Best life insurance in Canada

antoine fruchard Antoine Fruchard  updated on 2020-11-13

Did you know that 22 million Canadians have life insurance? Do you want to cover your loved ones or your business in the event of death and not leave any debts behind? Life insurance is for you.

Read our exclusive guide to learn all about life insurance and compare the best life insurance in Quebec in just a few seconds.

What is life insurance?

Life insurance is an insurance that will pay out to your family if you die. The insurance company has to give to your family a tax-free lump sum cash payment also called the death benefit.

It’s intended to make sure that your family won’t be financially ruined if anything happens to you. It can also pay out to make sure that a mortgage or other debt is covered .

Do you need a life insurance policy?

You may need a life insurance policy to ensure your family is looked after if anything happens to you.

A life insurance payout could cover:

  • paying the mortgage on your family home, if you’re the sole breadwinner or you need both incomes to be able to keep up the payments;
  • looking after a dependent partner if you have very young children;
  • paying for university tuition for your children;
  • paying for full time childcare if a non-earning partner dies;
  • looking after an aged parent or disabled child, if you’re a carer;
  • repaying debts.

You may also be concerned that if you die, your family might have to give up on some of the better things in life – music lessons, horse rising, or holidays. A life insurance policy will ensure your loved ones don’t have to make those sacrifices.

If on the other hand you’re single, without debts and fancy free – you can probably do without, at least for now! (Though since life insurance is cheaper to buy when you’re younger, you might consider getting it arranged now if you see a spouse, mortgage and kids in your crystal ball.)

How does a life insurance policy work?

When you take out life insurance, you pay a monthly premium in return for which, the insurer will pay out a lump sum to your family or other named beneficiary if you die during the term of the insurance.

The insurer invests the premiums that it’s been paid, so that it can cover payouts as and when they come due.

That’s simple. But life insurance can be quite complex, as it comes in several different forms:

  • whole of life, which covers you as long as you live;
  • term life, which covers you only until a certain date (such as when your mortgage is paid off);
  • joint life, which covers you and your partner together but pays out only on the first (or occasionally on the second) death;

What does life insurance not cover?

Life insurance will generally not pay out in the following circumstances:

  • if you commit suicide, 
  • if your death occurs due to drink or drug abuse, 
  • if you are killed while committing a reckless or dangerous act. (If you fancy sky-diving without a parachute you’re unlikely to be covered. However, normal sports like skiing are not normally excluded.)

If you have a pre-existing medical condition you may also be asked to take a policy which excludes that condition.

What are the different life insurance policy types?

While the underlying idea is the same, life insurance comes in several different types which operate slightly differently. The most common types are:

  • Term life insurance
  • Permanent life insurance : whole of life insurance and universal life insurance.

What is Whole Life insurance?

Whole life insurance covers you for your entire life, as long as you keep paying the premiums.

When you take out a whole life policy you pay monthly premiums for a stated amount of cover, for instance a sum insured of $250,000. You also nominate a beneficiary, which may be a trust, or a member of your family. When you die, the insurer will pay out the agreed sum to your beneficiary.  Read our guide about whole life insurance.

What is universal life insurance?

Universal life insurance is a type of permanent life insurance, along with whole life insurance. Universal life insurance is

  • a life insurance policy
  • an investment account for making financial investments.

It is a flexible contract that allows the subscriber a great deal of freedom. The subscriber can pay regular amounts and can choose how his premiums are invested according to different possible investments via his investment account. This investment account has a cash surrender value.

What is Term Life insurance?

With term life insurance, you pick a certain period of cover when you buy the policy, and the insurance will only cover you if you die within that time. Read our guide about term life insurance.

When do you need each kind of policy?

SituationsTerm LifePermanent life
DurationLimitedAll life
Target
  • People with limited means
  • Homeowner with a mortgage
  • All adults wishing to protect their loved ones
  • People who have reached the limits of their savings accounts
InvestmentNoYes
Advantages
  • Low premium when you take it quite young
  • Easy policy to understand
  • Lifetime protection no matter when you die
  • The cost of premiums is guaranteed
  • The cash surrender value increases
  • Advantageous taxation
Policy types recommandation

How much is a typical life insurance policy?

