Life Insurance for Elderly Parents in Canada (2023 Guide)

Peer reviewed by
Erik Heidebrecht
, Certified Life Insurance Advisor
In This Article

Key takeaways

  • Depending on the situation, elderly parents might not need life insurance.
  • Life insurance is usually for those with people depending on their income — generally speaking, seniors are no longer working or supporting family.
  • Elderly parents' premiums will be expensive since it's risky to insure seniors who may have health issues. You might be better off just saving or investing the money.
  • But there may be some cases where buying life insurance for your elderly parents makes financial sense.

Read on to find out more about life insurance for elderly parents.

Should I buy life insurance for my elderly parents?

In most cases, you don't need to purchase life insurance for your elderly parents. There are two broad reasons as to why:

1. Life insurance is a financial tool intended to protect loved ones that depend on the policyholder financially. These dependents can use the payout to cover their daily expenses, pay off remaining debts and maintain their standard of living.

Many elderly parents are retired, likely drawing from a pension or their investments for their day-to-day needs and not providing regular financial support to their families.

2. Life insurance for seniors also tends to be quite expensive. There's a much higher risk in insuring older people since they're more likely to pass away during the policy's term and the associated rates reflect this risk! Here's a preview of what goes into the cost of life insurance for seniors:

life insurance for elderly parents - premium rates

But if you’re looking to get a policy to cover any medical or end-of-life expenses, it's probably cheaper for you to pay out of pocket when the time comes than to commit to pricey life insurance for your elderly parents.

But term life insurance can be a good idea for elderly parents with debts or obligations that will be paid off sometime in the future, like a mortgage. Note that generally, the maximum age for a term policy is 75 years old.

Term life insurance for your parents could be more affordable than you think. PolicyMe offers some of the best rates in Canada.

Permanent or term life insurance for elderly parents?

Depending on the scenario, term life insurance could be a viable option for your elderly parents. You may have heard that term life insurance is the most cost-effective form of life insurance for Canadians.

This doesn't always apply to those who are advanced in age. So what's the best life insurance in Canada for older parents? According to Life Insurance Advisor, Erik Heidebrecht, here's what to choose.

Life insurance for elderly parents over 60

If your parents are over 60, buying a term policy could be a good idea. At 60, they're still young and healthy enough to potentially qualify for a competitive term life insurance rate. And they're likely still working and might supporting kids or other family members on their income.

Consider purchasing a life insurance plan for a short term; until they retire or the kids become financially independent.

Not sure how much life insurance they might need? Use our life insurance calculator. Make sure you shop around for the best possible rates since the premiums can vary between insurers!

Life insurance for elderly parents over 70

Permanent life insurance could be your best option if your parents are over 70. For one, there are age restrictions with most term life policies. At 70, they'll qualify for fewer options.

You can also look into funeral expense insurance. This type of policy will offer a small payout at the time of death to pay off any end-of-life expenses, estate taxes and any remaining debts.

But premiums can still be relatively high with burial insurance, so it's key to do the math and make sure it's worth it for your situation.

Life insurance for elderly parents over 80

It's probably best to get a permanent policy for elderly parents over 80. As mentioned above, your parents may no longer qualify for term life policies.

Permanent life insurance might make sense, but try to weigh out if the pricey premiums would be better spent on building a savings account or investing.

Funeral expense insurance could be an option for those over 80 as well, although the same caveats with high prices will still apply here.

Life insurance for parents with health conditions

If you're having trouble finding coverage through a traditional term or permanent life insurance plan due to the underwriting process or the insurer's age limits, consider opting for simplified issue or guaranteed issue life insurance.

These plans don't require a medical exam. But your parents need to answer some health questions for simplified issue plans. Guaranteed issue policies will approve applicants as long as they meet the basic criteria.

Insurers that offer these policy types tend to accept older clients with health issues but at a cost. Simplified and guaranteed issue plans can be costly, with limited coverage amounts.

And most plans have a waiting period of up to two years. If your parents pass away within this timeframe, you won't be eligible for a payout (but your life insurance premiums will be returned to you).

