policies are:

  • Affordable coverage
  • Simple to understand
  • Flexible
  • Renewable
  • Convertible
  • Level premiums

What are the disadvantages of term life insurance?

The main disadvantages of term life policies are:

  • Temporary
  • No cash value, investment components, or dividends
  • Premiums increase dramatically on renewal
  • Death benefit not guaranteed if you outlive your policy

How does term life insurance work?

With term life insurance, you pay a certain amount of money, called a premium, to an insurance company for a set number of years. In turn, the company agrees to give money to anyone you choose if you die within your term.

The person you choose to receive the money is called your beneficiary. Most people choose their close relatives, like their spouse, children, or parents. But you can pick a friend, business, or charity too if you want.

Let’s look at how some of the key factors of term life insurance work.

You decide the number of years you want your term to be. Most Canadians get between 10 to 30-year terms. But you can also get a policy to match a specific time, such as:

  • The term of your mortgage
  • Until you reach retirement age
  • Until your children have graduated
  • Any specific needs you have

Usually, the shortest term you can get for term life insurance in Canada is 1 year and the longest is up to 40 years. But this also depends on the provider.

Some companies won’t offer less than 5 years and some may not offer more than 30 or 35 years, especially for seniors.

You could get a 1-year term that renews every year. But this is quite expensive, so we don’t recommend it.

You can make premium payments every month or every year. Some companies give discounts if you pay yearly, so you could save up to 8%. We talk more about term life insurance premiums and show you some figures in the section on cost in this article.

Term life insurance is an affordable way to protect your family's financial future.

You can usually get anywhere from $50,000 to $10,000,000 in insurance coverage for a term policy. It depends on the insurance company.

The coverage amount is how much money the insurance company would pay to your beneficiaries if you pass away while you have an active term life policy.

There are several factors you should think about when considering how much life insurance you may need.

In general, the oldest age you can get a term life policy in Canada is 70 years old. It’s not a good idea to wait until later in life, though.

Insurance costs more the older you are. It also costs more if you have health concerns. It’s normal for us to develop health concerns as we age. Your premiums would be a lot higher if you wait until you’re older.

By the time you’re in your 60s or 70s, you may also not have not short-term needs. Most older Canadians have a permanent insurance policy instead of term.

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Term is the cheapest type of life insurance policy. It’s a good option if you’re on a budget and you want financial protection that doesn’t come at a high cost.

What happens when my term ends?

If you reach the end of your policy’s term, you have a few options:

  1. Let your policy expire
  2. Renew your policy
  3. Get a new policy
  4. Convert your policy

1. Let your policy expire

You can stop paying premiums and walk away from your insurance coverage.

2. Renew your policy

If you still need insurance, you can renew for another term. We don’t recommend this because your premiums will be a lot more expensive.

The insurance company won’t ask you to do a medical exam again if you renew. So, they won’t be sure about your risk profile. Because of this, they’ll charge you more.

3. Get a new policy

This is a better option if you still need coverage. Buying a new term life policy will often cost less than if you renew your old policy.

4. Convert your policy 

You could also change your term life policy into a permanent life policy. There are some rules about doing this. Some life insurance companies may ask you to wait until a few years into your policy to convert. Or before you reach a certain age.

You don’t have to do a medical exam to switch your policy from term to permanent coverage. So, it’s a good option if your short-term needs are over but you still have long-term needs.

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Renewing vs converting your policy

There’s no one-size-fits-all answer for whether you should renew your term life insurance or switch to a permanent policy. It will depend on your unique situation and needs.

➡️ If you renew:

Term life insurance policies can get much more expensive on renewal. This is because the insurance company will not ask you to do a medical exam. So, they can’t be sure of your health and how risky it would be for them to give you a policy.

At the same time, by the time your policy ends, you will be older. And, as we’ve noted, life insurance costs more the older you get.

Learn more about the pros and cons of renewing your policy.

➡️ If you convert:

You can convert your term life insurance into permanent life insurance if you need it for long-term needs like covering funeral costsestate taxes, or other end-of-life expenses.

Your premiums will be more expensive if you choose to convert, but it’s normal for permanent life insurance to cost more than term life insurance. This is because most permanent policies come with a savings and investment component that lets you access what’s called cash value during your lifetime.

