Life insurance in Canada: 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 in Canada

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Who needs life insurance in Canada?



Stay-at-home parents

Married or common-law couples


Business owners


People with debt

Near retirees

Learn about how much life insurance coverage you need 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.
What type of life insurance do Canadians need - What is life insurance 101

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)

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
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


*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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Learn more about life insurance in Canada

Frequently Asked Questions

For decades, the life insurance industry in Canada 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.
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Is life insurance worth it?

Yes, if you have people who depend on you for financial security. It’s true that many people don’t die until they’re older and no longer need coverage. But because you probably don’t know when you’ll die, paying the cost of life insurance is worth it to ensure your family will be protected in case the unthinkable happens.

When should I get life insurance?

You should buy coverage as soon as you have anyone who depends on you financially. This includes people you support financially and people who could become financially responsible for your debt if you died. For most Canadians, this happens when they get married, have a baby or buy a home with someone else.

How much life insurance should I have?

The right amount of life insurance coverage depends on your family’s needs. In general, you should have enough insurance to financially support dependents, pay off debt and cover any other expenses you want to take care of for your family.

How does a life insurance policy payout work?

If you die while holding an active life insurance policy, your loved ones can submit an insurance claim to your life insurance company. Once your insurer processes and approves the claim, it’ll give your family the payout as a tax-free lump sum. Your family can use the money in any way they want.

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