Life insurance guides

life insurance guides

Life insurance is a vital financial tool that gives people and their families protection and peace of mind. Life insurance may be quite helpful in ensuring the financial security of your loved ones, whether you’re just beginning a family or making retirement plans. In this blog post, we’ll explore the basics of life insurance in Canada, its benefits, and the different types of policies available.

What is Life Insurance?

An agreement between a person and an insurance provider is life insurance. The insurance company guarantees that, in return for monthly premium payments, it will provide a cash benefit to the named beneficiaries after the covered individual passes away. This benefit is known as the “death benefit.”

The main objective of life insurance is to offer financial security and assistance to the insured person’s offspring or other beneficiaries in the event of their demise. It helps to guarantee that loved ones are not put through financial difficulty in the case of the insured’s death, especially if the person was a major income earner or had considerable financial commitments.

Why Does Life Insurance Matters?

The unanticipated can occur at any time since life is unpredictable. As a safety net, life insurance guarantees your family’s financial security in the case of your dying. It assists in making up for missed income, settles past-due bills, and provides money for upcoming costs like tuition or mortgage payments. Having life insurance gives your family the security they require to face the uncertainties of life.

How does it work?

Life insurance in Canada works by providing financial protection and support to the policyholder’s beneficiaries in the event of the insured person’s death. Here’s how it works:

  • Purchasing a Policy: The process begins when an individual decides to purchase a life insurance policy. They can work with a licensed insurance agent or directly with an insurance company to choose the type of policy that best suits their needs, such as term life insurance or permanent life insurance.
  • Determining Coverage Amount: The policyholder determines the coverage amount they need based on factors like income, debts, future expenses, and financial goals. The coverage amount represents the death benefit that will be paid out to the beneficiaries upon the insured’s passing.
  • Paying Premiums: To keep the life insurance policy in force, the policyholder pays regular premiums to the insurance company. Premiums can be paid monthly, quarterly, annually, or according to the policy’s terms. The amount of premiums depends on factors like the coverage amount, type of policy, and the insured’s age, health, and lifestyle.
  • Beneficiary Designation: The policyholder designates one or more beneficiaries who will receive the death benefit upon their passing. Beneficiaries can be family members, friends, or charitable organizations.
  • Policy Activation and Coverage: Once the policy is purchased, it becomes active, and the policyholder is covered. For term life insurance, coverage is provided for the specified term (e.g., 10, 20, or 30 years). For permanent life insurance, coverage is provided for the insured’s entire life, as long as premiums are paid.
  • The Event of the Insured’s Death: If the insured person passes away while the policy is in force, the beneficiaries must file a claim with the insurance company. They need to submit a death certificate and any other required documentation to initiate the claim process.
  • Death Benefit Payout: Upon receiving the claim and verifying the information, the insurance company pays out the death benefit to the designated beneficiaries. The beneficiaries can use the proceeds to cover living expenses, pay off debts, fund educational needs, or address other financial obligations.
  • Living Benefits (For Permanent Life Insurance): In the case of permanent life insurance, the policy also accumulates cash value over time. The policyholder can access this cash value through withdrawals or policy loans during their lifetime. These living benefits can be used for various financial needs, such as supplementing retirement income or funding emergencies.

Types of Life Insurance?

In Canada, several types of life insurance policies are available to meet the varying needs and preferences of individuals. The main types of life insurance offered in Canada include:

  • Term Life Insurance: Term life insurance provides coverage for a specified term or period, such as 10, 20, or 30 years. If the insured person passes away during the policy term, the death benefit is paid out to the beneficiaries. Term life insurance is often chosen for its affordability and simplicity, making it suitable for those seeking temporary coverage to protect their family or financial responsibilities for a specific period.
  • Permanent Life Insurance: Permanent life insurance offers lifelong coverage, as long as the premiums are paid. It includes an insurance component and a savings or investment component known as the cash value. There are different types of permanent life insurance policies in Canada, including:
  1. Whole Life Insurance: Whole life insurance provides a guaranteed death benefit, and the premiums remain level throughout the policyholder’s life. The cash value component grows on a tax-deferred basis and can be accessed through withdrawals or policy loans.
  2. Universal Life Insurance: Universal life insurance offers more flexibility compared to whole life insurance. Policyholders can adjust the premium payments and death benefit amount based on their needs. The cash value grows based on the policy’s investment performance, and policyholders can access it through withdrawals or policy loans.
  3. Participating in Whole Life Insurance: This type of whole life insurance allows policyholders to receive dividends from the insurance company. Dividends are not guaranteed and are based on the company’s financial performance. Policyholders have various options for using dividends, such as taking them in cash, using them to reduce premiums, purchasing additional coverage, or leaving them to accumulate with interest.
  • Term-to-100 Life Insurance: Term-to-100 (T-100) life insurance is a simplified form of permanent life insurance. It offers coverage for the insured’s entire life with level premiums until age 100. Unlike other permanent policies, T-100 does not include a cash value component. This type of insurance is often chosen for estate planning purposes, covering final expenses, or leaving a legacy to beneficiaries.
  • Critical Illness Insurance: Critical illness insurance provides a lump-sum payment to the insured if they are diagnosed with a specified critical illness covered by the policy. It is designed to help policyholders manage the financial impact of a severe illness, allowing them to focus on recovery without worrying about financial burdens.
  • Guaranteed Issue Life Insurance: Guaranteed issue life insurance is a type of whole life insurance that doesn’t require a medical exam or health questionnaire. It is typically available to individuals who may have difficulty qualifying for other types of life insurance due to health issues. While it offers coverage, the premiums are generally higher, and there may be a waiting period before the full death benefit is payable.

Is it necessary to have life insurance in Canada?

In Canada, life insurance is not legally required, but it is strongly advised because of the substantial advantages it provides. Life insurance guarantees that your family will be taken care of in the case of your dying by offering financial security. It replaces lost income and pays for necessities like unpaid bills and funeral expenses, assisting in keeping up their level of living. For individuals who have dependents, life insurance is especially important since it assures their financial security after they pass away. It can also be useful for estate planning and company continuity. For many people and families, purchasing life insurance is a wise financial move since it assures you that your loved ones will be taken care of in the event of your passing. 

How much insurance coverage do you need?

The amount of insurance coverage you need depends on your financial situation, responsibilities, and long-term goals. Here are some factors to consider when determining how much life insurance coverage you may require:

  • Determine how much of your income is needed to support your family’s lifestyle.
  • Consider outstanding debts like mortgages, loans, and credit card debt.
  • Factor in the cost of your children’s education and other future financial goals.
  • Account for funeral and final expenses that your family may face.
  • Think about potential medical or long-term care costs.
  • Aim for coverage that is at least 5 to 10 times your annual income.
  • Work with an insurance agent or financial advisor to conduct a comprehensive needs analysis.
  • Review your life insurance coverage regularly as circumstances change.
How much insurance coverage do you need?

life insurance policy amount chart

This formula helps calculate the appropriate coverage amount you need for your life insurance policy. By adding up the outstanding debts, providing for your family’s income needs for a specific period, covering the remaining mortgage balance, and factoring in your children’s education costs, you can arrive at an estimation of the ideal life insurance coverage to protect your loved ones financially in case of the unexpected.

How much does life insurance cost in Canada?

The typical monthly price for life insurance can vary greatly, from $17 to over $300. Because premiums are determined by each person’s specific coverage needs and lifestyle, there is such a large gap. Consider your responsibilities, assets, and what you want to leave your family before requesting a quotation online or through a broker. Think about things like the kind of life insurance you require, your age, health, and lifestyle, as they might affect the price. The chart below shows the typical life insurance premiums for a Young  (35-year-old ) male seeking $500,000 in coverage. 

The table shows the average monthly and annual premiums for both males and females seeking different types of coverage:

Policy TypeAverage Male PremiumAverage Female Premium
Term Life Insurance$23 per month / $259 per year$17 per month / $193 per year
(10-year term)
Term Life Insurance$34 per month / $375 per year$25 per month / $280 per year
(20-year term)
Term 100 Insurance$313 per month / $3,412 per year$266 per month / $2,953 per year
Whole Life Insurance$338 per month / $3,751 per year$287 per month / $3,194 per year

Please note that these are average premiums, and individual rates may vary based on factors such as age, health, coverage amount, and lifestyle. It’s essential to obtain personalized quotes to get a more accurate estimate of life insurance costs.

