Affordable Life Insurance for Seniors in Canada

Looking for affordable life insurance options for seniors? We cover everything you need to know to get the best insurance for your needs.

November 12, 2020

Life sometimes doesn’t go according to plan. Even after retirement, you may need life insurance for various reasons. And that’s okay because there are many types of affordable life insurance for seniors in Canada.

There are a variety of life insurance policies that accommodate seniors, even those with a medical condition. Of course, life insurance becomes more costly as you age, but if you look in the right places, you can find a life insurance policy that meets your needs and fits your budget.

Continue reading to find out what options are available to you and how to make the right choice, including:

Highlights

  • Seniors in Canada can choose from permanent life insurance, term life insurance, and no-medical life insurance
  • The maximum issue age for term life insurance is 75
  • Permanent life insurance lets you leave a specific amount to your loved ones, no matter how long you live
  • Seniors with an underlying medical condition can also get coverage. They should consider buying no-medical life insurance

What is life insurance for seniors?

Life insurance for seniors is a solution designed specifically for seniors, typically over 50. Compared to life insurance products for younger people, these are less flexible and more expensive. But that doesn’t mean they are any less important. When you’re over 50, life insurance for seniors can help you:

  • Take care of any unpaid debt that you have
  • Cover funeral arrangements or end-of-life medical expenses
  • Leave an inheritance for your loved ones

Many factors affect rates of senior life insurance policies. The three most important ones are:

Age

The older you are, the more costly life insurance becomes. Premium rates increase as you age because of a decrease in your total life expectancy.

Coverage amount

The more coverage you want, the higher the premium.

Health

retirement party birthday cake

A pre-existing health condition, like heart disease, can increase your insurance premium. The same is true for unhealthy lifestyles, such as regular alcohol consumption or obesity.

Which types of insurance are available for seniors?

Broadly speaking, there are two main types of life insurance — whole life insurance and term life insurance. Both these types are available to seniors in Canada. As to which life insurance for seniors is right for you, that depends solely on your situation. When deciding among various options, take into account your financial goals. Next, decide how much money you’ll require to fulfill these goals.

Now, let’s see which type of life insurance for seniors is a better choice in which situation.

You have outstanding debts. If you have a debt, like a mortgage, that your spouse or children will inherit, consider buying term life insurance. Your beneficiary can use the insurance payout to pay down the debt after your death.

You want to allocate funds for your funeral. In this case, whole life insurance, such as term to 100, may a better option. It will help ease the burden on your family in funeral planning.

You have a child with special needs. Life insurance is a way to ensure that a dependent doesn’t suffer financially after you’re gone. If you have someone who relies on you financially, go for whole life insurance.

You want life insurance for estate planning. Last-to-die life insurance is mainly used for estate planning purposes. Such a policy is typically cheaper than traditional whole life insurance and pays out the death benefit only after the death of the surviving spouse.

You want to create an extra source of savings. With some types of whole life insurance, like whole life insurance, a portion of your premium gets put into a savings account. You can borrow against or withdraw from this savings account and use the money as you see fit.

Do keep in mind that whole life insurance, unlike term life insurance, has no deadline. As such, they cost more. Also, among permanent life insurance policies, those that build cash value have higher premiums than those that don’t.

How do pre-existing conditions affect getting life insurance?

Senior Couple Dancing at Home

Having a pre-existing condition doesn’t necessarily mean you can’t get competitive rates. If the health issue is well managed or not severe, you may automatically qualify for standard rates.

Even a severe medical condition doesn’t automatically disqualify you from getting coverage. But you may have to pay higher premiums and have limited choice.

A pre-existing condition is a health condition you were diagnosed with before applying for life insurance. There are many types of pre-existing health conditions, such as high blood pressure, that carriers take into consideration.

That said, each insurance company follows a unique underwriting process, and some are more lenient than others for specific health conditions. For example, some Canadian insurers look more kindly on high blood pressure. For this reason, it’s wise to shop around and find the best policy for your situation.