So, while you will pay more, you also get more benefits too. And you would not have to take a medical exam to convert.

If you’re unsure about your options, speak with one of our licensed insurance experts. We can take a look at your current needs and help you determine which course of action would be in your best interest.

what to do when term life insurance ends

How much does term life insurance cost?

Term life insurance costs vary depending on several factors. In general, people who are young, healthy, and don’t smoke get the lowest life insurance rates in Canada.

Term life insurance products are the cheapest in the market. Premiums are often lower than it would cost you to buy a cup of coffee every day.

Take a look at the chart below to see some of the average Canadian term life premiums from some of the country’s leading companies.

Term life insurance quotes in Canada

Age 10-year term 20-year term 30-year term
20 $14 $20 $24
30 $15 $22 $33
40 $20 $34 $64
50 $45 $83 $166
60 $140 $281 Not available

 *Quotes based on $500k in coverage for a non-smoker in regular health. 

What affects term life insurance premiums?

Term life insurance premiums depend on factors like:

  • Age
  • Sex
  • Health
  • Medical history (including family history)
  • Smoking status
  • Occupation
  • Lifestyle/hobbies
  • Type of policy
  • Term length
  • Amount of coverage

Life insurance costs less the younger you are because, in most cases, you don’t have a high risk of passing away soon. This is why it’s a good idea to sign up when you’re young, because then you can get low prices and keep that same low price for as long as your term lasts.

Policies also cost less if you don’t smoke or do risky activities like skydiving. And, they also often cost less for women because Canadian statistics show women tend to live longer than men.

Things like term length and coverage amount don’t work this exact same way. You may think that a shorter term means a lower price. Sometimes that is the case. But sometimes it may be more cost-effective to go with a longer term.

How much term insurance coverage should I buy?

A general rule of thumb is to get at least 10-15x your yearly income in life insurance coverage. But how much coverage you should buy also depends on things like:

  • Your budget
  • Any bills or outstanding debt that would have to be paid off
  • How much your family would need to keep up with the cost of living
  • Inflation

Most of us would want to leave a lot of money behind for our loved ones. But you may not really need a million-dollar policy.

The best way to find out how much term insurance you should buy is to use a life insurance calculator. We have a free one you can use to find out how much insurance you would need in minutes.

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When is the best time to buy term life?

The best time to get term life coverage is when you’re young and healthy. This is when your premiums will cost the lowest. And, this is when you’re most likely to benefit from a term life policy.

The best time to buy life insurance will always be today. Your premiums will always cost less the younger you are, and you can also avoid the risk of something happening without having the coverage you need.

How to get the lowest term life insurance quotes in Canada?

If you’re ready to start checking out term life insurance options, you can get the lowest term life insurance quotes in Canada all in one place on PolicyAdvisor.com!

Our easy platform lets you compare online quotes from the best providers. This is an easy way for you to find the lowest rates and best deals.

Or, you can speak with our licensed life insurance brokers. We’re here to help, so book a call and let us help you find the lowest rates!

How can I apply for term life insurance?

You can apply for term life insurance online at PolicyAdvisor.com. Our easy-to-use platform lets you browse plans and submit an application in minutes. It’s a simple process. Just input your preferences and some information. We handle the rest!

Connect with an advisor 

Compare the best term life insurance quotes on PolicyAdvisor.com. And our expert life insurance agents are happy to connect if you need some help!

We’ll answer your questions, explain everything in simple terms, and help you find the best life insurance plan for your family. You don’t have to pay a dime either! We offer personal help free of charge. There’s no obligation to buy.

Term life insurance gives you simple, affordable, and flexible insurance coverage.

Frequently asked questions

Do I have to do a medical test to get a term insurance policy?

It depends. These days, insurance companies may not ask for a medical test in many cases. They may just ask a few health questions.

In general, if you’re a Canadian citizen or resident in good health and you’re getting under $500K in coverage, you will probably not be asked to take a medical exam.

Learn more about life insurance medical exams

Do I get a refund if I cancel my term life insurance policy?

No, you will not get money back if you cancel a term life policy. Think of it this way: term life insurance coverage is like renting an apartment. During your “lease” term, you get the benefit of housing. When the lease is up, you walk away.