Benefits of Life Insurance:

  1. Financial Protection: Life insurance provides a safety net for loved ones in the event of the insured’s death, ensuring their financial well-being.
  2. Estate Planning: Life insurance can be an essential tool in estate planning to cover taxes and final expenses, preserving the family’s assets.
  3. Tax Advantages: Some life insurance policies offer tax-deferred growth of cash value and tax-free death benefits.
  4. Flexibility: Life insurance plans offer various options to customize coverage based on individual needs and goals.
  5. Living Benefits: Permanent life insurance policies provide living benefits through cash value, which can be accessed during the insured’s lifetime.

The best life insurance plan will depend on your unique needs and circumstances, so make sure to seek advice from a professional insurance agent or financial counselor.

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How to find the best life insurance in Canada?

It’s important to carefully evaluate your unique needs and preferences while looking for the finest life insurance in Canada. To assist you in finding the best life insurance coverage, follow these steps:

  • Assess Needs: Determine your financial requirements and obligations.
  • Choose Policy Type: Select the right type of life insurance (term, whole, universal) that suits your goals.
  • Compare Quotes: Obtain and compare quotes from multiple insurers for the best rates and coverage.
  • Check Financial Stability: Ensure the insurer is financially stable and reputable.
  • Review Policy Features: Understand the policy’s features, terms, and conditions.
  • Seek Professional Advice: Consult a licensed insurance agent or financial advisor for personalized guidance.
  • Disclose Health Information: Provide accurate health details for a valid policy.
  • Read Reviews: Check reviews and testimonials for customer satisfaction.

By following these steps, you can find the best life insurance policy in Canada tailored to your needs.

Best Life Insurance Providers in Canada

  • Emma (formerly known as PolicyMe): Emma, now rebranded as PolicyMe is a Canadian insurance tech company that offers online life insurance solutions. They provide a simplified and streamlined process for getting life insurance quotes and purchasing coverage online. PolicyMe aims to make life insurance accessible and more straightforward for Canadians by leveraging technology to eliminate traditional barriers and complexities in the application process.
  • PolicyAdvisor: PolicyAdvisor is an online platform that helps Canadians compare life insurance quotes and find the most suitable coverage. They offer a user-friendly interface that allows individuals to receive personalized insurance recommendations based on their unique needs and preferences. PolicyAdvisor partners with various insurance companies to provide a wide range of life insurance options.
  • is an online comparison platform that allows users to compare insurance quotes, including life insurance, from various Canadian insurance providers. They provide a simple and efficient way to access multiple quotes and compare coverage options to find the most competitive rates available in the market.
  • Insurance Hotline: Insurance Hotline is another online comparison platform that helps Canadians compare insurance quotes from different providers, including life insurance. By filling out a form with their relevant details, users can receive multiple quotes and make informed decisions about their life insurance needs.

Even though these platforms can make it simple to compare prices and get coverage, it’s still a good idea to check out each insurance provider’s track record, financial standing, and customer satisfaction ratings before choosing one. For specialized guidance and assistance in selecting the best life insurance policy for your unique circumstances, you might also think about speaking with a qualified insurance agent or financial counselor.


Is life insurance taxable?

In Canada, life insurance death benefits are generally not taxable for the beneficiaries. However, some exceptions may apply if the policy is owned by a corporation or used for tax avoidance purposes.

When should I get life insurance?

It's best to get life insurance when you have financial dependents, outstanding debts, or specific financial goals to protect your loved ones financially in case of your passing.

Why should I shop for life insurance online?

Shopping for life insurance online offers convenience, easy comparison of quotes, and access to various policy options from multiple insurers in one place.

How do I use my life insurance while I'm alive?

Permanent life insurance policies, such as whole life or universal life, accumulate cash value over time. You can access this cash value through withdrawals or policy loans for various financial needs.

Can life insurance be used for anything?

Whole life insurance is primarily designed to provide a death benefit to beneficiaries, some types of permanent policies can offer living benefits, and you can use the cash value for various purposes, such as supplementing retirement income.

When can you borrow from a whole life policy?

In whole life insurance, you can borrow against the policy's cash value after it has accumulated sufficient value, usually after several years of premium payments.

How to draw money from life insurance?

To access money from a life insurance policy, you can either make a partial withdrawal from the cash value or take a loan against the policy's cash value, which may require repayment with interest.


Your thorough financial strategy must include life insurance as a significant element. You may provide your family security and safety, even after you pass away, by acquiring the right life insurance coverage in Canada. Make an informed decision about your need for life insurance by carefully examining the options, contrasting several estimates, and speaking with professionals. 

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