Is Life Insurance Worth It In Canada? (2024)

Peer reviewed by
Stephanie Roux
Certified Life Insurance Advisor

PolicyMe content follows strict guidelines for editorial accuracy and integrity. Learn more about our editorial guidelines.

In This Article

Key takeaways:

  • Life insurance is worth it if loved ones rely on you financially or have debt that could be a burden if you pass.
  • A term life insurance policy is generally worth it for the average Canadian with dependents.
  • Permanent life insurance may be worth it for high-net-worth people with maxed-out investment accounts.
  • Life insurance might not be worth it if you have no dependents or debt.

Is life insurance worth it in Canada?

Life insurance is worth it in Canada for anyone that:

  • has large debts, like a mortgage
  • has loved ones that depend on their income
  • wants the peace of mind of knowing their dependents are financially covered

As a rule of thumb, term life insurance is generally worthwhile for the average Canadian's financial needs. To start, here's how much more affordable term would be versus whole life insurance.

chart comparing average monthly premium cost for life insurance for men and women, for whole and term policies, to help Canadians figure out if life insurance is worth it for them

Do you need life insurance?

If you're not sure you need life insurance, think about this: can your loved ones take care of themselves if you're gone? To help you out, start with the image below:

a flow chart that helps you figure out the question: do you need life insurance

Life insurance might be worth it for you if you answered "yes" to most questions. But if you want to talk this through with a real human, we've got you covered.

PolicyMe advisors are non-commissioned, so they're not incentivized to oversell you on coverage. Get genuine advice, the kind of advice we'd actually give our closest friends below:

Who needs life insurance?

It’s a good idea to get life insurance if someone relies on you financially. More specifically, here's a look at who should consider coverage:

a chart that answers the question: should i get life insurance

Your dependents could be left struggling financially if you pass, but life insurance coverage can help ease that.

For example, this is a breakdown of the economic situation that your loved ones would need to navigate if they lost your income:

These are example questions you should ask yourself when considering life insurance:

Who doesn't need life insurance?

You probably don’t need life insurance if there is no one that will shoulder your financial responsibilities if you pass away. 

But consider this: you may have enough to cover immediate obligations, but what about things like your spouse's retirement or the kids' education?

If your income was lost, could your family maintain the existing savings schedule? If you don't think they'll be able to cover all future expenses, then life insurance would be worth it.

What age is best to get life insurance?

The best age to get life insurance is when you first have a dependent. "New" dependents are usually the catalyst behind most life insurance purchases.  

That can be a spouse, kids or any other family member that relies on you. And the age at which you buy your policy can also have significant benefits. The younger and healthier you are, the cheaper your life insurance will be.

Just how much more worthwhile is it to lock in your rate sooner? Here's a comparison of the cost of life insurance by age:

at what age do i need life insurance -- average life insurance cost by age

At what age is life insurance not worth it?

The age at which you don't need life insurance depends on your financial situation and the needs of your loved ones. Remember: the point of life insurance is to protect your dependents from financial burden if you were to pass prematurely. 

You may no longer need coverage if you've reached an age where:

  • Nobody relies on your income
  • You’ve paid off your debts 
  • You have enough savings to support dependents
  • You have a sizeable emergency fund

For most, this happens sometime around the time that we retire. The average age of retirement was 64 years old in 2022, says Statistics Canada.

This is a good milestone to help you plan for the end of your life insurance needs.

Not sure if life insurance is actually worth it for your specific financial situation? Chat with a non-commissioned PolicyMe advisor for genuine, impartial advice. We'll even tell you if you don't need life insurance right now.

What type of life insurance policy is worth it?

Life insurance is generally worth it for many Canadians, but specific types of policies are more suitable than others, depending on your situation. We'll be looking at:

  • Term life insurance policies
  • Permanent life insurance policies
  • Group life insurance policies (employee life insurance through work)

Is term life insurance worth it?

Term life insurance is worth it for most average Canadian families that need life insurance to cover financial obligations and dependents. 

“[It] provides cost-effective, temporary coverage over an insured's younger years," explains the CLHIA.