Obviously there are a lot of factors affecting the amount you’ll pay in premiums. However, as a rule of thumb a healthy person can usually secure $200-250,000 of cover for $15-20 a month.

The exact price will depend on

  • your age,
  • your state of health and medical history,
  • your weight,
  • whether you smoke,
  • how much you drink,
  • your lifestyle (a racing car driver will pay more than Mr Sensible),
  • the sum you want to insure,
  • the term of the insurance,
  • any ‘extras’ such as critical illness cover that you want added to the policy.

If you have a critical illness, such as cancer, you may find that it’s more difficult and more expensive to get life insurance. Sometimes insurers may want to exclude your pre-existing condition. Most insurers will want an in-depth medical report so it’s worth talking to your consultant to see what kind of report you’ll get and how that might affect your insurance.

Below are examples of monthly premium amounts for term and permanent life insurance based on age for the same underwriter profile.

Term life (premium increase per level)Whole life insurance
No smoker woman – 30 years old – $100,000 policy Femme non-fumeur de 30 ans pour 100,000 $10 $50 $
No smoker woman – 60 years old – $100,000 policy 64 $178 $
Life insurance price

What are the best life insurance in Canada?

Insurance companyDetails
desjardins logo
  • Term life insurance for 10, 20 or 30 years
  • Basic or customized permanent life insurance
  • Subscribe by phone or make an online appointment
manuvie assurance
  • Online quotes
  • Term life insurance for 10 years renewable and up to $75,000
  • Several permanent life insurance policies
  • Possibility of guaranteed membership
ssq assurance logo
  • Quote by phone
  • All types of life insurance possible
  • No medical examination for life insurance
Les meilleures assurances vies

How much life insurance do I need?

We’ve looked at some of the best insurers for different types of insurance and different individuals. But of course, your experience may be different depending on your particular needs.

In particular your age will have a major impact on how much you pay, as the table below shows. We looked for the lowest premium we could find.

If you’re over 50 when you start paying in, you’ll pay more than four times what a 25 year old would have to pay.

In particular your age will have a major impact on how much you pay, as the table below shows. We looked for the lowest premium we could find. If you’re over 50 when you start paying in, you’ll pay more than four times what a 25 year old would have to pay.

Age at start of policyMonthly premium
20-30$12
30-40$15,5
40-50$30
Over 50$60
10 years Term life – $100,000 death benefit

How do I buy life insurance?

To purchase life insurance, nothing could be simpler. Compare and store for quotes from the best insurers in Quebec with our tool above and then click on quote.

When buying life insurance, you will have to decide :

  • the type of life insurance you want (term, permanent, etc.)
  • the number of insureds (family, children, etc.)
  • the amount to be paid upon your death
  • but also of your beneficiaries and the percentage allocated to each one.

Life insurance as a financial investment?

Permanent life insurance allows anyone to invest funds on a regular basis in an investment portfolio with many investment options. You insure your life and allow a loved one to benefit from a death benefit, but you also benefit from the returns of the investment account which can increase your death benefit, or increase your surrender value to finance a long-term objective (retirement, new business, studies etc.).

Should I take out single or joint life insurance policy?

This isn’t quite as easy as it looks, because two single life policies aren’t quite the same as a joint policy. If you and your spouse or partner take out a joint policy, it will only pay out when the first partner dies (a ‘first-death’ policy – ‘second-death’ policies are also available but they are generally used for the specific purpose of insuring against inheritance tax liabilities). That might be all you need if it’s to pay off the mortgage, but then again, you might need more protection if you have young children.

What is a single life insurance policy?

A single life policy covers one individual only. If you have a single policy, and your partner has a single policy, then if either of you dies, the relevant policy will pay out and the other policy will be unaffected.

What is a joint life insurance policy?

A joint life insurance policy covers two lives but will only pay out on one death.

  • First-death policies pay out on the first partner’s death. This is the kind of policy you’ll need to provide for mortgage repayment or for the living expenses of a young family.
  • Second-death policies don’t pay out on the first partner to die, but on the surviving partner’s death. Usually, this kind of policy is used to help the children pay the inheritance tax bill where there’s likely to be a large amount of tax to pay.
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