Term life policies work the same. During the term, you have the benefit of financial protection. Once the term is up, you can walk away knowing you had peace of mind for the agreed term.

What are the other kinds of life insurance?

Aside from term, the other kind of life insurance you can get in Canada is called permanent life insurance. These policies cover you for the rest of your life and have an investment component.

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

Most people who buy permanent life insurance get a whole life policy.

Learn about the different types of life insurance in Canada

If you’re not sure which is better for you, contact us. Our friendly licensed advisors are here to help and happy to help you figure out which plan would work best!

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What is Annual Renewable Term life insurance (ART)?

In most of our articles, when we mention term life insurance, we are referring to level term life insurance. What this means is the premium rate is locked in for the length of your coverage term. For example, let’s say you applied and were approved for a 20-year term life insurance policy, with a monthly premium of $30. That $30 is what you pay every month for 20 years (or 240 months). 

Some applicants shop and compare for quotes to ensure they can lock in the lowest monthly premium for the longest term possible given their age, health, and smoking status. This ensures a stable fixed cost and the peace-of-mind knowing they are covered for their desired length of time: Typically, 10, 20, 30 years or to age 65 or 100, depending on their provider.

However, there is another term insurance which is not mentioned quite as much, that works a little differently and offers insurance seekers added flexibility and options with their coverage. Annual renewable term life insurance, while not the most popular or well-known product, has some features that set it apart from level term insurance and make it a useful option for specific financial situations.

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What is Annual Renewable Term life insurance?

Annual Renewable Term (ART) life insurance is a short term life insurance policy which locks in your premiums for one year and can be optionally renewed at the end of each year. 

The insurance company guarantees to renew the policy yearly for a set number of years. 

The premium rate is guaranteed but not level: it increases every year. While, yes, the price increases, you are still guaranteed your insurability every year you renew your term. The premium rates start low at the beginning of the policy but increases every year as the age increases, given the rise in mortality risk of the insured person.

Annual renewable term life insurance caters to individuals seeking temporary life insurance coverage at a low cost.

Learn more about renewing life insurance.

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How does Annual Renewable Term life insurance work?

Just like any other form of life insurance, the annual renewable term life insurance offers financial protection to your dependents, in the event of your passing away, during the term of the policy.

To obtain ART, you have to first establish your insurability with a medical questionnaire or further medical underwriting through a medical exam and/or blood work.

Once your insurability is established, you choose your death benefit amount and find out what your monthly (or yearly if you choose) premium is. You now have life insurance for the year, and can renew each year until you feel you no longer need the coverage or want to look into other options such as term, whole, or universal life insurance.

The first year’s premiums are typically much lower than what one would pay in a longer term life insurance policy, but keep in mind they do increase every year. While the increase may appear minimal in the early years of the coverage, they will change substantially once you hit higher ages.

Also keep in mind that in most cases annual renewable term life insurance is not a long-term solution (more on this below). If you continue to renew your coverage beyond the initial first few years, you may quickly approach the point where a 10 or 20 year term life insurance policy would have a lower premium than what you currently pay. Unfortunately, you’ll have no time machine to go back and choose the least-expensive option at this point.

How much does Annual Renewable Term life insurance cost?

Below are the annual premiums a healthy, non-smoker at age 40 would qualify for with both ART coverage and 10-year term life insurance for $100,000. In this case, the applicant would save hundreds of dollars over the 10 year period by locking in a rate for pure term life insurance; there are no cost savings here through ART coverage.

Premiums for $100,000 Coverage, Non-Smoker, Good Health, 10-Year Term, Age 40-49

Age ART Term Life Insurance
40 $129 $121
41 $129 $121
42 $129 $121
43 $143 $121
44 $163 $121
45 $177 $121
46 $194 $121
47 $213 $121
48 $233 $121
49 $257 $121
Total $1,766 $1,210

This example for the same circumstances at age 50 are a little different. While there is slight savings in the early years with ART, the annual renewable premiums are substantially higher in the later years. After 10 years, one who chose term life insurance would save about $800 (male: $833, female: $793).

