Considering term life insurance? You’ve probably hit a major life milestone: new baby, new house, new business.

You’ve got new responsibilities and you need the financial protection to back them up.

At this point, you’re probably wondering where you can buy term life insurance in Canada and how much it costs. And most importantly: who has the best rates.

In this post, we’ll look at how to choose the right term length and coverage amount for you and what you can expect to pay as a result.

We’ll also look at term life insurance providers in Canada and how to pick the best one for you.

What is term life insurance in Canada?

Term life insurance is a type of life insurance that gives you coverage for a fixed period of time, such as 10, 20, or 30 years.

To keep your term life insurance policy active, you need to pay a monthly fee called a premium

When you buy term life insurance in Canada, you select the term length and the amount of coverage you want based on your needs.

If you die while your policy is still active, your insurance company will pay the person named in your life insurance policy (the beneficiary) an amount equal to your coverage. 

Example: You buy a 20 year life insurance policy for $1,000,000 in coverage. You name your husband as the beneficiary.  If you die before the end of those 20 years, your husband will receive $1,000,000 from the life insurance company.

This payment is called a death benefit. Your beneficiaries will receive your death benefit as a tax-free lump sum.

They can use this money however they want: to fund your kids’ college education, to pay the mortgage, to buy essentials like groceries etc.

Here’s the good news: Your monthly premiums and coverage amount will be locked in for the entire term, no matter the length of your policy. 

This means that the life insurance company can’t change how much you pay per month during your term, even if your health status changes. Now that’s a relief.

Clear as mud? Watch this quick (and funny!) explainer video.

How much does term life insurance cost in Canada?

The cost of a term life insurance policy in Canada depends on: 

  1. Your age
  2. Your biological sex/gender identity
  3. Whether you smoke
  4. Your health status

The first three factors determine your base rate. Your health status determines if this base rate will go up. For example, if you have diabetes, your monthly premiums will likely go up.

Let’s look at some sample rates.

Term life insurance rates: man, non-smoker

Term Life Insurance Price Comparson chart for article on Term Life Insurance in Canada

Want a personalized quote right now? Use our life insurance calculator to see your price per month with PolicyMe.

How term life insurance rates are calculated in Canada

Let’s dive into how term life insurance rates differ based on your options.

1. The coverage amount you choose

Coverage amount means how much you want your beneficiaries to receive if you pass away during your term.

A $1,000,000 policy means that if the unthinkable were to happen, your beneficiaries would receive $1,000,000 in one lump sum, tax free.

The more coverage you choose, the more your beneficiaries receive if you pass away during your term.

But, here’s the thing: if you want your insurer to pay out a larger death benefit if you die, you have to pay higher premiums every month. 

Example: $250,000 in coverage would cost about $24.77 a month whereas $500,000 in coverage would cost about $39.63 a month.

2. The policy length you choose

If you buy a policy at age 20 and want coverage for 30 years, you'll pay more than choosing coverage for just 10 years i.e. until you're 30 years old. 

This is because you're more likely to die between age 20 to 50 than between age 20 to 30. Statistically, that’s just the cold hard reality.

In other words, if your coverage extends into the later years of your life, you’re going to pay more every month.

​Example: A $250,000 20-year term policy would cost about $24.77 a month while a $250,000 30-year term policy would cost about $41.02 a month.

3. Your personal characteristics

We’re not talking about whether you enjoy craft beer or have a terrible sense of direction or speak three languages. 

We’re talking about: how risky are you to insure.

Meaning: is there anything that would increase the likelihood you’d die while holding your policy.

Here’s what can make your rate go up (or down):

  1. Age: Your premiums increase as you age. If you buy a policy at age 40, you're more likely to die during a 20-year term then if you buy the same policy at age 20.
  2. Gender: Men pay higher premiums than women do because, statistically, they tend to die at a younger age.
  3. Health: If you have a pre-existing condition that increases your risk of dying early, you'll pay higher premiums. This could include diabetes or a heart condition. Or perhaps you have a family history of illness.
  4. Risky hobbies: Anything that increases your chance of accidental death, like frequent skydiving.
  5. Smoking Status: In general, smokers are more likely to die earlier than non-smokers, so they are charged higher premiums.