  • The term refers to the duration of coverage, usually 10, 20 or 30 years. Choose a term based on when you expect to have no dependents or pay off debts
  • If you pass away during the term, your family receives the payout you chose
  • Term is cheaper than permanent policies, providing coverage for the years you need it most
  • This makes term policies a worthwhile investment for the average Canadian's needs

Is permanent life insurance worth it?

Permanent life insurance can be a worthwhile option for Canadians with extremely high income. But it's likely not worth it for the average family. Here's what you need to know if you're asking yourself if a permanent life insurance policy is worth it for you:

  • Whole life insurance (a type of permanent life insurance policy) lasts your entire life but is seven and a half times more costly than term
  • Some permanent policies have cash value but are funded by high premiums and are less flexible
  • Death benefit can be used to pass wealth onto your family with tax benefits
  • Can build generational wealth, but it's only worth it if other investments are maxed (i.e. RRSP and TFSA)
  • An affordable term policy combined with self-investing provides more control and flexibility for managing funds
is life insurance a good investment - permanent life insurance vs investing

Is group life insurance worth it?

Group life insurance is usually a good supplement to a term policy, but it's often not enough to cover all of a family's financial needs. Here's a breakdown of group policies:

  • Group life insurance policies may be worth it, especially if provided for free by an employer
  • Generally, group coverage amounts to one to two times your annual salary
  • Group life insurance alone may not provide enough security to support your family if you pass
  • Coverage will also end if you leave the company

4 examples: who is life insurance worth it for?

Here are some examples of real-life Canadians wondering, "is life insurance worth it?".  Life insurance advisor Stephanie Roux shares her recommendations:

1. Elena, 31 and Feng, 33, in Burnaby, BC

  • Elena and Feng have been married for 2 years, with a $500,000 mortgage on their home
  • Elena works as a financial controller, while Feng is a coordinator at a non-profit

"Elena and Feng need life insurance. If one of them were to pass, the surviving spouse would have to cover the mortgage. And without their partner's income, the other might need help with daily expenses.That's why death benefits from a life insurance policy are so critical."

2. Asma, 33, in Calgary, AB

  • Asma, a business analyst, owns a condo with a mortgage balance of $250,000
  • Although she makes all the payments herself, her mother co-signed her mortgage

"Asma needs life insurance. She has a mortgage that needs to be paid if she passes. And because her mother has co-signed, she'd be responsible for the payments.Any other outstanding debts she has could also become her mother's responsibility. She doesn't want to burden her with these costs. That's why life insurance is important."

3. Laila, 24, in Regina, SK

  • Laila is a few months away from completing her studies
  • To stay debt-free, she chose an affordable program, lives at home and commutes to school
  • Her parents are still working and can comfortably provide for their own needs

"Laila probably doesn’t need life insurance. She has no debts or dependents."

Jordan Rodrigues, Insurance Specialist & Product Expert from adds this: "An exception: to give back in a big way, you can set up a life insurance payout (death benefit) to benefit a charity – for a cause that's close to your heart. You'd then get a charitable receipt for paying life insurance premiums and claim that on your taxes, year over year."

4. Barb, 58 and John, 62, in Barrie, ON

  • Barb and John's kids are grown up and have moved out to start their own families
  • Both are still working, but they're hoping to pay off the mortgage before retiring for good

"Barb and John need life insurance. They still have an outstanding balance on their mortgage. Financially, their children are just starting out and may not have the money to support the surviving parent."

Is life insurance a smart investment?

Life insurance is a smart investment for Canadians with people that rely on them financially in the sense that it's a wise purchase. It's usually not a good idea to use life insurance as an investment vehicle for cash value, as it isn't the most efficient way to invest (versus things like the stock market or an RRSP).

Here's a look at whole life insurance as an investment account compared to other types of investments:

is life insurance a good investment - average rate of return chart

But there are scenarios where a whole life insurance policy might be a worthwhile investment vehicle, but for the average Canadian family, this isn't the case.

The main reason you would use life insurance as an investment tool would be for tax benefits. But if your TFSA and RRSP accounts aren't maxed out, you're better off putting your money there.

Alternatives to life insurance

Life insurance helps to financially protect your family when you pass, and it's a good idea for many people.

