Life Insurance
Life Insurance Broker, Agent, Advisor: What's The Difference? (Canada-Specific Guide!)
August 31, 2023
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6 minutes
Life Insurance
Life Insurance Payout in Canada: What Is It and How Does it Work? (2023)
June 1, 2023
•
5 minutes
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Key takeaways:
The average cost of life insurance in Canada ranges between $15 to $100 per month, says Life Insurance Advisor Erik Heidebrecht.
The average cost of term life insurance in Canada is $26.55 per month for PolicyMe customers (age 40 and under, $500,000 in coverage, 10 year term.
Here's what you could expect to pay for life insurance, on average, based on data from 33 different Canadian life insurers:
45 and under? Term life insurance rates are even more affordable. Here are some sample rates for a 40 year old:
PolicyMe only sells its own term life insurance, and we make it fast, affordable and reliable to get covered. Check your PolicyMe price below.
The cost of life insurance in Canada partly depends on factors that are out of your control, like your age and gender.
And it also may depend on factors that are in your control, like your health, lifestyle and coverage amount.
Here's exactly what insurers consider when calculating your life insurastnce premiums:
Insurance companies usually give you your price in two steps:
And, spoiler alert: rates go up as we grow up. So, the sooner you lock in your premium the better. As the graph shows below, prices really start to climb once you hit your 40s (it's a mortality risk thing, not that we want to remind you).
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PolicyMe's prices are 5-10 per cent cheaper than the Canadian competition, plus we let you skip the annoying advisor calls and endless paperwork. Apply online in 20 minutes or less (on average, for eligible applicants) and lock in your protection today.
How much you'll pay for life insurance depends partly on personal factors, like your age, gender and whether you smoke.
Prices are for $500,000 in coverage for a non-smoking man.
Term life insurance costs by age (20 year term):
Whole life insurance costs by age:
This chart shows how life insurance premiums break down by age and gender:
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Younger people pay lower life insurance premiums since, statistically, they're less likely to pass away. And the great thing is that once you purchase a term life insurance policy, your price won't change for the entire length of the term, even if it's for 30 years.
Make sure you're getting a level term, though (like with PolicyMe). Yearly renewable policies that are available through Canadian companies like Cover Direct and Emma have prices that go up every year of your term.
Pushing 40 or 50? You can still get affordable life insurance. Term life insurance can cost as little as $30-40 a month from providers like PolicyMe. You'll pay a lot more for whole or no medical life insurance; think hundreds of dollars a month, not dozens.
Both prices are for 40 year olds buying a 20-year term insurance policy with $500,000 in coverage.
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Your gender plays a role in determining how much ife insurance costs, because men have a shorter life expectancy than women, says Harvard Medical School.
Both prices are the industry average for a 35-year-old man for $500,000 in term life insurance coverage over 20 years. The non-smoker price is a 255 per cent decrease! Definitely a good reason to quit smoking.
Smokers pay much more for life insurance coverage because smoking is tied to serious medical issues like cancer, making smokers more expensive to insure.
You'll need to be nicotine-free for at least one year to qualify as a non-smoker.
And it may be tempting but don't lie about your health status (or lifestyle) on your application. Not only is it considered fraud, but you may also lose your coverage, leaving your family without a financial safety net.
The healthier you are, the lower your life insurance prices will be. That said, how much your price goes up really depends on your individual health condition.
For example, someone with type two diabetes would likely be declined for coverage if they're under 40 years old. Over 40 years old, you'd pay around 150% of the base price, depending on how well your diabetes is being managed.
Some insurers require applicants to undergo a medical exam and provide your medical history and your family medical history, though you may not have to.
Health conditions that may impact your life insurance costs are:
If you have been denied coverage or have a pre-existing condition, you can apply for no medical life insurance products, some of which approve you instantly without a medical exam. But these policies are much more expensive, sometimes three times as much as a term policy.
Buy life insurance as soon as possible if you have a pre-existing condition or a family history of medical issues as this will help you lock in the lowest rate. Prices only increase the older you get!
You may pay more for life insurance if you like to live life on the edge. Risky choices like high-risk hobbies (skydiving or scuba diving) increase the risk factor of covering you.
On top of this, insurers may review criminal history and motor vehicle reports to see how risky you are to insure. Driving violations or criminal convictions can affect your monthly price or get your application denied, but each insurer has its own rules.
Here's where the math gets complicated. Your life insurance premiums are calculated with standard industry ratings, from A to J or 1 to 10, with 1 being the most ideal and 10 being the riskiest.
Let's say you engage in a few high-risk hobbies and your life insurance company places you in the "C" rating class. You'd pay about 75 per cent more for life insurance.
Dangerous jobs, as classified by life insurers, would include jobs like:
Risky jobs can have serious real-world consequences. 1,071 workers passed away at work in 2021, reports the Association of Workers' Compensation Boards of Canada.
Different life insurers may have different definitions of what constitutes a dangerous job, so shop around to get the best life insurance quote.