Is no-medical insurance a good option for seniors in Canada?

Well, it all depends on your situation.

Do you have a pre-existing condition that disqualifies you from getting traditional life insurance coverage with regular medical screening? Do you hate undergoing the physical or time-consuming process of a medical review?

If you said yes to any of the above, opt for life insurance that doesn’t involve a medical review. However, brace yourself for high insurance quotes as these policies are pricier than traditionally underwritten policies.

Seniors who don't want to take a medical test can buy either simplified whole life insurance or guaranteed issue life insurance. The latter is more accommodating of the two and consequently more expensive. For this reason, apply for guaranteed issue life insurance only if you can’t get the other one.

Let’s now look at these two policies in detail.

A Jar of coins with a plant growing from the center

Simplified Whole Life Insurance

This life insurance for seniors provides lifetime protection. However, unlike the standard whole life insurance, it only offers bare-bone coverage and doesn’t include a savings component. You won’t have to take a medical exam but will have to answer questions related to your health. The premiums are higher than traditional whole life insurance, and the coverage amount lower.

This type of life insurance for seniors allows you to take care of end-of-life expenses. Some simplified whole life insurance policies include a waiting period, typically two years. Your loved ones receive the death benefit payout only when you die after owning the life insurance policy for two years. If you die before two years are up, the insurer is under no obligation to pay the death benefit. But it will return the premiums paid for the policy to your beneficiary.

Who’s it for: For Seniors who can’t get traditional life insurance coverage, but who are only at moderate health risk.

Guaranteed Whole Life Insurance

Guaranteed whole life insurance provides coverage, regardless of your medical history — hence the name. Like traditional whole life insurance, this type of life insurance for seniors provides coverage for your entire life. But it has limited features and no cash value component.

You neither need to take a medical exam nor answer questions about your health. Almost everybody who applies gets the coverage. However, it is considerably more expensive than simplified whole life insurance.

In most cases, the maximum death benefit is $50,000. Some guaranteed whole life insurance policies include a waiting period, usually two years. You need to hold on to your policy for two years before it pays out the death benefit to your beneficiary. If you pass away within the waiting period, the insurer will refund the amount you’ve paid into the policy to your family.

Who’s it for: Seniors who can’t get traditional whole life insurance or simplified whole life insurance.

What is the price of term life insurance for seniors?

Senior couple talking to a financial advisor

Life insurance premiums are often unique to the person applying for coverage. How much premium you will pay depends on three factors — age, gender, and physical condition. The last factor is one that can vary a lot from one person to another and widely affects premium rates.

A healthy, non-smoking 60-year-old male could expect to pay roughly $109 for a 20-year term life insurance policy. The same coverage starts at approximately $74 for a non-smoking female.

Smokers may have to pay as much as two times the amount of their non-smoking peers. That’s hardly surprising, though. Smokers have a significantly higher mortality rate than their non-smoking counterparts.

While smoking considerably affects your life insurance premium rates, your age has even a greater impact. In fact, it is the primary factor influencing your cost of life insurance. For this reason, it’s wise to purchase life insurance as early as possible. The longer you wait, the more your premium rates will go up solely on age — and understandably so. The older you are, the fewer years you are expected to live.

To give you a better idea, our team analyzed price quotes for two seniors life insurance providers. Industrial Alliance (iA) is a popular term insurance option and Canada Protection Plan (CPP) is often recommended for non-medical (no medical exam required).

iA Insurance for Seniors Price Example

Quotes are for $100,000 in coverage over a 20-year term length. They represent quotes for someone who is a non-smoker and in good health.

Age Male Female
50 $38.25 $27.72
55 $64.17 $44.10
60 $109.26 $73.53
65 $186.03 $124.29
70+ Contact Us for Options Contact Us for Options

CPP (No Medical) Preferred Insurance for Seniors Price Example

Quotes are for $100,000 in coverage over a 20-year term length. They represent quotes for someone who is a non-smoker with no medical exam required.