Premiums for $100,000 Coverage, Non-Smoker, Good Health, 10-Year Term, Age 50-59
Age ART Term Life Insurance
50 $205 $226
51 $205 $226
52 $205 $226
53 $230 $226
54 $268 $226
55 $299 $226
56 $339 $226
57 $386 $226
58 $442 $226
59 $511 $226
Total $3,090 $2,257

The savings are even more pronounced in one’s sixties. Below are the premiums for the same $100,000 policy for a 60-year-old non-smoker. A male applicant could save over $3,300, and a female applicant would save over $2,500, at the end of the term as opposed to continually renewing their Annual Renewable Term coverage.

Premiums for $100,000 Coverage, Non-Smoker, Good Health, 10-Year Term, Age 60-69
Age ART Term Life Insurance
60 $497 $550
61 $497 $550
62 $497 $550
63 $594 $550
64 $739 $550
65 $863 $550
66 $1,008 $550
67 $1,179 $550
68 $1,382 $550
69 $1,622 $550
Total $8,878 $5,497

Why would someone choose Annual Renewable Term life insurance?

There are several situations where an annual renewable term life insurance policy makes sense. 

Short term debt obligations: Those carrying a temporary debt can find annual renewable term policies useful. If you are carrying a mortgage debt or car loan, but know you will be selling that asset to pay off the debt in the near future, an annual renewable policy can be a cost effective way to protect yourself in this period.

For those that rely solely on workplace benefits for their life insurance coverage needs, ART policies can offer a temporary solution when one is between jobs or find themselves temporarily unemployed.

Another ideal use case for ART coverage is for those who need insurance immediately, but intend to improve their health to the point where it would lower their premium for another form of insurance.

Some other uses for ART coverage include:

  • Business owners looking to cover a short-term loan
  • New parents making sure they are covered while they weigh all of their insurance options.
  • Smokers who can take the time afforded to them through ART coverage to quit smoking permanently and dramatically lower their future insurance premiums.
Check out PolicyAdvisor's life insurance calculator.

What are the similarities between ART and term life insurance?

As mentioned, there are several ways an annual renewable term life insurance policy is similar to level term life insurance:

  • Regardless of length, both types of policy are renewable at the end of the term
  • Similarly, premiums are guaranteed for the term
  • Both offer temporary life insurance protection
  • Pricing for both reflects cost of pure life insurance
  • There is no access to any cash value or investment accounts

What are the differences between ART and term life insurance?

Despite both being temporary forms of life insurance, annual renewable term life insurance does have some key differences with traditional term life insurance.

Term Life Insurance Annual Renewable Term
Renewed after initial term, generally of 10, 20, 30 years Renewed annually
Premiums are fixed for the term Premiums increase every year
Covers wide range of uses Covers short-term and temporary use-cases

How do you buy annual renewable term life insurance?

Not all Canadian life insurance providers offer ART policies. Companies like Empire Life have options for annual renewable term life insurance with the additional option to convert that coverage to a 20-year term life insurance policy, should you decide that is the right option for you down the road.

Regardless of whether you choose a term life policy or think an annual renewable term is what your coverage needs call for, our licensed brokers have decades of experience helping Canadian insurance seekers find the right coverage at the right price for their unique coverage needs. 

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How life insurance, probate, and wills work

Wills and final testaments are a big deal, and an important part of making sure your family is taken care of once you’re no longer around. But they can be overwhelming to understand. Canadians often wonder if life insurance is part of their estate, whether it goes through probate, and if their will determines who their life insurance beneficiary has to be.

Letting these questions go unanswered while you try to figure it out can cause expensive delays if you were to pass away. In this article, we help you sort out the whys and hows of wills, life insurance, and probates. This will let you figure out where the proceeds of your life insurance policy should go.

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Let’s start by quickly refreshing what “life insurance“, “estate“, and “probate” mean. Or, you can skip to how a life insurance policy factors into a will.

What is life insurance?

Life insurance is a contract between you and a life insurance company. If you, the insured person, die, the insurance company will pay a lump sum of tax-free money to your named beneficiary. In exchange, you agree to pay them regular insurance premiums, which are a small amount of money over time.

Read more about how life insurance works.

What is an estate?

Generally speaking, an estate includes all the things that someone owns at the time of death.

For example, high-value items like your car, jewellery, and bank accounts. It also includes any property you own, like your home, cottage, or land.

