How to Buy Life Insurance in Canada in 7 Steps

This guide will walk you through every step you need to take to buy life insurance in Canada.

10 minute read

Originally published: May 07, 2024

How to Buy Life Insurance in Canada in 7 Steps Logo

How to Buy Life Insurance in Canada in 7 Steps

This guide will walk you through every step you need to take to buy life insurance in Canada.

10 Minute read

Originally published: May 07, 2024

How to Buy Life Insurance in Canada in 7 Steps Logo

With life insurance, you can ensure that your loved ones are covered in the unfortunate event of your death. This is why it is an important aspect of many people’s financial planning process. That said, many Canadians who buy life insurance for the first time don’t know what to expect. That’s why we’ve written this step-by-step guide so that we can help you better understand how to buy life insurance in Canada.

Determine Your Coverage Needs

The very first step you should take when buying life insurance is to understand why you are purchasing life insurance. For example, many people purchase life insurance to offset shared financial obligations such as a mortgage or a business. Other Canadians purchase life insurance to offset capital gains taxes on property they would like to pass down. There are many reasons why people purchase life insurance, so it’s important to understand your own financial needs.

Once you know why you are purchasing life insurance you can then estimate how much coverage you will need. For example, if you only want to cover the cost of your funeral you may only need $10,000 in coverage whereas if you would like to cover a mortgage payment you may need $200,000 or more in coverage. Understand what expenses you would like to cover after you pass and estimate the cost as this will help you understand which policy is right for you and your needs.

Here are some popular reasons you might need life insurance in Canada:

Reasons to Buy Life Insurance in Canada

Figure Out Which Type of Policy is Right for You

After determining the amount of coverage you need, you will need to determine which type of life insurance policy is right for you. The two main types of life insurance are term life insurance and permanent life insurance which can either be traditionally underwritten or written as a no-medical life insurance policy.

Term Life Insurance

Term life insurance has a death benefit that is paid out if the insured were to pass away within a specific time frame, typically 10, 20, or 30 years. At the end of the term, the insured can typically choose to renew the policy, and some policies may be converted to permanent life insurance. This is the most popular and affordable type of life insurance and is ideal for those who anticipate their coverage needs to change over time.

Permanent Life Insurance

Permanent life insurance provides coverage for the remainder of the insured’s life. Certain types of permanent life insurance may also offer a cash value component that can be invested and grown. This type of insurance is more expensive than term life insurance but is a great option for those interested in lifetime coverage that never expires.

No-Medical Life Insurance

While term life insurance and permanent life insurance typically require applicants to answer medical questions, undergo a medical exam, and/or submit an attending physician’s statement (APS), these policies can also be underwritten as a no-medical life insurance policy. What this means is that applicants will not need to undergo a medical exam, will only be asked limited or no medical questions, and will not need to submit an APS. This type of insurance is more expensive so it is ideal for Canadians with pre-existing medical conditions who may be denied traditionally underwritten life insurance.

Consider Working With an Agent or Broker

Now that you know how much insurance you need and what type of policy you are interested in, you need to determine how you will find a policy. While some Canadians choose to ask for and compare quotes themselves, many Canadians choose to work with a licensed life insurance agent or broker.

Insurance agents are directly affiliated with specific life insurance providers and can work with you to find the best policies the insurance provider can offer you. This differs from a life insurance broker as brokers represent their clients directly and can help you determine which policies are the best for you by looking at a variety of life insurance providers.

Life insurance brokers can be hired at no cost to you, instead, they are paid a commission from the life insurance provider you decide to get a policy through. By speaking with an agent or broker you can get expert insight into your specific situation, and save yourself the trouble of finding and comparing quotes yourself.

Compare Quotes From Different Insurers

Whether you decide to look for and compare quotes yourself, or are working with a licensed insurance agent or broker, the next step is to determine which policies are the best for your coverage needs. While it may be tempting to choose the insurance policy with the lowest overall rate, it’s important to also consider the amount of coverage you qualify for and if there are any optional riders you may be interested in. By carefully considering your options you can ensure that you choose the right policy.

Complete the Application Process

After choosing a policy you are interested in, the next step is to complete the application process. You will need to provide accurate and truthful information to your insurance provider with basic personal details such as your age, gender, weight, occupation, and so on. Other information you may be asked includes if you have a criminal record, if you partake in any dangerous hobbies, if you have a history of drug or alcohol use, if you smoke, and if you have a hazardous occupation.

For traditional insurance, you will also be asked to provide relevant health information including any pre-existing conditions you currently have, your family health history, conditions you have had in the past, prescriptions you take, and so on. You may also need to schedule a medical examination where you will go over your health history and may need to undergo testing such as a blood test.

