If you’re the kind of person who likes to cut your cake and eat it too, whole life insurance could be your perfect financial solution.

It gives you the peace of mind that comes with knowing your family will have some extra funds to handle any financial obligations once you’ve passed on. And it gives you a way to pocket some extra cash while you’re still around.

Think of this article as your easy guide to understanding what whole life insurance is, how it works, and how you can best use it to your advantage. Let’s take a look.

What is whole life insurance?

Whole life insurance is a type of permanent insurance that covers you for your entire life. When you die, the insurance company makes a payout to your loved ones.  They can use this payout for things like paying for your funeral or estate taxes, or anything else they need.

Some whole life policies also come with an investment component that builds cash value over time. You can use cash value during your lifetime or let it add to the death benefit after you’ve passed away. Plus, some policies pay dividends on top of cash value, giving you even more options to build wealth to use now.

People often use “whole life insurance” when they’re talking about permanent life insurance policies. But whole life is just the most common type of permanent insurance. There are other permanent life options as well, like Term-to-100 and Universal Life. You can learn more about that in our guide to permanent policies.

Key features of whole life insurance

Some of the key features that distinguish whole life policies from term life policies include:

• Lifelong protection
  As long as you pay your insurance premiums, you will have coverage for life. This is unlike term insurance, which only lasts for a specific number of years.
• Investment component
  Whole life policies build cash value by the insurance company investing the premiums you pay. This is automatic and included as part of all policies. Some policies also give you dividends. You can use cash value and dividends to pay premiums, reinvest, borrow, and more.
• Guaranteed death benefit
  With this whole life, the insurance company has to make a payout, called the “death benefit.” Compare this to term life insurance, where someone could outlive their policy and the company wouldn’t have to pay anything.
• Limited pay options
  Whole insurance lets you pay the entire cost of your premiums early if you want to. This premium payment option is called “limited pay.” Your policy lasts the rest of your life, but you could pay an agreed amount off in a certain time frame and still keep your policy until you die. For example, you could set a payment period of 8-20 years, or stop paying when you reach retirement age.

What are the different types of whole life insurance policies?

There are two main types of whole life policies: participating and non-participating. The main difference between them is that a participating policy pays annual dividends but a non-participating policy does not.

Participating whole life insurance

A participating insurance policy has an investment portfolio that is managed by the insurance company. If that investment gets any returns, you will be paid the dividends.

Normally, dividends are paid out every year. They can be given to you as cash, or you can reinvest them into the policy. If you choose to reinvest your dividends, you will not be charged any tax on them.

There’s another benefit to reinvesting your dividends. It can increase your whole life policy’s death benefit value, which can then be left for your family or be used to leave a legacy once you pass away.

Participating life insurance is usually more expensive than non-participating because it pays dividends and gives you the option to increase your death benefit. Insurance companies look at how much they expect the investments to get back when they decide how much to charge you for this kind of whole life policy.

Non-participating whole life insurance

Non-participating life insurance is a whole life policy that gives you the basics. It still:

• Covers you for your entire lifetime
• Has a cash value component
• Has level premiums that don’t change
• Is guaranteed to pay out a death benefit

But it does not:

• Have an investment account
• Pay dividends

Life insurance can cost anywhere from $10-70 per month. There is no one-size-fits-all policy with a standard price. Life insurance is customized to your life and financial goals— the insurance companies take your personal and policy details into account and then determine the price. So, how do you know if you’re getting a good deal?

To get a general idea of how much you can expect to pay for life insurance, read on and find out average life insurance rates based on coverage and age, and learn more about how your policy is priced.

How much is life insurance in Canada?

The average cost of term life insurance in Canada is about $10 per month for $100,000 in coverage for a 10-year-term policy, if you are young and healthy (30-40’s, non-smoker). However, the actual price of life insurance is dependent on the type of policy you get and your personal demographics.

Life insurance rates by age in Canada

Age plays a big factor in the cost of life insurance. Check out the quoted prices for each age group in the tables below.

Life insurance rates by coverage amount

The table below has common life insurance death benefit amounts and how much they cost depending on your age.

