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How much does life insurance cost in Canada? Updated 2022

SUMMARY

The cost of life insurance is highly variable, changing from person to person and policy to policy. Factors like age, gender, health, lifestyle, and smoking status influence your life expectancy and how much you will be expected to pay for a life insurance policy. Policy type, insurance provider, and coverage amount will also have a direct impact on the cost of life insurance premiums.

By Jiten Puri
CEO & Founder, Insurance Advisor, LLQP
12 min read
IN THIS ARTICLE

Calculating the cost of life insurance can produce more questions than answers sometimes. Life insurance policies don’t come in boxes on store shelves. Instead, they are often intricate, customized plans that take into account not only your personal health details but also the size and length of coverage you are looking to obtain.

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How much is life insurance in Canada?

First off, what does one consider life insurance in this context? The simplest form of coverage is term life insurance. This type of life insurance policy provides coverage for a set amount of time or term, and the length of that term goes a long way in determining the cost of basic life insurance.

The life insurance death benefit is able to cover most of your life insurance needs that are temporary in length. This could include financial situations like your mortgage, any outstanding debt you may have, coverage for your children’s education, or life expenses for your loved ones so they maintain the same standard of living – even if you pass away.

Because of the shorter life insurance term, a life insurance company will generally provide less expensive premiums for term life insurance.

There are several other factors that affect the average cost of your life insurance premium, which we’ll explain further. However, the graphic below can give you a rough idea of the average cost of life insurance.

the cost of life insurance at different ages

To quickly see how much term insurance would cost for you, use our life insurance calculator. You can get a personalized, no-obligation estimate matching your financial security needs in minutes.

How much does permanent life insurance cost?

Permanent insurance or whole life insurance is generally more expensive type of policy because it provides financial protection for your entire life. Additionally, whole life insurance policies have a cash value which your elevated premiums also contribute to, and can be accessed in the form of policy loans or a policy dividend.

Learn more about how permanent insurance policies work and the cost of whole life insurance.

How much does newborn life insurance cost?

You can purchase life insurance for a newborn child – or even older children – in two ways.

One is by adding a child term rider to your insurance policy when you purchase it. This typically adds a few more dollars to your monthly insurance premium and provides a modest death benefit should a dependent child pass away while your policy is still active.

The more common form of newborn life insurance is when a parent, grandparent, or guardian purchases a whole life policy for the child. Because of the young age and lack of health history for the insured child, the life insurance premium is generally lower than those for an adult obtaining whole life insurance.

Learn more about life insurance for children.

Check out PolicyAdvisor's life insurance calculator.

What affects the cost of life insurance?

The cost of life insurance is determined by two types of factors – your personal history and health (which affect your life expectancy), and the details of your insurance policy.

what factors affect the cost of life insurance

Personal factors

Age and birthday

The younger you are, the cheaper your life insurance will be. The cost of life insurance premiums rises as you age – statistically, you’re more likely to die or develop poor health the older you are.

When you’re young, you present less risk to the insurance company covering you – especially on a shorter-term life insurance plan. If you’re highly likely to outlive the coverage term set in your policy, your insurer won’t be called upon to pay your death benefit. If you’re older, you may want to read more about the best life insurance for seniors.

In regards to the cost of whole life insurance, the same factors apply. It also must be considered that if you take on a policy at a younger age, there is (hopefully) a longer period over which you are contributing premiums, thus spreading out the cost and risk for the insurance company.

And one last thing – the cost of life insurance is determined by your age at your nearest birthday. If you are turning 40 within the next six months, an insurance provider will consider you 40 right now.

Gender

Gender affects the cost of life insurance. Women are statistically less likely to die at an earlier age. The average life expectancy in Canada is 4 years higher for females.

Smoking status

It’s no secret that smoking is terrible for your health and increases your likelihood of developing a long list of diseases. Insurance providers are experts on these statistics and therefore increase the cost of life insurance for those who smoke a daily dart. In fact, smoking will impact the cost of your life insurance premiums significantly, usually doubling the cost of life insurance as you age.

There is a silver lining in that cloud of smoke. If you prove (or profess) that you quit smoking for 12 months, you may no longer be considered a smoker. Though, you will probably need to submit another blood sample to prove this fact. That said, the cost savings can be another motivating factor to kick the habit!

the cost of life insurance for smokers

For those who smoke the odd bud, now and again, there’s also reason to rejoice. Cannabis consumers are no longer considered smokers by most insurers though amount and frequency can still affect this determination.

Learn more about life insurance and smoking.

Medical history and general health

Insurance providers like healthy people – we’ve already established they are risk-averse. They determine your health based on certain key parameters like your height and weight to determine BMI.

Insurers want to know if you are taking medications or were treated for certain conditions like cholesterol, blood pressure, hypertension, and more. Your consumption of alcohol and any history of substance abuse also affects the cost of life insurance.

If a medical exam determines your BMI, cholesterol, blood pressure, history of disease, alcohol and drug use are in a good place, your cost of life insurance and monthly premiums will most likely be much lower.

Not getting a medical exam also affects your average cost of life insurance. A life insurance product called simplified issue life insurance forgoes an in-person life insurance medical exam and instead only asks some simple questions about your medical history and health. Though it is easier to qualify for this coverage because of the quick underwriting process, it is typically much more expensive than a fully underwritten insurance policy.

Learn more about no medical life insurance.