But there are other ways to support your family. Let's take a look at some options:

Next steps: is life insurance is worth it in Canada?

  1. Take stock of your obligations, dependents, debts and emergency funds.
  2. Project how long your dependents will rely on you and how long it will take to pay down your debts.
  3. Choose a life insurance policy that covers you for the duration your family needs, this will help narrow down your life insurance options.
  4. Decide on a coverage amount and ensure that the payout is enough to take care of your family and cover funeral expenses.
  5. Make a shortlist of the best life insurance options and reach out to them to get quotes. Compare their offers, weighing coverage, flexibility, and cost of life insurance.
  6. Buy life insurance from one of the life insurance companies that suit your needs.

FAQ: Is life insurance worth it in Canada?

What is the main reason for having life insurance?

The main reason for having life insurance is to protect your loved ones from financial issues if you were to pass away. Buying a life insurance policy makes sure that the people that rely on you for financial support don't have to face monetary losses if you pass away. A death benefit would give them the gift of financial security in a difficult time.

Is life insurance a good idea?

Life insurance is a good idea if someone financially depends on you, like your spouse/partner, kids or aging parents. Only some Canadians need life insurance. If you're single, financially independent and don't have large debts like a mortgage, you can probably skip a life insurance policy. 

But if your financial situation has changed recently, it may be time to reevaluate your need for a policy. If you're unsure how much CI coverage you need, visit PolicyMe to determine how much critical illness insurance do I need.

How long do I need coverage for?

You need life insurance for as long as you have someone financially dependent on you. That length of time is different for everyone, but your answer likely won't stay the same forever. That's why we tend not to recommend permanent life insurance.

Term life insurance lets you choose the term length that suits you and your family the best. So you can save money by only getting the amount of life insurance you need.

How much is my life insurance policy worth?

Your life insurance policy's worth will depend on the type of life insurance you have. Permanent and universal life insurance tends to have a cash value component, which will change over time. 

If this question is in the context of selling your life insurance policy to someone else, take note that you are only able to sell your policy in Quebec and Saskatchewan.

Is life insurance a scam? 

No, life insurance is not a scam. It’s a valuable service that fills a real need in Canadian society by offering peace of mind and financial security for those left behind when a loved one dies. But not all life insurance policies will be worth it for everyone, and making payments toward a policy doesn’t always have an upside.

In the event that you do need life insurance, your loved ones will be thankful you made the investment. The key to maximizing the benefit of life insurance is to find the policy, rate, and coverage that makes the most sense for you and your family, and doing your due diligence to ensure that you work with a reputable life insurance company. 

What is the importance of life insurance?

Life insurance is important because it looks after your family's financial future in the event that  you're not around. Imagine if you were gone and couldn't provide for them anymore – life insurance steps in to help. When you purchase life insurance, it makes sure your loved ones can still afford things they need, like housing, final expenses, time off work and childcare, even if you're not there to support them.

Having life insurance gives you peace of mind, knowing that your family has financial protection to take care of themselves if something happens to you. It's like having a safety net for your loved ones so they don't have to worry about money during tough times.

Should I buy life insurance coverage?

Life insurance is a good idea for some, but not everyone needs it. You should think about purchasing life insurance if you have a family that depends on your income, like kids or a spouse. If something happened to you, life insurance would help make sure they can still pay for important things.

But if no one relies on you for financial support, paying premiums toward a life insurance policy might not be necessary. Remember, the goal is to protect those who depend on you, so if that doesn't apply, you might not need it.

If you are interested, get an insurance quote through PolicyMe for some of the best rates in Canada.


Canadian Life and Health Insurance Association. Canadian Life and Health Insurance Association - Canadian Life and Health Insurance Facts, 2022 Edition.

Canadian Life and Health Insurance Association Inc.

Government of Canada, Statistics Canada. Retirement age by class of worker, annual.


Payment Delinquencies Increase, Credit Card Demand and Balances are Rising. Retrieved March 14, 2023, from


Statista. Average value of new mortgage loans Canada Q3 2021-Q3 2022, by metropolitan area.


Walker, A. Funeral Costs in Canada: Questions and Answers.

Laura McKay

COO & Co-Founder
About the Author

What to read next