To quickly see how much term insurance would cost for you, use our life insurance calculator. You can get a personalized, no-obligation estimate matching your financial security needs in minutes.

What is the cheapest life insurance? 

The cheapest form of coverage is term life insurance. This type of life insurance policy provides coverage for a set amount of time or term.

Because you’re only covered for a short amount of time (10, 20, or 30 years, etc), a life insurance company will charge you less than a policy that lasts your whole life (more on that below).

How much does term life insurance cost?

As mentioned above, term life insurance generally costs about $10 a month for $100,000 in coverage if you are young and healthy. But you may need more or less coverage, and maybe your health circumstances are different.

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

Term life insurance quotes in Canada*

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

How much does whole life insurance cost?

Permanent insurance or whole life insurance policy prices are generally a more expensive type of policy because it provides coverage for your entire life. Additionally, whole life insurance policies have a cash value which your elevated premiums also contribute to, and can be accessed in the form of policy loans or a policy dividend.

Learn more about how permanent insurance policies work and the cost of whole life insurance.

To get a general idea of how much whole life insurance costs, check out these whole life quotes below.

Whole life insurance quotes in Canada*

*Quotes based on $100k in coverage for a non-smoker in regular health. 

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 life insurance costs a little as $3 per month. But it depends on how you buy this coverage for your child.

You can purchase life insurance for a newborn child – or even older children – in two ways.

1. Add a child rider to your insurance policy

This typically adds a few more dollars to your monthly insurance premium and provides a modest death benefit should a dependent child pass away while your policy is still active.

2. Buy a separate whole life policy

Children’s whole insurance is guaranteed to remain in force for the covered child’s entire lifetime (including into adulthood) and can generate dividends during this whole period. Whole life insurance also accrues a cash value, which the child can later withdraw from – like a savings account – or use as collateral for a loan from a financial institution.

Learn more about life insurance for children.

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.

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.

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.

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.

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.

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.

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

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

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

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.

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.

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. 

Many people think there are only two kinds of life insurance in Canada: term life insurance versus whole life insurance. But there are actually many more options!

Read on to find out about the three common types of life insurance available in Canada to help you figure out which policy will fit your needs. 

What are the two main types of life insurance?

The two main types of policies are term life insurance and permanent life insurance (which is commonly called whole life insurance). In addition to the main types, there are also no-medical life insurance plans.

Term and whole life insurance are traditionally underwritten, meaning there are a lot of application questions and usually a medical questionnaire or exam. No-medical policies have accelerated underwriting, meaning no medical exam, fewer health questions, and faster approvals.

Here’s a breakdown and detailed description of all the types of life insurance that are commonly offered in Canada.

1. Term life insurance
2. Permanent life insurance
   • Whole life insurance
     • Non-Participating
     • Participating
   • Universal life insurance
   • Term-to-100
3. No-medical life insurance
   • Simplified issue life insurance
   • Guaranteed issue life insurance

1. Term life insurance

Term life insurance pays a tax-free, lump-sum payment to your beneficiaries if you die within the policy term.

The most popular coverage lengths for term insurance are:

• 10 years
• 15 years
• 20 years
• 25 years
• 30 years
• up to age 65

Some life insurance companies in Canada (such as RBC Life Insurance or Industrial Alliance Life Insurance) allow you to pick your own term (6, 8, 11 years, etc.).

With term insurance, you can choose your policy lengths to match time-bound debts or liabilities. This could include financial obligations like:

• Your mortgage
• Any outstanding debt you may have
• Coverage for your children’s education
• Living expenses for your loved ones so they maintain the same standard of living

✅ Advantage of term life insurance

• The cheapest form of life insurance
• Your monthly premiums stay the same throughout the term
• It’s flexible—when you buy a term policy, you choose your coverage amount and coverage term
• You can stack your term policies to match each of your financial obligations

❌ Drawback of term life insurance

• Coverage will expire eventually —this means you must find coverage again when the term is up.

✍️ Bottom line

Term life insurance is a cost-effective and flexible way to protect your family, especially during years when you have many financial obligations.

Read more about term life insurance.

