Life insurance 101: what you need to know

What is life insurance?

Life insurance is a financial safety net. It protects your loved ones in the event that you die and your income is no longer around to support them. If you die with an active life insurance policy, your loved ones will receive a tax-free payment that they can use in any way they want.

The basics of life insurance

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Life insurance is more affordable than you think

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*Quotes are based on our customers’ average coverage amount and policy length of $500,000 over 20 years.

Your monthly rate

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$20.75

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Who needs life insurance?

Parents

Breadwinners

Stay-at-home parents

Married or common-law couples

Caretakers

Business owners

Homeowners

People with debt

Near retirees

Learn more about who needs life insurance here

Types of life insurance in Canada

Term life insurance

Temporary coverage that lasts for a fixed period of time, usually 10 or 20 years

Your loved ones receive a tax-free payment if you die during your policy term

The most affordable type of policy

No hidden fees or restrictions

Can be cancelled before expiry without penalty or loss of value

Whole life insurance

A type of permanent life insurance that provides coverage for your entire life

Has a cash value because some of the money you pay gets invested

Comes with surrender fees, taxes, interest, and other restrictions

8-10x the price of a comparable term life insurance policy

Universal life insurance

A highly flexible type of permanent life insurance

You can adjust your monthly payments and coverage amount based on your needs

Very complex because the policy always needs to be managed while active

8-10x the price of a comparable term life insurance policy

Mortgage life insurance

Your insurer pays off your mortgage if you die

Death benefit can only be used for your mortgage, not other expenses

Costs the same every month, even when your outstanding balance is less

Price essentially gets more expensive over time

What type of life insurance do you need?

For 95% of young Canadian families, term life insurance is the best type of life insurance because it provides sufficient coverage at a highly affordable price.

Buying a permanent life insurance policy may make sense for some people based on their needs. However, because permanent policies are much more expensive and far less flexible, we usually don't recommend them for our applicants.

Term life insurance vs. whole life insurance plans

Transfer estate wealth efficiently
Savings and investments vehicle
Funeral expenses

Whole life insurance

Term life insurance

High income earners with complex financial needs
Parents with long-term dependents, such as children with disabilities
Parents with dependents (e.g. children, elderly parents)
Homeowners

What it's for

Who it's for

Expiration date

Same cost each year

Cash value

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Average cost per month

$178 / month*
Lifetime coverage
Tax-deferred investing
No
No
Yes
Replacing income
Paying off debt
$22 / month*
Affordable (lower premiums)
Easy to manage (no hidden feeds, taxes, interest or other stipulations)
Flexibility to choose length of policy term
Yes
Yes
No

Benefits

*Average rates listed are for a non-smoking female, age 40, for $250,000 in coverage over a 20-year policy.

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Canadian life insurance is cheaper than most people think. Get an instant online quote in just a few easy steps.

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Talk to an advisor

Have a question we don’t answer here? Want help finding the best life insurance Canada offers?

Give us a call at: +1 (866) 966-7457

Our experts are available to talk 7 days a week, from 9AM to 6PM ET.

You can also send us an email.

Learn more about protecting your family financially

Frequently Asked Questions

For decades, the life insurance industry has been plagued with high-pressure, jargon-filled sales tactics.

We want to guide you along the process, so that you choose your policy for the right reasons, on your own time.
Go to Learning Centre
Is life insurance worth it?
When should I get life insurance?
How much life insurance should I have?
How does a life insurance policy payout work?
Does a lower rate mean lower quality?

When you're ready, we're here for you

Enough talk – we know you’re busy. We're here to help when you’re ready to cross ‘get insurance – seriously, just do it’ off your to-do list
You can always call +1 (866) 999-7457 or email advisor@policyme.com

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