Example: For a healthy non-smoker, a $250,000 20-year term policy would cost you $24.77 a month if you buy it at age 35. The same policy will cost $55.20 a month if you buy it at age 45.

There’s no reason to guess about what your cost might be. You can get a personalized term life insurance quote in seconds with our easy quote calculator.

Who's eligible for term life insurance in Canada?

The most important factor for determining eligibility in term life insurance policies is age. 

Generally, you must be between the ages of 18-65 to be eligible for term life insurance in Canada.

First off, you must be over the age of 18 to be eligible for any term life insurance policy in Canada. 

Second, most life insurance companies only sell term policies to Canadians up to the age of 65.

PolicyMe offers term insurance up to age 75, with term coverage extending as far as age 85. Meaning, if you’re 75 years old you can still buy a 10 year term life insurance policy.

What about pre-existing health conditions?

Sometimes you can be eligible for term life insurance policies without a medical exam. 

You’ll likely have to pay much higher premiums, though. And you’ll still need to answer medical questions. This option is usually called “no medical life insurance” or “simplified life insurance.”

It’s a good idea to apply for a traditional policy first. With streamlined life insurance like PolicyMe, most people are approved instantly. 

Even if you are flagged as high risk, it’s a good idea to do the medical exam. You could still qualify for lower rates and higher coverage than with simplified life insurance.

Plus, the cost of medical exams is covered by the insurer in Canada. Even if you’re declined for coverage, you don’t need to pay for the exam.

Why is term life insurance so popular in Canada?

Term life insurance is gaining popularity in Canada because it’s designed to give you financial security during the years when you really need it.

According to a recent survey, 33% of Canadian parents with kids under the age of 18 have term life insurance, 25% have mortgage life insurance and 22% have permanent life insurance.

Usually, you need term life insurance if:

  1. You have young kids who depend on you financially
  2. A mortgage that would be hard for your family to pay without your income
  3. You take out a large loan to start a new business, for renovations to your home etc.

Good to know: Term life insurance is different from permanent life insurance, which doesn’t expire. It’s very expensive and best for wealthy Canadians with complicated financial situations.

Many Canadians decide to buy term life insurance when they start having kids or when they buy their first home. Which are two life events that many Canadians experience!

Read more: Term vs. Whole Life Insurance, Explained.

Can I really afford to add life insurance to my list of expenses?

At first, it may seem overwhelming to buy life insurance when you've just added mortgage payments or a diaper subscription to your monthly expenses.

But, because how term life insurance works is by giving you coverage for a fixed period of time only, it's the cheapest type of insurance on the market. 

At about $20 to $40 a month, it's relatively affordable even when you're young and still trying to establish yourself in your career.

What term life insurance coverage is right for you?

When you buy term life insurance, you'll want to choose a term length and coverage amount based on:

  1. The amount of financial protection your family needs
  2. The length of time they need it for

For many people, this ends up being equal to their expenses they need to pay until their kids have moved out and their mortgage is paid off.

That said, your needs might differ from others, depending on your family's situation and your preferences. 

For example, if you want your kids' post-secondary education to be covered, you'll need a longer policy term.

When you're thinking about your coverage amount, it's also important to consider expenses that may not be a factor right now.

Real-life example: term life insurance in Canada

Chau is a stay-at-home parent of twin boys with another little one on the way.

Her partner works during the day. Chau is very busy doing the eight million things that stay-at-home parents do every day, from prepping dinner to wiping bums to taming tantrums about bath water “being too wet.”

Image of mother holding baby in bed for article on Term Life Insurance in Canada

If she passed away while her kids were still very young, her partner might have to pay for childcare so they can continue to work. 

Chau’s family lives in Calgary. Daycare costs about $1,075 on average per child. That’s over $3,000 for three kids!

$3,000 extra per month is a huge burden for most families.

Factoring in these types of expenses when buying life insurance is really important to make sure your family will have the funds they need if the unthinkable were to happen.

What's the best term life insurance in Canada?

Wondering how to find the best term life insurance in Canada? Here are some factors to consider when you’re considering different Canadian insurers.

