We all want to get the best life insurance plan that is the most cost effective, and we need the coverage to be as affordable as possible. But it can be hard with all the different types of life insurance policies and companies out there. So to figure out how to find the coverage you need for the best price, you need to understand the types of life insurance policies, cost of life insurance, how much coverage you need, as well as what the cheapest life insurance available for you is. Luckily, this blog will cover all of those questions, and help you find what the cheapest life insurance is for you!
The process of getting life insurance
Upon applying to life insurance, it is important to think about your health, age, and lifestyle because those considerations matter the most, based on that information the life insurance company will determine if you are approved or denied a policy. Note, that each company has their own guidelines that they follow, so one company may deny you for the mere mention of diabetes, while another company could instantly approve you – each company is different. The company decides who they want to do business with – so if the company thinks you are deemed “high risk,” that means the company thinks there is a higher chance you die before a certain age. So the higher risk you are the higher chances you have of being denied life insurance and the higher the cost of your policy will be as well. See the photo below for a list of factors that affect the application process in certain ways:
These factors will determine if you are denied traditional or simplified life insurance. Where if you are denied life insurance, it just means you need to find the right type of life insurance for yourself – which will usually end up being a simplified, guaranteed or no medical life insurance policy. You usually are denied life insurance because of the state of your health or any underlying health conditions – but remember, anyone can get life insurance. If you are denied life insurance, that could only mean you need to apply differently whether it’s applying to a different company or a different type of policy that best suits your needs. Being denied life insurance can be stressful – if you want to learn more about your options, feel free to read our blog about reasons you were denied life insurance.
Types and Cost of life insurance
There are multiple types of life insurance policies that you may consider, with each type of life insurance policy and company asking you a varying amount of questions for the application process. Please note, each life insurance company has their own guidelines that the underwriting follows when it comes to accepting or denying life insurance policy applications.
The three main types of life insurance include: traditional life insurance (also known as fully underwritten), simplified life insurance, and guaranteed issue or no medical life insurance. Below is a table generally comparing the following life insurance types: fully underwritten, simplified issue, and guaranteed issue. For more details on the types of life insurance read our Guide to Life Insurance Terms and Product Types.
Traditional life insurance tends to be cheaper compared to the other types of life insurance, but will be most likely to deny you based on the risk from the information required, such as your: age, gender, risky hobbies or job, general wellness and medical conditions, or your criminal or driving record. Further, traditional life insurance branches off into two main types of traditional life insurance. including: term life insurance and permanent life insurance.
- Usually the cheaper one, term life insurance, lasts a certain period of time between 5 and 30 years.
- Giving growing cash-value, permanent life insurance (also known as whole life insurance) will last your whole life. With term being the cheapest, and permanent life insurance following in price – permanent life insurance can offer cash value over time.
- Traditional life insurance can offer the best prices, and highest coverage amounts depending on factors of your life.
Simplified and guaranteed issue life insurance policies are special because they do not require a medical examination. A medical examination is used to determine your physical wellbeing and is used during the application process to determine your risk of dying before a certain age. While simplified life insurance may ask some medical questions, guaranteed life insurance has nothing medical related required in the application process. Since no medical exam and possibly no medical questions are asked, your risk is assumed to be higher because they do not know the state of your health and wellbeing – therefore, simplified and guaranteed or no medical life insurance is more expensive than traditional. But, because simplified life insurance still asks medical questions, the answers to those questions will determine your eligibility for that policy. Basically, the more questions being asked, the more factors that determine if you are approved or not.
How much coverage do you need?
Before signing off on a life insurance policy, it is important to figure out the coverage amount needed specifically to you. The coverage amount is only based on you and your life – so ask yourself, “If I were to pass away now or in the future, would there be any person or business that you would leave financially burdened?” And by being financially burdened, how would your funeral expenses be paid, or any business expenses, mortgage debt, educational debt, or any kind of financial obligations you or your family have be paid, especially if your income is important for your family’s financial stability. Life insurance is meant for you if you have things that need to be paid in case you pass away, especially if it is to ease others from dealing with these costs. This isn’t an easy question to answer but we did make a blog to help you find out how much life insurance you need, so check it out!
Does cheap mean it’s good?
The cost of life insurance can depend on many different things, and what it covers. Your premiums may just be cheaper if you are in good health, not because your coverage is less than what you need. This means that cheaper life insurance will depend on the person’s needs – for example, if you need $200,000 of life insurance but only get $100,000 for the cheaper premium cost, it’s not ‘good’ because it’s not enough to cover any expenses and provide for your family in the event that you pass away. Alternatively, if you need $100,000 of life insurance and you pick the cheaper premium cost from a different company for the same amount of 100K, then that is perfectly okay because you have enough coverage for your needs.
What is the cheapest life insurance for you?
The cheapest life insurance mainly depends on your risk, which is calculated from information about your health and wellbeing. The company you applied for a life insurance policy wants to know how much of a risk you are to do business with, they calculate the risk of you dying before a certain age – note, each company is different and have their own separate guidelines and rule that the underwriting who look at your application must follow. And these companies user many different types of information you give, which include:
The older you are the more your life insurance policy will increase in cost. For example, see below to see an example in the change for life insurance cost as the age increases.
Due to females having a higher life expectancy, life insurance companies typically give lower prices for women applying for life insurance policies.
For example, see the table below for a comparison of quotes from many different companies between female and male smokers and non-smokers for $500,000 in coverage for a 10-year term life insurance policy.