But any liabilities you have are also part of your estate. This includes loans, lines of credit, and other debts. We’ll talk about why this is important a little further down.

The total value of your estate is your assets minus your liabilities. And, if you have assets that you wish to pass onto another person when you die, then your estate (in most cases) must be probated.

What is a will?

A will is a written document that states how you wish your estate to be distributed after you pass away. It’s also known as a last will & testament. A written will helps your loved ones access your assets, although after the probate process has been completed.

Read our complete Guide To How Wills Work In Canada.

What is probate?

Probate is a legal process of determining whether the will of a deceased person is legitimate, and confirming who has been appointed as the will’s executor. The executor will be responsible for making sure the will is carried out. But we’ll get to that in the next section.

The probate process takes place in a court in the deceased person’s home province. Probate is considered finalized once the court issues an official document.

But in the event that someone dies without a will, their assets will be distributed by the court according to provincial laws. When this happens, it’s called intestacy or an instate death.

Who is an executor?

An executor of a will is the person who is responsible for carrying out the will. This individual is either named in the will or appointed by a court. They have to distribute the assets of the estate according to the deceased person’s will.

How are wills and life insurance related?

Both life insurance policies and wills are powerful tools for planning what happens after your death. But they function in different ways and follow different rules. They can also act independently of each other, giving you more control over what happens to your assets.

Is life insurance considered an estate asset?

No, life insurance is not usually a part of your estate as long as you have a beneficiary. If you have a beneficiary, the insurance money will be paid directly to that person instead of becoming an estate asset.

In other words, you cannot “pass” your life insurance policy or death benefit payout onto your next of kin as you would be able to with an estate asset — and, believe us, that’s a good thing! It means your beneficiary will receive your insurance payout much faster and easier than if it went through your estate. Plus it guarantees they will receive the full amount. We’ll give you more reasons why you wouldn’t want your life insurance to be part of your estate below.

There are some circumstances where a life insurance payout could become a part of a deceased person’s estate. But complex matters like these are the exception rather than the norm.

For example, an insured person can choose to name their estate as their life insurance beneficiary. Or, a life insurance policy owner and their only beneficiary can unfortunately die at the same time. In cases like these, the insurance payout would become a part of the individual’s estate.

Is life insurance included in someone’s will? 

No, a life insurance policy and its corresponding payout are not generally included in someone’s will. Because you already named a life insurance beneficiary who will receive the payout when you pass away, there’s no need for you to include it in a will. The insurance company will bypass your will, estate, and any other end-of-life instructions and give the payout money directly to the person you named as your beneficiary.

Life and wills are generally separate. Although, they can work in tandem as a solid estate planning strategy.

Does life insurance go through probate?

No, life insurance money given to your beneficiary does not usually go through probate. As we mentioned earlier, it skips over your estate and your will and goes straight to the beneficiary — which means they get it much faster.

For instance, if you have named your daughter as the person to receive your life insurance death benefit after you die, then the named beneficiary is your daughter. She is the rightful recipient of your life insurance proceeds. The proceeds will belong to your daughter as her property, and she will be able to use the money any way she sees fit.

But, let’s say you did not name a beneficiary to your life insurance application or policy, or the beneficiary is no longer alive; what would then happen to the life insurance proceeds upon your death?

In these circumstances, your life insurance proceeds would go to your estate and then have to go through probate. The probate process is typically time-consuming and — worse yet — is not free.

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Frequently Asked Questions

Why designate a beneficiary to your life insurance policy?

We all want to make sure that when we die, our families are financially secure and that our loved ones receive the money from our life insurance policy without any delay or cost. This was most likely your intention when you initially purchased your life insurance policy.

As discussed above, this is possible if you have named a beneficiary or beneficiaries to your life insurance policy. This person could be your spouse, children, parents or anyone else you wish to leave the money for upon your death – even groups such as a charity or association.

If you do not name a beneficiary, then by default, your estate is the beneficiary. In such cases, your life insurance proceeds (as mentioned earlier) are required to go through probate.

Why avoid having a life insurance payout go through probate?

There are several reasons why it’s generally a good idea to keep your life insurance proceeds out of the probate process. We’ve outlined 3 major ones for you below:

1. Cost

Here’s the expensive part we mentioned earlier. As part of the probate process, certain fees are paid to settle the estate, like probate fees and attorney fees. Probate fees vary by province and can range from a flat amount to a percentage of your assets.

