Average Cost of Life Insurance in Canada

The cost of life insurance doesn't have to be expensive. Life insurance premiums are usually based on age, health, and your specific needs.

July 6, 2021

Life insurance is important as a part of any financial plan. It offers financial protection for your family when the unthinkable happens and ensures they don’t suffer more than they have to.

So how much is the average cost of life insurance in Canada? Unfortunately, there is no “one size fits all” when it comes to life insurance. Life insurance policies are intricate and customized plans that take your personal factors, like age and health, and financial needs into account.

Continue reading to learn how insurers determine life insurance rates and more.

How much does life insurance cost in Canada?

The cost depends on both personal factors, like age and health, and the specifics of your insurance policy. A 30-year-old healthy individual may pay less than $15 per month for a 10-year term policy worth $100,000. The same policy, however, may cost more than $100 per month for a 60-year-old smoker. Check your life insurance quote to find out how much you’ll have to pay for this kind of coverage.

How are life insurance rates determined?

Business meeting concept.

When you purchase life insurance, you transfer the financial risk of your death to the insurer. In return for your premium payments, the insurer promises to pay your beneficiaries a death benefit when you die. For such an arrangement to be financially viable for the insurance company, their insurance premiums based on the risk profile of customers. Anything that increases your risk of death will also increase your cost of life insurance.

Some of the key factors insurers look at include:

Age

Life insurance costs increase as you grow older. Statistically speaking, the older you are, the higher your risk of dying.

Life insurance is cheapest when you’re young and healthy because the risk assumed by your insurer is low. If you buy term life insurance early in life, there’s a good chance you’ll outlive the policy term and the insurer won’t have to pay a claim. The same logic applies to permanent life insurance. When you buy a permanent policy in your 20s or early 30s, there’s a good chance you’ll pay premiums over a longer period. So the cost and risk get nicely spread out for the insurer.  

All else being equal, older people pay more for coverage than younger people.

Gender

Women generally live longer than men. In Canada, the average life expectancy for women is 84 compared to 80 for men. Because of this disparity, women pay less for life insurance coverage than men.

Health

Health is one of the most critical factors for determining life insurance premiums. A healthier lifestyle is not only good for your body — it is also good for your life insurance premiums.

Insurance companies like healthier applicants because they are likely to live longer. As such, they reward them with lower premiums.

Insurers may ask you health-related questions to assess your health. They may also require a medical test and access to your health records. However, there are also some products that don't require medical exams.

One of the things insurers look at is your body mass index (BMI). That’s because it is a useful indicator of health. High blood pressure, diabetes, and heart problems are just a few examples of illnesses linked to higher BMIs. People with higher BMIs often pay higher life insurance rates.

Insurance companies also check if you are taking medications for any health condition that can impact your life expectancy. If you have an underlying health condition, like diabetes, your cost of life insurance will be higher. Also, a history of serious illnesses, like cancer, can increase your premium.

Smoking Status

Tobacco use is bad for your health — and wealth.

Smoking is a huge red flag for insurers because smokers tend to have a shorter lifespan than non-smokers. They also are more likely to develop critical illnesses like

cancer or have a stroke. These facts make them risky for insurance companies. To compensate for the additional risk, an insurer will ask you to pay more if you smoke.

How much more?

Well, premiums for smokers can be two to three times higher than non-smoker premiums.

However, there’s some good news. If you don’t smoke for 12 months, some insurance companies may no longer consider you a smoker. While you may not qualify for non-smoker rates right away, your cost of insurance will be much lower than before.

Vaping, too, affects your life insurance rates. Most insurers treat vaping users like smokers, so expect to pay a higher premium if you vape.

Family medical history

family happy in the outdoors.

Insurers will ask you questions about your immediate family’s health history when you apply for coverage. They will want to know if any of your parents or siblings under age 60 suffered from certain medical conditions.  

Your family’s medical history can impact your life insurance rates because insurers see it as a predictor of your own health. If a loved one suffered from a hereditary disease, you are more likely to have it as well.