3. Criminal or driving record
Having any kind of criminal or driving record can have an impact on the application process of your life insurance policy, including the cost of a life insurance policy. Read our blogs about getting life insurance with a DUI charge or with a criminal record.
4. Health and medical condition
The more severe you may have any current or past medical conditions when applying to life insurance, the more likely you will be denied from traditional life insurance (whole life or term life insurance) or possibly even denied a simplified life insurance policy, but also your premium (the cost) of your life insurance policy will increase, especially if you are denied traditional or simplified life insurance. But remember no matter what, you can find a life insurance policy for yourself, read our blogs to learn more about getting life insurance with medical conditions.
It can be seen above that the cost can heavily change depending on the smoking status of the applicant. For example, if you are a smoker looking for life insurance, then your premium can cost more than double than if you were a non-smoker because of the risk the life insurance considers you to have towards your health.
5. Risky hobbies
Participating in what’s considered to be a “risky” hobby can affect the cost or application process for a life insurance policy. If you participate in these activities listed below in the photo, then a life insurance policy might not cover you in case you die due to an accident involving you participating in a non-covered hobby, meaning there will be no death benefit if your cause of death was from participating in a non-covered hobby.
6. Dangerous job
A life insurance company’s underwriting will consider the kind of job or occupation you have, specifically they want to know if the type of job you have could potentially increase the risk you have of having any fatal incidents. See in the photo below for a list of the top 6 most dangerous types of occupations.
In the end, your personal cheapest price for a life insurance policy depends on a lot of things in your life like your health and wellbeing, lifestyle, as well as the amount of coverage you need. Although you have limited coverage based on if you can get high coverage from traditional or simplified life insurance policies due to severity in the factors listed above like severe health conditions, such as: asthma, cancer, or many other medical conditions. Therefore, the cheapest life insurance starts with if you are able to get traditional life insurance like term life or whole life insurance, since those tend to offer the best premiums and most coverage amount, secondly simplified life insurance can offer up to one million dollars coverage amount, but the prices begin to increase being more lenient on different risk factors you may have, then finally guaranteed issue and no medical life insurance will give almost anybody life insurance, disregarding many to all medical conditions. But, will offer the least amount of coverage ranging from $25,000 to $50,000 in coverage. Depending on the type of life insurance you are eligible for will determine the price you pay for a life insurance policy.
Frequently Asked Questions (FAQs) about Life Insurance
There are so many reasons for you to get life insurance, the main being that it will protect your loved ones from any financial burdens in the event of your death, you becoming critically ill or becoming disabled. Luckily, life insurance in Canada has great rates and unique plans that can fit your lifestyle and plans that are affordable as well. Another reason to get life insurance is the fact that it can have great riders such as critical illness riders, and disability riders. These riders are important to have because life is unexpected and it is best to be protected in any event.
Term life is designed to cover you for a specified period (say 10, 15 or 20 years) and then end. Because the number of years it covers is limited, it generally costs less than whole life policies. But term life policies typically don’t build cash value. So, you can’t cash out term life insurance.
A smoker is someone who has used any of these products in the last 12 months:
- Any tobacco products (cigarettes, nicotine base products)
- E-cigarettes, vaping device
- Marijuana (over a certain limit)
*An occasional cigar is often defined as one large cigar per week with negative cotinine results on urine tests.
Not always, you should only worry about if you have enough coverage with a cheap life insurance policy. Also make sure your policy suits your lifestyle, meaning the policy should cover your occupation and activities you do that the life insurance company deems risky, like snowboarding or working as a crane operator.
There are a handful of things to consider when you purchase life insurance, this list includes most of the important factors to consider when purchasing life insurance:
- Life insurance term
- Life insurance benefits, or additional riders
- Health conditions which are pre-existing or you are susceptible to based on family medical history
- Smoking status (smoker or non-smoker)
- Your age
- Children’s or dependent’s age
- Spouse’s age
- Occupation risks
- Existing loans and mortgages
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Not necessarily, the cost of life insurance can depend on many different things, and what it covers. Your premiums may just be cheaper if you are in good health, not because your coverage is less than what you need.
First, it is important to understand why you were denied life insurance, then you are able to access your next steps, such as: do you look for a different type of insurance plan or could you need to apply to a different company? If you are looking for a deeper understanding of reasons why you could be denied life insurance, check out our blog about 6 Reasons Why You Were Denied Life Insurance.
The best life insurance company can vary depending on your own needs. Some of the best life insurance companies in Canada can be seen in the photo below, each with a rating based on their service and performance. Read our blog about the best life insurance companies in Canada to get a deeper understanding on how these companies stand out compared to others.
Need advice on finding the best price for life insurance in Canada?
Don’t worry, because it can be extra work when trying to not only find the right policy for yourself but finding the cheapest policy as well. Work with an advisor now or any time convenient with you to figure out the best way to save money in getting the best life insurance for yourself.
At Protect Your Wealth, we work with and compare quotes and policies from the best life insurance companies in Canada to help find the perfect solution for your needs. We’ve been providing expert life insurance solutions since 2007, including no medical life insurance, critical illness insurance, and permanent life insurance, to build the best package to give you the protection you need.
We’re proudly based out of Hamilton, and service clients anywhere in Ontario, Albert and British Columbia, including areas such as Toronto, Calgary, and Victoria. Contact Protect Your Wealth or call us at 1-877-654-6119 to talk to an advisor today!