2. Permanent life insurance

Permanent life insurance (also known as whole life insurance) covers you for your entire life, rather than just a short term. Permanent life insurance is best suited to protect ‘permanent’ or ‘lifelong’ needs such as estate tax liabilities, care for a disabled child or dependent, liquidity for closely-held businesses, and even funeral expenses.

Permanent life insurance also has an investment component. As you pay into your permanent policy over your lifetime the insurance company invests your premiums and your policy starts to accumulate a cash value. Typically, the cash value gains grow year after year and are accessible starting in a specific year of the policy (such as after 10 years).

A policy’s cash value and the cash surrender value may be different.

• Cash value: the sum of money that builds inside the policy. This value can be used to borrow or loan against.
• Cash surrender value: the amount of money paid to a policyholder if they terminate the policy minus any surrender fees.

Some policies also allow you to tap into the investment component of the policy in the form of policy loans, dividends, and more— but it depends on what kind of permanent life policy you have. There are many different sub-types of permanent life insurance policies such as: 

• Whole life insurance
  • Non-participating
  • Participating
• Universal life insurance
• Term-to-100

✅ Advantages of permanent life insurance

• The policy accumulates cash value, which allows for investment or other growth opportunities
• Coverage for life

❌ Disadvantages of permanent life insurance

• Higher premiums
• Premiums can fluctuate, depending on the product

✍️ Bottom line

Permanent life insurance is a more nuanced product that can be beneficial for those specific financial goals beyond covering their debts and providing a lump-sum payment for their loved ones.

Read below about the different subtypes of permanent life insurance policies available, like whole life insurance (non-participating and participating), universal life insurance, variable life insurance, and term-to-100.

What is whole life insurance?

Whole life insurance is a form of permanent life insurance that provides you with coverage from the day you get your policy until the day you die. In other words, it protects you for your entire life. As long as you pay your premiums, your policy never expires — it’s as simple as that. It is the flagship type of “permanent” life insurance, which is why people often interchange the names.

Most whole life policies come with something called a cash value component. As you pay your premiums, part of that money is invested and generates a tax-deferred cash value that grows over time. You can then access it during your lifetime. You can access it in many ways such as:

• Withdrawing your cash value
• Borrowing your cash value
• Using it to loan against
• Cancelling the policy and cashing out the value

Beyond that additional perk, some whole life insurance policies offer additional investment perks called “participating life insurance.” Whole-life policies that just have the cash value and no additional investment perks are known as “non-participating.”

Read more about whole life insurance.

What is non-participating whole life insurance?

Non-participating whole life insurance is permanent insurance in its most basic form. It provides a tax-free death benefit with lifetime coverage that is guaranteed as long as you are paying the premiums. They have a level premium, it can’t increase if your health changes once your coverage is in force.

A non-participating policy has accumulated cash value that you can utilize, but it does not pay additional dividends.

What is participating whole life insurance?

Participating life insurance is a type of whole life insurance policy that—in addition to the guaranteed death benefit—can generate and pay out money over the course of the policy in the form of dividends.

These dividends, which are determined by the insurance company’s performance and profits, are typically issued to the policyholder annually. The policyholder can then choose to:

• Take the dividends as cash
• Premium reductions
• Put into a cash accumulation interest account
• Buy up more life insurance coverage

What is universal life insurance?

Universal life insurance is similar to whole life insurance, except there is a self-directed long-term investment component. Your insurer gives you options for investing the cash value of your policy so it can be considered a way to save for retirement. These options are presented as portfolios that usually generate varying levels of guaranteed returns. If you are a savvy investor or mindful of estate planning, you may find that universal life policies could be an appealing option.

That said, universal life insurance plans require more hands-on activity than other life insurance coverage options, and may not boast the same rate of return as other investment options. Additionally, a universal policy would require more monthly premiums than a simple term life policy would, because there’s more potential for earning.

Read more about the difference between whole life and universal life insurance.

What is variable life insurance?

Variable life insurance is similar to universal life insurance in that it has a self-directed investment component—however, the portfolios available are more volatile (or variable) than what is usually offered with universal life. The returns are not guaranteed.