Age Male Female
50 $50.94 $37.26
55 $80.46 $56.61
60 $131.22 $88.22
65 Contact Us for Options Contact Us for Options
70+ Contact Us for Options Contact Us for Options

Assuming you are in good health, you can save between $10 to $20 per month going with iA term insurance. CPP remains a good affordable option if you have a pre-existing medical condition as no medical exam is required to be covered.

Are convertible or renewable life insurance options available for seniors?

Saving money for life insurance

In short, the answer is yes, but there’s usually a limit as to when you can convert.

Life insurance for seniors in Canada is convertible to permanent coverage. Term life policies allow conversion before the insured turns 71, but there are exceptions. Some term life insurance policies allow conversion till age 75.

In case you are 60-year-old with a 15-year term policy, you can trade your term policy for permanent coverage before you turn 71. However, if you are of 72 years and purchase a 10-year term life insurance policy, you cannot exchange it in favour of a permanent life policy.

If you are in good health and believe you will outlive the policy term, consider permanent life insurance, such as universal or whole life insurance, instead.

Life insurance for seniors is renewable up to a certain age. You can renew most term life insurance policies without a medical test up to age 75 or 85. Some Canadian insurers also offer plans that are renewable up to age 90. You’ll have to pay higher premium rates than before, though. That’s because the cost of insurance increases with age.

What is the maximum coverage or maximum terms for life insurance?

Term life insurance policies expire when you turn 85. That means if you’re 60 and looking for term life insurance, you can get coverage till your 85th birthday. In other words, depending on your age, seniors in Canada can buy term life insurance with a 10-year, 20-year, or 25-year term.

Keep in mind the maximum issue age for term life insurance is 75. So if you are over 75, you can only buy a permanent life insurance policy, such as whole life coverage or term-100.

As far as the maximum coverage amount that seniors in Canada can take out is concerned, it can vary from one insurer to another. However, some types of life insurance for seniors, such as guaranteed life insurance, have a maximum limit that’s usually the same across carriers.

Which carriers offer affordable life insurance for seniors?

As said before, life insurance premium rates are usually unique to the insured. That’s because many factors affect the cost of insurance, like age, gender, and health.

Also, different carriers evaluate risk differently. So you may get different quotes from different insurers for the same policy. What’s more, no single provider is the low-price leader for every senior. The carrier that offers the cheapest life insurance for one person might be an extremely pricier option for another.

For this reason, we can’t say with certainty which provider offers the most affordable life insurance for seniors in Canada. But what we can do is help you find the best rates. All you have to do is use our online calculator to get online quotes instantly. This way you can easily find out who is offering the cheapest coverage for your unique needs and situation.

Keep in mind: You can lower life insurance costs by paying premiums annually. Most insurers in Canada offer a discount — generally between 2% and 5% — if you pay annually.

Overall, what do you recommend is the best life insurance for seniors?

Happy elderly couple in love with fresh flowers and dog in forest

Life insurance needs are not one-size-fits-all. So the life insurance solution that’s best for your neighbour may not work well for you.

Consider your age, health, and financial goals while selecting a policy. The best life insurance solution for you is one that meets your financial goals without making a hole in your pocket.

Seniors in their 60s who are in good health may find term life insurance most suitable. For starters, term life insurance is significantly cheaper than whole life insurance. Secondly, if you renew it in time, you get coverage for your later years as well.

In short, term life insurance helps you take care of any unpaid debts you may still have and also leave an inheritance to your loved ones.

On the other hand, older seniors with serious underlying health conditions may like to consider non-medical life insurance coverage to cover end-to-life medical expenses and funeral expenses.

Whole life insurance, in contrast, is the best option for seniors of any age who want to leave a specific amount to their family or a charity, regardless of how long they live. It is also suitable for seniors whose priority is to minimize estate taxes for their heirs.

As you can see, seniors in Canada have plenty of options to choose from. If you’re still not sure which type of life insurance for seniors is best for you, let us help you. Send us an email or schedule a call to have our advisor guide you through your options and help you pick a product that’s right for you.

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