Wait to Be Approved

After submitting your application, all that’s left to do is wait. The approval waiting times can vary between insurers and may take up to a few months if the insurance provider needs more information from you. But, once the insurance provider has all of the necessary information it typically only takes a week to be approved.

Review and Understand Your Policy

After being approved for a life insurance policy, you will typically get a grace period ranging from a week to a month to review the terms of your policy and agree. Once you confirm your policy and start paying premiums, coverage will go into effect. Be sure to notify your beneficiaries and keep a copy of the terms of your policy somewhere accessible in case you or your beneficiaries need to review it in the future.

Case Study Example

Here is a helpful case study outlining how this process can work with a specific example. For this example, we will see how this situation applies to Earl, a married Canadian man with three children.

Step 1: Determine Your Coverage Needs

The first thing Earl needs to know is how much coverage he needs. He currently has a wife and three children that rely on his income. He makes a yearly salary of $100,000 and would like to ensure his family had a year’s worth of his income to put towards funeral costs, childcare, and daily living expenses in the event of his death.

Step 2: Figure Out Which Type of Policy is Right for You

Earl is 45 years old, and his children have already all moved out of the house. He doesn’t expect any big changes in his finances and knows that he will get a preferred insurance rate since he is in good health and is still relatively young. With this in mind, Earl decides he would like permanent life insurance so that his rates will never increase with age or changes in his health.

Step 3: Consider Working With an Agent or Broker

To find himself the best rates from a variety of insurance providers, Earl reaches out to a trusted insurance broker. By working with a knowledgeable expert, he can save himself the headache of getting quotes from different insurers himself and knows that the rates the broker finds will be ideal for his situation.

Step 4: Compare Quotes From Different Insurers

After reviewing the options given to him by his insurance broker, Earl decides to purchase a permanent life insurance policy through a well-known insurance provider that offers him $100,000 of coverage at a preferred rate.

Step 5: Complete the Application Process

Earl fills out the application, letting the insurer know his occupation, age, gender, and other personal information. He also attends a medical appointment to undergo some basic tests and share his health and prescription history to demonstrate he is in good health.

Step 6: Wait to Be Approved and Review Your Policy

Once the insurance provider received Earl’s complete application and results from the medical appointment, it only took a week for them to get in contact with him with an offer. Earl made sure to thoroughly review the offer with his spouse and children, who will be the beneficiaries of the policy. After signing the required paperwork, ensuring he had a copy for himself and his family, and paying his first premium, Earl could finally rest easy knowing his family’s financial future would not be at risk if he were to pass away.

Frequently Asked Questions (FAQs) About Life Insurance

Life insurance is worth buying if you have people who financially depend on you and your income. If you have a spouse, children, or even a business partner who relies on you to contribute financially to certain expenses then life insurance is a great way to protect their financial future. By purchasing life insurance, if you were to pass away a death benefit would be paid to whoever you list as a beneficiary. This amount can be used to make up for income they were expecting to receive from you, such as a shared mortgage payment with your spouse or childcare and education costs for your children.

If you are looking for the best life insurance companies in Canada, it may depend on where you live and what type of insurance you are interested in. For example, certain insurance providers may be better for residents of Ontario than Alberta and certain providers such as Canada Protection Plan may be a better choice for Canadians interested in no-medical life insurance.

The cost of life insurance in Canada will vary based on your age, gender, health, and other factors. On average, life insurance premiums cost between $15 to $100 per month. Most insurers also offer to allow policyholders to pay premiums annually instead of monthly with a small discount on the yearly premium costs. If you are interested in saving money on life insurance, check out these 8 cost-saving ideas you can consider when buying life insurance.

Find a Solution That’s Right for You.

Hopefully, this step-by-step guide helped you understand how to buy life insurance in Canada. If you have any questions or would like help with the process, please feel free to reach out to one of our expert financial advisors.

Here at Protect Your Wealth, we work with and compare policies and quotes from the best life insurance companies in Canada to ensure we find the right policy for you. We provide expert life insurance solutions, including no medical life insurance, critical illness insurance, disability insurance, term life insurance, and permanent life insurance to build the best package to give you the protection you need.

To schedule a consultation about your income protection goals, or if you have any questions about insurance in Ontario or Canada, please contact Protect Your Wealth or call us at 1-877-654-6119 to talk to an advisor today! We’re proudly based out of Hamilton, and service clients anywhere in Ontario, British Columbia, Manitoba, and Alberta including areas such as Kingston, Mississauga, Medicine Hat, and Nanaimo.

Reach out to work with a trusted life insurance broker today.

Contact Protect Your Wealth