Here's how these policies compare to term life insurance:

life insurance for elderly parents - policy types

Best life insurance for elderly parents in Canada

Here are the insurance companies offering the best policies for elderly parents depending on their specific needs.

1. PolicyMe: best for term life insurance coverage for parents 70 and under

2. Manulife: best for permanent life insurance coverage

3. Canada Protection Plan: best for simplified and guaranteed issue coverage

But don't assume your parents will only be approved for no medical life insurance. In many cases, term life insurance is the more affordable choice, even if your parents have a medical condition.

Get a term life insurance quote in a few clicks; it could save you a bundle!

Getting life insurance for elderly parents

Getting life insurance for your elderly parents isn't that different from buying a policy for yourself, with two major exceptions.

  • Firstly, you'll need your parents' consent. The application process for a life insurance policy generally involves medical exams, health questionnaires, and the release of personal information. If your parents don't agree, you won't be able to insure them.
  • Then the insurance company may ask you to prove your insurable interest in their situation. You have an insurable interest in a party or asset when you know you'll experience a negative financial impact in the event of its loss.

It's why, for example, you'd buy insurance for your own car, but not that of your coworker's. While it's sad, you won't suffer an economic impact if your cubicle buddy passes away.

If you have their permission and can demonstrate your insurable interest if necessary, you can start shopping around for quotes and looking for the best life insurance options for your parents.

Next steps: How to buy life insurance for elderly parents

  • Carefully consider their financial situation, age, health and your objectives for them to determine whether it’s necessary to buy life insurance for your parents
  • Decide on the type of policy (permanent, term, or funeral insurance) and the coverage amounts needed
  • Speak with your parents to get their consent 
  • Shop around for the best rates and service
  • Apply, and if approved, start making the monthly payments

Affordable, flexible and easy to apply for. Term life insurance could be the perfect fit for your parents' situation. Get an instant, no-obligation quote below.

FAQ: Life insurance for elderly parents in Canada

Does the Government of Canada give life insurance for elderly people?

Yes, the Government of Canada does offer a small payout for deceased individuals who qualify. If you’ve made contributions to your Canada Pension Plan (CPP) for the required amount of time, your estate or beneficiary may be eligible to receive your CPP death benefit.

The benefit is $2500 in a one-time lump sum. If you’ve decided your parents don’t need a life insurance policy, this could be sufficient to help cover some end-of-life expenses. However, it’s definitely not enough to replace the payout from a traditional insurance plan.

Why do I need to buy life insurance for my elderly parents?

You often don’t need to buy life insurance for your elderly parents. For example, if there’s no one relying on them for financial support, and you can cover any funeral expenses when they pass away, your parents may not need life insurance at all.

But knowing there’s a life insurance payout available when you need it can provide a sense of security. A death benefit can:

  • Take care of any end-of-life expenses, such as medical bills and funeral costs
  • Financially support the family members that remain
  • Pay off debts
  • Cover moving costs for the surviving spouse or children
  • Help with estate planning by managing the tax implications of leaving a legacy or making a charitable donation

Your parents could buy their own coverage. But some seniors can't afford the monthly payments of holding their own policy. Others may not feel that they need a life insurance policy at all (but don't mind if you purchase one for them).

Only you and your family can decide whether it’s necessary to purchase a life insurance policy for your elderly parents.

Is getting life insurance for elderly parents worth it?

In most cases, life insurance for elderly parents probably isn't "worth it," at least from a financial perspective. It'll be challenging to find affordable rates. You'll likely be paying very high premiums for average coverage, particularly if your parents are advanced in age and have health issues. You may even have trouble finding a policy they'll be approved for.

If you have concerns about covering specific bills or expenses after their passing, consider saving or investing the money you’d use to pay their monthly premiums instead. You could actually come out ahead if you do so.

However, you can't put a number on the peace of mind you'll have from knowing your parents are covered by a life insurance policy. If this is a key consideration for you, then purchasing an insurance plan for your elderly parents can be worth it for your situation.

Laura McKay

COO & Co-Founder

About the Author

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