Life Insurance for Teachers in Canada

Teachers need individual life insurance just as much as any other professional, perhaps even more so since they usually don’t have access to group life insurance.

Full-time teachers often receive life insurance coverage provided by their employer as part of their group benefits plan. It can provide financial security to those you care about. If something happens to you, the proceeds of your policy can help replace a portion of your income, ensuring your family can live comfortably.

In this blog post, we'll cover everything you need to know about life insurance as a teacher. Let's dive in.

Key Takeaways

• Teachers need life insurance for the same reasons others do: to secure the financial future of their dependents.
• Two of the most common life insurance are term and whole life insurance
• Life insurance cost depends on many factors, but buying it early in life allows you to lock in a low rate.

Why do teachers need life insurance?

Reasons for taking out life insurance are different for everyone. But the decision to buy it is mostly about securing the financial future of your dependents.

Beneficiaries need to understand the procedure for claiming life insurance benefits, which involves providing necessary documentation and filing a claim with the insurance company. The insurer reviews the claims and disburses benefits according to policy terms.

As a teacher, you likely need life insurance if:

• Someone depends on you for their financial well-being: If you are the primary breadwinner or contribute to your household income, your death can cause economic hardship to your loved ones. Life insurance pays a tax-free lump sum to your beneficiary upon death. The large sum can help your family stay afloat in your absence.
• You want to avoid leaving behind debt: Your debts don’t disappear when you die. Instead, your estate is responsible for paying them off. This can eat into your children’s inheritance. Protect their inheritance by taking out a life insurance policy. The insurance proceeds can help them pay off the debts they leave behind without worrying about their own financial future.
• You don’t want to burden your loved ones with the funeral costs: In Canada, the average funeral cost is around $9,150. If you don’t want your loved ones to pay for your funeral out of their own money, burial or funeral insurance is worth looking at. It is a small permanent life insurance policy designed to cover end-of-life expenses.
• You want to leave behind a legacy: If you wish to donate money to a charity after death, life insurance is a viable option. To contribute to a cause close to your heart, buy a permanent life insurance plan and name the charitable organization as the policy beneficiary.
• You want to supplement retirement income: Whole life insurance builds up cash value over time, which can nicely supplement your retirement income.

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What’s the best life insurance for teachers?

There are different types of life insurance for teachers that match various needs. The best life insurance for you depends on your personal circumstances, financial needs, and budget.

Various teachers' unions in Canada provide group life insurance plans as an affordable coverage option for educators.

As a teacher, you have access to all types of life insurance unless you have a serious medical condition. The two most common life insurance options for reasonably healthy people are term life insurance and permanent life insurance. Those not qualifying for these policies may consider other options, such as simplified and guaranteed issues.

Here’s what you need to know about each of these types of life insurance to help you pick a policy that best matches your needs.

Term Life Insurance

With a term life insurance policy, you get life insurance protection for a set period, called the “policy term”. The most common policy terms are 10, 20, and 30 years, though you can take out a shorter or longer length policy. Term life insurance pays a death benefit if the insured passes during the policy term. Most plans let you renew life insurance coverage at the end of the policy term without a medical exam until you reach a certain age. This feature is a way of giving you peace of mind. You have access to affordable life insurance should you need it for longer than expected.

Who is the term life insurance for: 

• Teachers who want affordable coverage (Premiums for term life insurance can be up to 10 times cheaper than that for whole life)
• Teachers who need life insurance coverage for a limited period (e.g., until they retire or their children complete college education)

Whole Life Insurance

Whole life insurance is often dubbed as a “set it and forget it” policy — and perhaps rightly so.  Once you sign up for it, coverage lasts as long as you live, ensuring your family will be protected when you pass. Of course, to keep the plan active, you must continue paying premiums as scheduled. 

Along with death benefits, whole life insurance accumulates cash value. When you pay the premium, the insurance provider invests a portion of the policy’s cash value component. 

The cash value grows at a guaranteed rate, and after a certain period, you can take loans against it. Another way to access the cash value is through withdrawals. Typically, the policy beneficiary receives the sum assured when the insured passes, not any unused cash value. 

Who is whole life insurance for:

• Teachers who want permanent, stable life insurance coverage and access to cash value when they need it
• Teachers who want to leave behind a legacy 
• Teachers who don’t mind paying higher premiums for lifelong coverage and guaranteed cash value growth

Simplified Issue Life Insurance

Traditional term and whole-life insurance policies require you to answer a few health questions and take a medical exam as part of the screening process. If you want to skip the life insurance exam or have a serious underlying condition, simplified issue life insurance can be an option. 