1. How trustworthy is the insurer?

Like a marriage, buying life insurance is a long-term commitment. You want to be sure that your insurer will be around to pay out your death benefit even if you don't die until you're 90% of the way through a 30-year term policy. 

That's why you want to choose an insurer that's financially stable enough to survive the test of time.

The good news is that life insurance is heavily regulated in Canada. This means that almost every Canadian life insurance company is in excellent financial health.

Plus, all Canadian life insurance companies are required by government regulators to be members of Assuris. If the insurer fails, Assuris will make sure you get 85% of your promised benefits.

PolicyMe is backed by Canadian Premier Life Insurance Company, which is an Assuris member.

2. What coverage options are there? What are the exceptions or exclusions for payout?

Different Canadian insurers will offer different features on their term life insurance policies. 

To make sure you get the best policy, look for one with robust coverage (i.e. coverage over $100,000), limited exceptions or exclusions and the option to renew your policy down the road.

At PolicyMe, we offer coverage from $100,000 to $5,000,000. The only exclusion is sucide within the first two years of the policy. And you can extend your coverage anytime within the first five years.

3. Do they accept electronic applications?

Online applications for life insurance aren't just easier to fill out, they also get processed more quickly. 

In fact, filling out a paper application can increase your application processing time by up to six to eight weeks. That’s just plain annoying.

Moral of the story: look for an insurer that offers online applications for a smoother, faster application process. At PolicyMe, most applications are approved in seconds, not weeks.

4. Are they competitive on price?

It's common in Canada to see a wide range of prices from different insurers for what's essentially the same term insurance policy. 

Thankfully, a lower price doesn’t mean the policy is a scam or the policy is inferior in some way.

In most cases, a lower price usually means that that company is pricing the policy more aggressively to win you over as a customer. 

There’s no reason to pay more than you need to for a term life insurance policy, regardless of what some insurers might claim.

If you’ve been trying to find an insurer that covers all four of these areas, look no further than PolicyMe. 

We’re committed to providing affordable life insurance options, for people from all walks of life. Plus, we’re backed by Canadian life insurance giants, for your peace of mind.

FAQ: Term life insurance

Can I extend my term life insurance coverage?

Yes, you can extend your term life insurance coverage in the first five years of your policy (with PolicyMe). After five years, or when you reach the end of your term, you’ll need to reapply. 

If you renew your policy, it's almost guaranteed that you'll pay higher premiums. Why? Because now that you're older, your risk of dying is higher. And that makes it more likely that your insurer will have to pay a death benefit during your renewed policy term.

You can also apply for convertible term life insurance, which gives you the option to convert your term policy to a whole or universal policy.

Is my term life insurance worth anything?

Unlike whole or universal life insurance, term life insurance does not have a cash value. When your term ends, or if you cancel your policy before the end of your term, there’s no refund.

Sounds like a bad deal? Think of it this way: term life insurance is like auto insurance or home insurance. If you don’t make a claim on your car insurance, you don’t get your money back. Same deal with term life insurance.

What should you pay for term life insurance in Canada?

Here’s one thing for sure: you should pay less for term life insurance than you would for a permanent life insurance policy.

The exact amount you’ll pay for term life insurance every month will depend on your age, your health status, the insurer providing you a quote, as well as the length and amounts of your coverage.

From age 20 to 35, prices stay pretty similar. After that, they start increasing quickly. For example, a 35-year-old nonsmoking woman would pay $25.44 a month for $500,000 in coverage and a 20 year term. A 50-year-old woman buying the same policy would pay $93.28 a month.

What is the maximum age for term life insurance in Canada?

Most term life insurance policies in Canada will offer coverage up to the age of 65.

PolicyMe actually allows you to sign up for term life coverage until the age of 75, with coverage lasting as long as age 85 (a 10 year policy). 

If you’re 70 years old, you can buy a 10 or 15 year policy. If you’re 65, you can buy a 10, 15 or 20 year policy etc.

Laura McKay

COO & Co-Founder

Laura brings 7 years of experience working in insurance & strategic operations as a management consultant at Oliver Wyman, after experiences at Manulife and Munich Re. In 2017, she launched a successful initiative for the World Economic Forum focused on innovation in insurance, working closely with insurers, tech pioneers, and policy-makers.

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