Diseases that run in the family include:

  • High blood pressure
  • Diabetes
  • Heart disease
  • Stroke
  • Some types of cancer, like breast cancer
  • Dementia
  • Alzheimer’s disease
  • Parkinson’s disease
  • Mental illness
  • Multiple sclerosis

Occupation

Insurance companies look at your occupation when calculating your life insurance rates. Your cost of life insurance depends on how risky you are to insure. If your job requires you to perform dangerous duties, your premiums are likely to be higher.

While each insurer has its own definition of “dangerous”, it generally includes anything that increases the risk of fatal injury or death. Examples of jobs that can classify you as a high-risk individual include:

  • Pilots
  • Police officers
  • Race Car drivers
  • Astronauts
  • Soldiers
  • Firefighters

If your job has a higher degree of risk, the insurer may offer standard rates but charge an additional flat fee. This flat fee varies from one insurer to another. However, if your job is extremely risky, insurance companies may deny you coverage altogether. People working in war zones or coal mines often find it difficult to get coverage.

Hobbies

A lady painting in her room

Living life on the edge has its perks — but an affordable life insurance premium is not one of them.

Each insurer has its own rules and processes for determining risk, but one thing is certain. If you have a high-risk hobby, you will likely pay higher life insurance rates.

So what makes a hobby dangerous?

As far as your insurer is concerned, any activity that increases the chance of you dying of an unnatural cause is dangerous. Some hobbies that can result in a high-risk classification are:

  • Surfing
  • Rock climbing
  • Scuba diving
  • Adventure travel
  • Skydiving
  • Mixed martial arts

Driving record

Insurers also check your driving record to assess your risk — and that’s hardly surprising. The average Canadian drives for 380 hours per year on the road. That’s nearly 16 days!

The road can be a dangerous place. About 2,000 people die in road accidents per year in Canada. Statistically speaking, the more you drive, the higher is your risk of being involved in a road accident. That’s simple math.

Your risk of a road accident increases if your driving record is spotty. That’s what insurers look at when evaluating your risk. A poor driving record is something that insurance companies frown on.

A lot of speeding tickets or at-fault accidents in the past few years can seriously bump up your cost of insurance. Moving violations, like texting while driving or tailgating, can also increase your risk profile. A major recent violation, like a DUI conviction, may even make you ineligible for coverage. Parking tickets, however, do not affect your life insurance rates. However that doesn’t mean we don’t strongly recommend following the rules to avoid tickets.

Types of life insurance policy

Life insurance policies are either term or permanent. Term life insurance offers coverage for a specified period. In contrast, a permanent policy covers you for life. Many permanent life policies also include a savings component, called cash value.

However, lifelong protection and the cash value component come at a price. Premiums for a permanent life policy can cost several times more than that of a comparable term life policy.

Policy term

This variable applies only to term life insurance since a permanent life policy lasts as long as you do.

The longer the policy term, the more you will have to pay for it. That’s because the chances of the insurer having to pay the death benefit amount are higher for a Term 30 policy than, say, a Term 10 policy.

Policy amount

Your policy’s death benefit amount directly impacts the cost of insurance. If it goes up, the cost will increase too. For example, a 10-year term life policy with a death benefit amount of $5 million will be pricier than a $1 million policy having the same term.

Foreign Travel

What you did last summer is nobody’s business, but where you travelled to is.

Life insurance companies look at your travel history of the last two years or so before approving your application. They will also inquire about your future travel plans — where you plan to go next and for how long.

If you have travelled or plan to travel to certain countries, your cost of life insurance may increase. Life insurance companies may view traveling to certain countries as risky. This includes countries at war or that have poor health care, political instability, or endemic disease.

Policy Riders

A life insurance rider is an add-on that enhances your coverage. But that doesn’t mean riders are right for you.

Most riders require an additional premium payment, so choose only those that you really need. Just like with any other life insurance product, the cost of a rider is lower when there’s less chance of filing a claim.  

Term life insurance rates by age

Age is the primary factor that determines your life insurance rates. The cost of insurance goes up with age. That’s because the older you are, the higher your chance of dying. In other words, a 50-year-old will almost always pay more than a 30-year-old, even if both are in good health.