Variable life insurance usually isn’t offered in Canada. Instead, whole life with an investment component is almost always referred to as universal life insurance in Canada.

What is term-to-100 insurance or term life insurance to age 100?

Term-to-100 insurance plans are the bridge between term and whole-life insurance. Coverage lasts your entire life, but you only pay premiums for a fixed term (until you turn 100 years old). While this type of policy is permanent, it doesn’t have the cash value or investment component that other permanent policies have—but that does make term-to-100 cheaper than most permanent policies. Many choose a term-to-100 policy with a lower death benefit amount to cover funeral costs (or as a de facto final expense insurance).

Read more about term to 100 life insurance.

3. No medical life insurance

No medical life policies have very few medical questions and do not require a medical exam. Options include simplified and guaranteed issue life insurance. Both types of policies insurance have lower coverage amount options than traditionally underwritten policies. These policies are best for those who:

• Have underlying health conditions or medical issues
• Have hobbies or pastimes that are considered dangerous (like sky-diving)
• Need to get coverage quickly

✅ Advantages of no-medical life insurance

• The application process is quick
• No medical exams
• Few or no medical questions

❌ Disadvantages of no-medical life insurance

• Usually less coverage offered
• Higher premiums

✍️ Bottom line

No-medical life insurance is a great option for those in poor health or who need coverage fast.

Read more about life insurance without medical exams.

Simplified life insurance

Simplified issue life insurance requires you to answer a FEW questions about your medical history on the life insurance application, rather than undergoing a full physical medical exam and interview process. Simplified issue life insurance policies usually carry additional limitations such as an exclusion period (sometimes 1-2 years) during which no claims are accepted. They may also have lower death benefit coverage than traditional policies.

Read more about simplified issue life insurance.

Guaranteed life insurance

Guaranteed life insurance has NO health questions and is essentially a pay-to-play product. It is a last-resort life insurance option. It’s there for those who don’t qualify for any traditional life insurance policies or simplified life policies. A guaranteed issue policy has a 2-year waiting period as well as a lower life insurance payout amount—the death benefit is usually limited to $50,000.

Find out more about the difference between simplified vs guaranteed life insurance.

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.

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.

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.

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!

Ultimately, only you can make the decision for what kind of protection you think you need, but due to the unexpected nature of illness, trying to figure out your ‘needs’ can leave you scratching your head. If you’re concerned, it’s best to err on the side of caution.

Try our free critical illness insurance calculator to figure out how much coverage you might require or speak to our friendly advisors.

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 I get life insurance if I smoke?

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.

How does smoking affect my 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.

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.

Looking for more specific life insurance rates? You can always get an online life insurance quote from PolicyAdvisor for the most accurate estimated premiums in Canada.

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.

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 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.

Other factors which affect life insurance for smokers

Vaping

Vapes and electronic cigarettes, as well as the flavoured tobacco products used in these devices, are usually considered the same as smoking. 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 classification for vapers may change in the future, you will still find yourself paying higher premiums today depending on the carrier you choose.

Marijuana and cannabis 

Marijuana smoking is another subject that is often conflated with its nicotine counterpart. With recreational marijuana usage legalized in Canada, the classification of cannabis smokers has changed. Once upon a time, if you were a recreational marijuana smoker, you would be considered a smoker in the eyes of your insurance provider.

While that is no longer the case, as a casual marijuana user you may still be asked exactly how much marijuana you consume. Depending on the specific insurance company, heavy cannabis use may still be classified with smoker ratings. However, if you mix marijuana with tobacco, then even a single recreational usage in 12 months would classify you as a smoker.

Read more about legal marijuana and life insurance.

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 that 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 find the best life insurance smoking rates

Your best bet for finding the best life insurance company for smokers is to speak with an experienced insurance broker. Our brokers have experience pairing smokers with insurance providers who work well with cigarette smokers and offer the best rates for those searching for term life insurance. We work with Canada’s best life insurance companies and find you the right quote for your circumstances and budget. Schedule a call or contact PolicyAdvisor.com today.

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.

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.

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.

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.

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!