The life insurance policy you go with will also have a big impact on how much life insurance costs.
The more life insurance coverage you get (i.e. the higher the death benefit is that your beneficiaries would get), the higher your premiums will be.
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More coverage may not increase your price as much as you'd think.
Here's what someone aged 35 would pay for different coverage amounts:
The monthly cost of life insurance differs based on the type of coverage you choose, for example here are term life insurance rates versus whole life insurance rates:
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Here are some basics about the two main types of life insurance policies you can buy in Canada.
Term life insurance:
A 35-year-old woman and man can expect to pay $23 and $31 per month respectively for a 20-year term
Lasts a set amount of time (like 10 or 20 years)
Pays out a “death benefit” if the policyholder dies during that term
More affordable than permanent life insurance coverage
Protection during a period of temporary need, like while you’re paying off your mortgage
Whole life insurance:
A 35-year-old woman and man can expect to pay $243 and $296 per month respectively for whole life insurance
Permanent coverage, as long as you keep paying your premiums
Policies can cost five to 10 times more than term because it lasts for your whole life (even more if it's cash value life insurance)
Can include some benefits term policies don’t have, like a cash value component
Life insurance prices start at $22.50 for a 35-year-old man for a 10-year term with $500,000 in coverage and $31.32 for a 20-year term.
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The shorter the policy length, the more affordable the life insurance policy. And most term options (like PolicyMe) are "level", meaning the premiums stay the same the entire term.
Read your policy before signing! Other types of term policies have premiums that go up incrementally, like a one-year renewable or a five-year renewable policy.
A 35-year-old man and woman can expect rates to start at $22.50 per month for a joint policy.
Joint life insurance is a single policy that covers two people under one premium. These policies are often cheaper than buying two separate permanent insurance policies.
Another option for couples is individual policies which let couples to pick their own lengths and coverage amounts. While this can sometimes be pricier than buying one joint life insurance policy, it's much more flexible.
PolicyMe offers the best of both worlds: couples can buy their own policies and get a discount in their first year when they apply together.
A 65-year-old man and woman can expect monthly premiums to start at $81.17 and $59.94 respectively for a 10-year term policy with $100,000 coverage.
Senior life insurance is often used for funeral expenses, estate planning and supporting your beneficiaries once you have passed. And it's still very much possible to get good coverage once you're older.
A child rider benefit can be tacked on to an average 20-term term policy for costs starting at $9.
But whole life insurance premiums for a 5-year-old child can start at $67.14 per month, which is pretty high.
Some families purchase life insurance for their children to lock in lower prices, using the policy as an investment vehicle for their child's future. One of Canada's leading providers of children's life insurance policies is Equitable Life.
PolicyMe offers free child coverage – at no extra cost – to every policy.
This means that if a policyholder's child passes away, the parents get $10,000 to help them financially during this difficult time.
There are eight key ways to crunch the numbers and get the lowest prices when you shop for a life insurance policy.
1. Buy early: It's best to purchase life insurance when you're younger and lock in a lower price, as rates increase each year.
2. Shop around: Get quotes from various life insurance companies to compare and find the best deal.
3. Consider a term life insurance policy: One of the easiest ways to save money — permanent insurance policies last your entire life but are much more costly.
4. Bundle your policy: Some insurers allow you to bundle your life insurance policy with other types of insurance, like home or car insurance, for a discount.
5. Look for discounts: Some companies offer discounts if you apply as a couple. PolicyMe offers 10% off the monthly cost of life insurance in the first year if you apply together.
6. Maintain a healthy lifestyle: Stay in good health by managing your weight, quitting smoking and avoiding high-risk hobbies.
7. Don't skip the medical exam: If you don't have pre-existing medical conditions, stay away from pricey no medical policies. You may not even have to do a medical exam with traditional policies.
8. Adjust your coverage: You don't need to purchase more life insurance coverage than you need — you can always adjust the death benefit or length of your policy.
Inflation doesn't usually impact the cost of life insurance if you already have a policy. You may experience higher life insurance premiums if you're shopping for a new policy or renewing your policy.
Inflation drives up costs, making things pricier over time. It also impacts interest rates, which means higher returns on investments like bonds, savings accounts, and some insurance policies, like permanent policies. This means your cash value may go up, but the purchasing power of your death benefit may be lower.
A life insurance premium is the amount of money paid by the policyholder to the insurance company to get covered. Premiums are most commonly paid on a monthly basis, but some companies allow for annual payments instead.
Life insurance premiums are calculated at the time of the policyholder's application and are based on various factors, like the type of life insurance product, the age, gender, smoking status and health of the policyholder i.e. the likelihood of claims being made.
Canadians can use a life insurance calculator to help estimate how much life insurance they need
Additional sources:
1. WinQuote Canadian Products. WinQuote by Equisoft. Accessed May 2023. https://www.winquote.net/
2. Hobbs, S., Director of Policy at Canadian Life and Health Insurance Association. Interview conducted by Hanna Horvath. 2023.
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