With simplified issue, your eligibility is accessed on the basis of the information provided by you. Since there’s no medical test, the approval process is much shorter compared to traditional plans. However, on the downside, the premiums are more expensive. 

Who is simplified issue life insurance for: 

• Teachers who want a life insurance policy quickly
• Teachers who don’t want to take a medical test or don’t qualify for traditional life insurance because of poor health

Guaranteed Issue Life Insurance

Guaranteed issue coverage is a type of life insurance coverage you can’t be turned down for. Its greatest appeal is that it requires neither an exam nor health questions. 

Coverage lasts for your entire lifetime, and acceptance is guaranteed as long as you meet the insurer’s age requirement, which is usually 40 to 80 years. The flip side is premiums are much costlier than for other types of life insurance, and the death benefit is rather limited — usually up to $25,000. 

Who is guaranteed issue life insurance for: 

• Teachers who aren’t eligible for traditional plans
• Teachers who want a life insurance policy to help cover their end-of-life expenses

How much coverage can you get?

You can get as much coverage as you reasonably need. Life insurers look at your age and annual income to determine the total amount of coverage you can have at one time. The maximum coverage limit is usually between 10 and 30 times your yearly income. If you earn $30,000 a year, you might be able to buy up to $900,000 in coverage. 

Your life insurance needs depend on your financial situation and goals. Because life insurance helps secure the financial well-being of your loved ones after you’re gone, calculating an appropriate coverage amount is crucial. 

While multiple methods provide a rough estimate, such as the “10 times income” method, it’s best to speak with an insurance advisor. He or she can help you accurately assess your life insurance needs, ensuring you are neither over-insured nor under-insured.

How much does life insurance for teachers cost?

Several factors impact the cost of life insurance, from your age and health to lifestyle choices and hobbies. But you have a say in what you pay. 

How much you will pay for life insurance largely depends on factors such as: 

• Age: Life insurance premiums increase with age. A 30-year-old teacher will pay less for a $500,000 30-year term life insurance policy than someone who is in their 40s, other things being equal. If you expect major life changes in the near-term future, like marriage, it may be worth exploring your options to lock in an affordable rate. 
• Health: Your health affects your life expectancy, which in turn determines your premium rate. The healthier you are, the lower your monthly premium will be. 
• Gender: Life insurance is cheaper for women than it is for men because women tend to live 10 years longer, on average. 
• Personal and family medical history: Insurance carriers look at both your personal and family medical history to assess the level of risk you pose to them. An underlying condition or a genetic predisposition to a disease can bump your premium rate. 
• Hobby: Being a safe occupation, a teaching job in and of itself won’t raise your premium — but a dangerous hobby can. Expect to pay more for coverage if you are into activities such as bungee jumping, mountain climbing, or scuba diving. 
• Policy details: The type of policy and coverage amount you choose also impact your premium cost. 
• Riders: Life insurance riders are options add-ons that provide additional protection or benefits, but they increase your overall insurance cost. For example, a living benefit rider, such as critical illness coverage, may raise your monthly premium by $8-$12. 

Conclusion

Life insurance is essentially buying peace of mind. You’re basically setting up a safety net for your family to reduce the financial impact of your death. The teaching profession doesn’t limit your life insurance options in any way but keep in mind that premiums vary by insurer. Therefore, get price quotes from multiple providers before signing up for a plan.

Dundas Life does all the hard work for you, comparing deals from top Canadian providers so that you can get the best deal. Book your free call with a licensed advisor today.

Frequently Asked Questions (FAQs)

How much coverage do you need?

The amount of term life insurance or permanent life insurance you need depends on your personal situation. You need enough coverage to cover all your obligations after you’re gone. To get an accurate estimate, start by looking at your present and future financial needs and current resources.

For example, if you believe your family would need around $1 million to live comfortable if they were to lose you, and you presently have assets amounting $300,000, you should buy at least $700,000 in coverage. 

Can I keep my life insurance policy if I change schools or retire?

If you have group life insurance, it may not be portable. You may lose coverage if you change schools. Retirement, however, usually has no effect on the coverage. Read the policy document to learn more about its terms and conditions. Individual life insurance, in contrast, is not tied to your job. The plan remains in force as long as you pay the premiums, regardless of any change in your employment status. 

How do my health and lifestyle affect my life insurance premiums?

Good health and an active lifestyle can help keep your life insurance costs to a minimum. On the other hand, a pre-existing illness or unhealthy lifestyle choices, like smoking, can bump up your premium rate.