Family medical history

Family medical history impacts your life insurance cost as well. Many medical conditions are hereditary. It’s common for family members to end up developing the same conditions, be it cancer, heart disease or rarer afflictions.

You’ll be asked about the medical history of your immediate family when applying for life insurance coverage. Despite your current health, any critical illnesses or related deaths in your family history will affect your life insurance rate.

Driving history, extreme sports, and adventurous extracurricular activities

Regardless of your health status, if you have a poor driving record (tickets, accidents, drunk driving charges) or you regularly engage in dangerous activities like sky-diving, race car driving, or mountain climbing, insurers are going to raise your life insurance rate or suggest some coverage exclusions or in extreme cases deny your coverage altogether.

Some insurers are even looking into using credit scores to assess risk.

Occupational risks

Just as extreme sports enthusiasts make insurers nervous, so do those who work dangerous jobs. Occupational risks influence the cost of life insurance. Firefighters, police officers, pilots, Alaskan crab fishermen, and MMA fighters all face a higher life insurance rate (or may not even qualify for life insurance) because of the risk found in their occupation.

Foreign travel

Do you have a well-stamped passport? What you gain in worldliness may end up costing you on your insurance premiums. If you regularly travel for extended periods to high-risk nations, you may also elevate your life insurance cost (or altogether denied coverage).

Learn more about travel and life insurance.

Current and past risk classification

Based on all the information above, insurance underwriters place applicants in risk categories when extending coverage and charge them accordingly. Each company names their categories differently (e.g. Regular, Premium, and Premium Plus – kind of like UberX, Uber Black, Uber Select, etc).

While it’s not realistic to try to improve your overall classification in a rush before the medical exam, it can provide an incentive to continue to eat well, exercise and curb your alcohol intake to qualify for a lower cost of life insurance in the future.

Learn more about risk categories and life insurance ratings.

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Policy factors

Length and type of life insurance policy

One of the most impactful variables on the cost of life insurance is the length of coverage. A longer term, or insuring someone for their whole life, translates to higher premiums because the insurer is required to cover a longer period of time.

As we know, an aging applicant is a red flag for insurers, so they charge more to offset the risk in the latter years of a policy. You can use our online insurance quoting tool life insurance quotes across policy terms.

Learn more about different types of life insurance.

The amount of the death benefit

This more than likely is the most obvious factor affecting the cost of life insurance. You should understand how much life Insurance coverage you need to protect your family and dependents.

If premium costs are a real concern, make sure you’re accurately filling out a online life insurance calculator and keeping your family’s future financial requirements realistic. If you can lower your death benefit, while still confidently protecting your family, some savings on the cost of life insurance can be found.

Learn more about how much life insurance you need.

Policy options and riders

Everybody likes to upsize their latte once in a while, but policy options and riders can impact the cost of life insurance. Things like convertibility, guaranteed renewability, critical illness, disability and long-term care insurance riders, waiver of or return of premium clauses, child term riders, and more, can drive up life insurance costs.

Learn more about life insurance riders

What is the average life insurance cost by age?

Taking everything above into account, you now know that life insurance costs are not one-size-fits-all. Luckily, the following posts will give you a broader idea of some representative life insurance costs by age.

What is the average life insurance cost by death benefit amount?

Below are some common life insurance death benefit amounts and how much they cost at different points in one’s life.

What is the average cost of mortgage life insurance?

Mortgage life insurance is the act of protecting your mortgage debt through term life insurance that has a term matching the amortization period of your loan. The cost of mortgage life insurance is typically much lower than lender-provided mortgage insurance. The life insurance rates and coverage are the same as the term life insurance examples we’ve outlined above. A life insurance calculator will give you a more concrete idea of the cost of mortgage life insurance.

millenials overestimate the cost of life insurance by 80%

How can I lower the cost of life insurance?

There are some ways you can lower your insurance premium besides the factors we listed above. One way to obtain more affordable life insurance is by changing your payment method. While insurance premiums are generally paid monthly, you can get a discount by opting for an annual premium.

And as mentioned above, fully medically underwritten policies, including an in-person medical exam, typically have lower insurance premiums than simplified or guaranteed life insurance policies.

Get help determining life insurance costs

You don’t have to do all the research to find out the cost of term life insurance alone. Our life insurance  quoting tools can help you find out the exact life insurance costs from some of Canada’s top life insurance companies. Still need help? Our licensed insurance advisors have tons of experience helping Canadians determine how much life insurance they need and what it might cost when it comes time to ensure the financial safety of their loved ones.

Need help?
Call us at 1-888-601-9980 or book time with our licensed experts.
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The information above is a brief representative summary for indicative purposes only. It does not include all terms, conditions, limitations, exclusions, termination and other provisions of the policies described, some of which may be material to the policy selection. Please refer to the actual policy documents for complete details. In case of any discrepancy, the language in the actual policy documents will prevail.

KEY TAKEAWAYS

  • The cost of your life insurance policy will depend on personal factors, the details and depth of your desired coverage, and the life insurance product you choose
  • Age, smoking status, and health conditions are some of the biggest personal determinators of your life insurance rate. Policies are less expensive when you are younger, not-smoking, and in good health
  • No medical exam life insurance policies are typically more expensive than fully underwritten policies
  • Generally, a term life insurance policy costs less than a whole life or permanent policy
  • An experienced advisor can help you find the best coverage within your budget

By Jiten Puri
CEO & Founder, Insurance Advisor, LLQP
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