If your life insurance proceeds go through probate, it can substantially increase the value of your assets and therefore your probate fees. Furthermore, if there are any creditor claims, debts, or taxes payable, these are also paid from the deceased’s estate. Such fees and payments can gradually reduce the life insurance death benefit if it is considered part of the estate, leaving your loved ones with that much less money.

2. Privacy

Another thing to consider is privacy. Once a will passes probate, it becomes a public document that anyone can see. Information about your life insurance benefits would also become public record if it goes through probate.

3. Processing time

As we mentioned earlier, some people may make their estate their beneficiary. This is often the case if the person only got life insurance primarily to use it to pay estate taxes upon their death.

But if you want your death benefit to be used by your family to replace your income, then it’s probably best that you name your beneficiary a family member or members. In this case, your life insurance provider pays the death benefit directly to your named beneficiaries. This way, there is no probate requirement and you avoid any added delay in your beneficiaries receiving the money. Plus, your beneficiaries will receive the amount you intended them to have in the first place.

Tip: Make a Plan B

As an extra note, it is a good idea to name a contingent or secondary beneficiary. This is just in case your primary beneficiary dies before you do. For instance, couples with children might want to ensure their dependents are the contingent beneficiaries in case both primary caregivers pass away simultaneously.

Check out PolicyAdvisor's life insurance calculator.

Can you use a will to change a life insurance policy beneficiary?

Nope, a will cannot be used to change who will receive someone’s life insurance money. An insurance contract is separate from a will. The beneficiary named on the life insurance policy will receive the payout in the event of the death of the insured. A will cannot be used to replace such a beneficiary.

This is why you should be sure to review and update the beneficiary designations of your life insurance policy after major life events like marriage, births, divorce, and death.

If you need any advice on how to update or augment your current life insurance coverage, give our licensed brokers a call. We’re happy to help you with any insurance questions you may have!

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How does vaping affect your life insurance?

There are many factors that influence the monthly cost of a Canadian life insurance policy. Anything that affects your health and lifespan is taken into consideration. This includes your mental health, physical health, and other health habits.

One section on your life insurance application asks about your tobacco consumption and smoking habits. Tobacco use is linked with increased health risk for several diseases such as lung cancer, mouth cancer, and emphysema. As a result, life insurance carriers consider smokers at high risk of premature death. This means that rates for smokers are significantly higher than non-smoker rates.

In recent years, fewer people are smoking traditional rolled cigarettes. However, this decrease in cigarette smoking has led to an increase in vaping. Many former smokers have switched to vaping or electronic cigarettes as some media portrays it as a more discrete way to consume nicotine. E-Cigarette use is also popular amongst younger demographics. This is due to accessibility, variety in flavours, and a more subtle smoking experience. However, since the rise in popularity of vaping, some studies out of the US have reported lung injury and other health concerns associated with vaping habits.

While vaping is still advertised as a healthier alternative to smoking, what do life insurance companies think? Knowing that tobacco consumption and smoking affect life insurance premiums, it’s only fair to wonder if vape use also leads to expensive insurance. This article reviews how life insurance companies view vaping when underwriting life insurance applications and what you can do to lower your premiums if you vape.

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Are you considered a smoker if you vape? 

If you vape, you are considered a smoker according to most life insurance companies. In fact, you can be considered a smoker if you have consumed or used any of the following in the past 12 months: 

  • cigarettes
  • tobacco products (chewing tobacco)
  • nicotine patches
  • hookahs 
  • nicotine gum
  • e-cigarettes
  • vapes 

Frequent consumption of marijuana, such as edibles or cannabis products, can also classify you as a smoker. This includes adding cannabis oil to your vape. However, this will vary depending on your insurance provider. 

There is some flexibility regarding cigar smoking. Some providers will allow you to smoke a few cigars and still classify as a non-smoker as long as your average is less than one a month. Though, this does depend on the size and type of cigar or cigarillo.

how life insurance companies classify smokers

Does vaping affect your life insurance? 

