How Much Does Life Insurance Cost in Canada?

Have you ever wondered how much life insurance costs?

Depending on the type of life insurance coverage you choose, your premium could be anywhere from a few dollars to a few hundred dollars per month.

The monthly cost depends on the option you choose based on the your financial situation, such as your partner's income, lifetime expenses, and other factors. But what's the right amount of coverage for you and your children?

Read on because this article offers a comprehensive breakdown of life insurance costs in Canada, ensuring you're equipped with the knowledge to secure the best rates.

How much does life insurance cost in Canada?

The average life insurance cost for Canadians depends on both personal factors, like age and health, and the specifics of your life insurance policy as there are 5 main types of life insurance.

A 30-year-old healthy individual may pay less than $15 per month for a 10-year lowest price term life insurance policy worth $100,000. The same life insurance policy, however, may cost more than $100 per month for a 60-year-old smoker.

That is why assuming you'll be paying the average life insurance cost in Canada is not realistic.

Find your cheap life insurance quote to find out how much you’ll have to pay for this kind of coverage and how much you'll need to pay for things like debts, education costs, and other family financial obligations.

Keys Takeaways

• Age is the primary factor that determines life insurance rates, with premiums increasing as policyholders grow older.
• Women generally pay less for life insurance than men, due to their longer average lifespan.
• Permanent life insurance policies are more expensive than term life insurance rates but offer lifelong protection and often include an investment component.

How are life insurance rates determined?

When you buy 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 Canadian life insurance company, their life insurance premiums are based on the risk profile of customers.

Anything that increases your risk of death will also increase your life insurance costs.

Some of the key factors insurers look at include:

Age

Life insurance cost increases 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 life insurance policy term and the life insurance company won’t have to pay a claim. The same logic applies to permanent life insurance.

When you buy a life insurance policy in your 20s, early 30s, or pay for life insurance for your child, there’s a good chance you’ll pay premiums over a longer period. So the cost and risk get nicely spread out for the life assurance company. 

All else being equal, people in their 40s, 50s, 60s, 70s, and above will 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 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, as this article will cover.

In many cases, taking control of your health can lead to lower premiums, especially if you can mitigate risk factors associated with certain health conditions.

Insurers like healthier applicants, whether they're from Manitoba, Saskatchewan, Ontario, Alberta, or British Columbia, because they are likely to live longer. As such, they reward them with lower life insurance premiums.

Insurers in Ontario, Alberta, British Columbia (or any province) may ask you health-related questions to assess your health. They may also require a medical test and access to your health records or request an attending physician statement. However, there are also some life insurance products that don't require medical exams, offering a simplified form and faster application process for those who prefer not to undergo a medical examination.

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. Policy add-on rider options and additional coverage for specific expenses, such as funeral expenses, may also affect the rates.

Insurers 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 life insurance cost will be higher.

Also, a history of serious illnesses, like cancer, can increase your life insurance premiums. It is important to discuss your financial situation with your partner and evaluate various options to ensure that you have an appropriate life insurance plan that secures your family's lifetime income and financial stability

If you have any questions about how much a life insurance company will charge you or which policy type to choose, speaking to an advisor can be beneficial.

Smoking Status

Tobacco use is bad for your health — and wealth.

Smoking is a huge red flag for life insurance 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 life 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 life insurance companies may no longer consider you a smoker. While you may not qualify for non-smoker rates right away, your life insurance cost will be much lower than before.

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

Family medical history

An insurer will ask you questions about your immediate family’s health history when you apply for life insurance. 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 costs 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.

A family history of serious health conditions may be seen as a risk factor, potentially leading to higher premiums for the policyholder. If a loved one suffered from a hereditary disease, you are more likely to have it as well.

The difference in health status between family members, however, can depend on genetic factors, experience, and lifestyle choices.

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

Life insurance companies look at your occupation when calculating your life insurance costs.

Your life insurance cost depends on how risky you are to insure. If your job requires you to perform dangerous duties, your premiums are likely to be higher. Some jobs, such as construction or mining work, may face higher rates due to the increased risks involved.

Insurance providers aim to strike a balance between their goal of covering customers and keeping costs reasonable.

While each life insurance company 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 fee to cover potential hazards associated with your line of work. This flat fee varies from one insurer to another.

However, if your job or situation is extremely risky, life insurers may deny you coverage altogether. People working in war zones or coal mines often find it difficult to get cheap life insurance, as do kids and seniors driving without auto insurance. This makes sense, as insurers must account for increased dangers.

Hobbies

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

Each insurer has its own rules and processes for determining risk and your security, but one thing is certain. If you have a high-risk hobby, you will likely pay higher life insurance rates due to the increased likelihood of accidents.

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 life insurers frown on.

A lot of speeding tickets or at-fault accidents in the past few years can seriously bump up your cost of life 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 cheap 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 life insurance or permanent.

Term life insurance offers coverage for a specified period. In contrast, a permanent life insurance 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 insurance policy. This is why it's important to explore all the choices available to you, including mortgage insurance options and consulting with professional advisors to understand the best answer for your needs.

It's also important to consider factors such as your employer and spouse when evaluating your life insurance requirements, in case any current or future policies are provided to you through your employer or your spouse's insurance.

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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 life insurance.

If it goes up, the cost will increase too. For example, a 10-year term life insurance policy with a death benefit amount of $5 million will be pricier than a $1 million policy having the same term. It's important to carefully consider your investments and estimate the right amount of coverage for your situation. To do this, you can use a life insurance calculator to help determine the ideal payout in the event of your death.

Foreign Travel

What you did last summer is nobody’s business, but where you travelled to recently is a question that a life insurance company will ask.

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 insurers may view traveling to certain countries as risky. This includes countries at war or that have poor health care, political instability, or endemic disease.

This is particularly important if you have disability insurance as well, as the likelihood of a payout increases with higher risks.

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 (you may even get a discount).  

Term life insurance rates by age chart

Age is the primary factor that determines your life insurance rates.

The cost of life 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 in your monthly premiums is significant, as the table below shows you.

Term life insurance rates by gender chart

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 life insurers 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.

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 larger death benefit amounts cost more. Therefore, it’s important you look at the term life insurance chart and pick a policy that meets your long-term financial goals and also fits your current budget.

Cost of term life insurance by policy length

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

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Cost of permanent life insurance

Permanent life insurance also know as life assurance 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.

As a result, when you buy life insurance. it is important to carefully assess your financial needs and take into account all the factors, such as age and existing disability insurance, when considering different life insurance options.

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 life insurance product is next to impossible. To determine your life assurance cost of your permanent life policy, we recommend you compare quotes and speak to an independent insurance broker.

Conclusion

The average life insurance cost 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 insurance. Speak to an experienced life insurance advisor to find out the best life insurance policies at the best price.