However, when you are young, your monthly premiums don’t increase so much for every year that you age. But once you cross 50, the jump is significant, as the table below shows.

Age Monthly Premium (Non-smoker) Monthly Premium (Smoker)
25 $26.82 $47.70
30 $27.18 $54.60
35 $29.70 $73.26
40 $42.30 $118.60
45 $68.12 $194.22
50 $112.14 $308.34
55 $201.42 $520.74
60 $362.70 $811.62

The term life insurance quotes are for a 20-year term life policy with a death benefit of $400,000.

Term life insurance rates by gender

Gender plays a big role in how much you pay for coverage. On average, men pay 38% more than women for the same life insurance policy.

It’s not like insurance companies don’t like men or like them less than women. It just so happens that women have longer average lifespans. They also are less likely to have riskier lifestyles and jobs. All these facts play into their rates, especially for term policies that stretch into your senior years.

Age Coverage Amount Premium (Male) Premium ( Female)
25 $200,000 $18.72 $14.94
$400,000 $26.82 $19.26
$1 Million $56.70 $36.90
35 $200,000 $20.70 $17.19
$400,000 $29.70 $22.50
$1 Million $59.40 $43.20
45 $200,000 $42.12 $30.06
$400,000 $68.22 $48.32
$1 Million $145.80 $102.60
55 $200,000 $115.02 $80.82
$400,000 $201.42 $137.70
$1 Million $452.70 $309.60

Cost of term life insurance by policy size

We all want to leave our loved ones as big a financial safety net as possible. However, policies with a larger death benefit amounts cost more. Therefore, it’s important you pick a term life policy that meets your long-term financial goals and also fits your current budget.

A graph shoing the Average life Insurance rates by policy face value from 200K to 1M.

Cost of term life insurance by policy length

The table below shows quotes for 10-, 20-, and 30-year term life policies. As expected, the longer the term of the policy, the higher the cost.  

Coverage Amount 10 Year Term 20 Year Term 30 Year Term
$100,000 $10.62 $12.60 $18.27
$200,000 $16.74 $20.70 $32.04
$400,000 $21.42 $29.70 $53.82
$1 Million $36.60 $59.40 $115.20

Cost of permanent life insurance

Permanent life insurance is not as simple as term life insurance. Since it covers you for life, it is more expensive than term life insurance which only covers you for a specific period of time. But lifelong protection is not what makes permanent life insurance complex, rather it’s the investment component that’s usually built into it.

Most permanent life insurance policies also double up as an investment tool. They also offer tax benefits you can take advantage of. Due to these factors, offering a generic quote example for this insurance product is next to impossible. To determine your cost of permanent life insurance, we recommend you compare quotes and speak to an independent insurance broker.

Conclusion

The average cost of life insurance depends on your personal factors and the specifics of the coverage you want. Age, health, and smoking status are some of the most important personal factors in determining the cost. Younger, healthier, and non-smokers usually get the best rates. Also, permanent life insurance is more expensive than term life. Speak to an experienced insurance advisor to find out the best life insurance coverage at the best price.

Common FAQs

Stack of money coins with account book finance in the background.

Is life insurance worth it?

Life insurance protects people who depend on you financially. It pays a death benefit to your beneficiaries when you pass away.

If you have dependents, life insurance may be worth its cost. It gives you peace of mind that comes from knowing your loved ones will be able to live comfortably when you’re no longer there to take care of them.

Life insurance may also be worth its premiums for someone without dependents in certain situations. For instance, you can buy life insurance to take care of your end-of-life expenses.

How much does life insurance cost?

The average cost depends on the type of policy you pick and the coverage amount. For instance, a healthy woman aged 30 may be able to purchase a $250,000 term life insurance policy for less than $30 a month. However, if that same person opts for whole life insurance, she may have to pay up roughly $200 per month. The cost also depends on personal factors such as your age, gender, health, and family’s medical history.

What’s the best age to buy life insurance?

There’s never a bad time to do a good thing. But yes, the sooner you buy life insurance, the better.

When you are younger, you pose less risk to an insurance company. That means you will get more favourable rates. Monthly premiums for a 20-year-old will be far lower than for a 45-year-old for the same coverage.

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