Vaping will affect the cost of your life insurance. E-cigarette users, vapers, and traditional cigarette smokers are all rated the same, regardless of the frequency or severity of their nicotine addiction. Any consumption of these products in the last 12 months classifies you as a smoker.

As a smoker, you are considered at higher risk for deadly health conditions such as stroke, heart disease, and cancer than a non-smoker would be. This means that you are more likely to pass away of a pre-mature death, making you riskier to insure. If you’re considered a risk to the insurance company, they will give you a rating, and this rating raises your premiums.

Insurance providers, like BMO, take into account the health effects of vaping, as well as unknowns like how some of the carcinogens found in vaping liquid (lead, formaldehyde) have long-term effects on e-cigarette users.

While Health Canada cites vaping as healthier than smoking regular cigarettes, US studies have reported adverse health issues and respiratory issues, many of which are still unknown. As more time passes and research is done on the long-term effects of vaping, we can assume that life insurance providers will update their guidelines for the cost of life insurance for vapers.

What happens if you lie about smoking or vaping on a life insurance application? 

When you apply for life insurance, you are asked many questions about your health. One of these questions will ask if you smoke or not. If you vape, you are classified as a smoker, so you must answer yes.

Depending on the type of insurance you are applying for and your age, you may also be required to take a medical exam as part of the application process. During this exam, you will provide a blood sample and/or urine test from which they can test for nicotine.

It is possible to purchase a life insurance policy without a medical exam. This type of insurance is known as no-medical life insurance. In the application process, you will still be asked if you smoke. However, because these policies require no medical exam, blood test, urine test, or assessment of your vitals, they wouldn’t have evidence of the nicotine in your system. But, it’s important to note that no-medical policies typically have a more expensive monthly premium than fully underwritten life insurance, so you won’t get a cheaper rate choosing no-medical coverage.

Moreover, even if you don’t have to take a medical exam for your life insurance policy, you still should be honest about your smoking status. An insurance policy has a contestability period that begins from the start of your policy and lasts two years. If your insurance provider finds there was any dishonesty or misrepresentation during the application process, they can rescind your policy and deny you life insurance coverage. If you die during this contestability period and are found to have been a smoker when you claimed otherwise, your beneficiaries may not receive the policy’s death benefit.

Even after the contestability period, your insurance provider has the right to deny a claim if they can prove misrepresentation or improper classification during the time of application.

What happens if you start smoking or vaping after getting life insurance? 

While health professionals would not recommend one starts smoking or vaping, it may still be the case for some. If you start smoking after your contestability period and you have a guaranteed rate, you should still be insured. However, if you’re considering taking up smoking it’s best to investigate your specific policy before you buy. Simply get a life insurance quote and compare the cost of smokers rates vs. non-smoker rates. It may deter you from taking up the habit.

Smoker premiums

Is life insurance more expensive if you vape?

Yes, life insurance is more expensive if you vape. If you are a nicotine user of any kind, you are considered a smoker and are subject to higher insurance premiums. Insurance for smokers can have 50-100% higher premiums compared to non-smoker policies. For a 45-year-old, male smoker your premium could be around $205 a month while a non-smoker could pay around $75 for a term life insurance policy. That difference adds up.

However, you may still qualify for preferred life insurance rates if you are a smoker. Preferred rates are offered to those with better than average health metrics. These metrics could include cholesterol levels, blood pressure readings, and body mass index. Speak with an advisor to learn more about affordable life insurance for smokers.

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How long after quitting smoking can you get life insurance?

You do not have to quit smoking to get life insurance, however, you will save a good chunk of change if you do. To be classified as a non-smoker you must have not consumed any tobacco or nicotine products in the last 12 months. After 12 months you can honestly state on your application that you are a non-smoker.

If you already have a life insurance policy but have quit smoking since the start of your policy, you can apply to have your status changed to non-smoker. With non-smoker status, you will qualify for lower premiums. You will have to sign a declaration confirming that you have quit smoking and have not consumed any nicotine or tobacco in the last 12 months. In addition, you will need confirmation of a medical exam stating that there was no trace of nicotine or cotinine in your system. Your insurance provider will also ensure there have been no other changes to your health.

Do you vape and are worried about getting life insurance? 

While vaping will affect the price of your life insurance quote, our expert advisors can help you find an affordable policy that works for you! Book a call with our advisors today!

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