Is Life Insurance Worth it in Canada?

Life insurance isn’t for everyone, but it can be essential for some. Find out if life insurance is worth it in Canada.

16 Minute read

Originally published: May 5, 2022

Updated: March 25, 2024

Is life insurance worth it in Canada get life insurance quote now

Life insurance isn’t for everyone, but it can be essential for some. Find out if life insurance is worth it in Canada.

16 Minute read

Originally published: May 5, 2022

Updated: March 25, 2024

Is life insurance worth it in canada get life insurance quote now

Have you ever thought about getting life insurance and if you really needed it? In this blog, we will help you get more clarity by looking at the ins and outs of life insurance in Canada. We will break down everything from term policies to no-medical options, catering to everyone from young adults to those in their senior years.

There are plenty of things that you need to consider when thinking about getting life insurance, so read our guide to finding out if life insurance is worth it to you!

Is life insurance worth it in Canada?

It depends, life insurance has great benefits and it is a great way to financially secure your loved ones after you pass but it might not be right for you. The life insurance coverage that you purchase is extremely crucial, so you must consider many factors before you get a life insurance policy. Think about the kind of life insurance you want: do you want a fully underwritten term life insurance or permanent life insurance policy, or maybe you want a simplified or no medical life insurance policy. The age that you are at the moment plays a big role as well, and to be frank, if you are someone with no dependents or financial obligations, then life insurance is probably not necessary, but if you are someone who has a spouse, has dependents and financial obligations like a mortgage, life insurance is very important to have.

What is life insurance?

Life insurance is basically a contract between you and a life insurance company. They provide you a certain amount of coverage, while you pay for this coverage in monthly premiums. In the case of your death, your beneficiaries will be given a life insurance payout. This money is typically granted tax-free, and can be used towards anything including the funeral costs, paying off the mortgage, debts and for your child’s education, etc. Life insurance is intended to give you the peace of mind that your family will be in a good financial position when you pass away. Next up lets see the different kinds of life insurance types to find out if life insurance worth it in Canada? 

Types of life insurance? 

There are a few major types of life insurance available for you to choose from, they are designed to fit many different circumstances and lifestyles. These are the different types of life insurance: 

  • Term life insurance
  • Permanent life insurance
  • Simplified issue life insurance
  • No medical life insurance / Guaranteed issue life insurance
  • Critical Illness insurance
  • Disability Insurance

Term life insurance

Term life insurance protects you for a certain period of time. Term life insurance policies are available in terms ranging from 5 up to 40 years. These policies work similarly to other types of insurance policies you may have: you pay a monthly payment, and in the event of your death, a payout is given out to your beneficiaries. 

Why term life insurance is worth it

  • Financial security for you and your family in the event of a death or disability.
  • Significantly more affordable compared to whole life insurance policies.
  • Adaptable policy terms to best suit your needs.
  • Once you’ve locked in your policy, your rates will never change.
  • Guaranteed death benefit.
  • Peace of mind knowing your family is protected.

Permanent life insurance

Permanent life insurance is a type of life insurance that never expires and pays a benefit upon the death of the insured. Many permanent life insurance policies also include a cash value component, which means that a percentage of your premium payment goes toward cash accumulation, which grows tax-deferred. You can borrow against the cash value, but the interest on these loans frequently adds up and reduces the ultimate death benefit. Permanent life insurance, like every other type of insurance, has advantages and cons. There are two types of permanent life insurance: whole life insurance and universal life insurance.



Premium Flexibility

  • Bundled premium which includes cost of insurance and investment.

  • Premium is level for life of the policy.

  • Premium can be for both insurance and investment or insurance alone.

  • Premium can either be level or increasing yearly.

Premium vs. Face

Amount of Insurance

Higher premium than comparable Universal Life

Lower premium than comparable Whole Life policy


Options Within Policy

  •  No investment options available, completely managed by Whole Life fund managers.

  • Easier to manage with no need to monitor investment account.

  • Wide variety of investment options, however self managed.

  • Must select from Insurance companies investment funds.

Impact of Market

Conditions on Cash Values

  •  Cash surrender value increases with dividends received from policy.

  • Cash surrender value cannot decrease no matter market conditions.

  • Account value may fluctuate with market conditions.

  • Investment returns completely dependent on policy portfolio.

Missed Payments

Paid for by Automatic Premium Loan from cash surrender value, if available

Premium paid directly from account value, if available

Advantage of Monthly

vs. Annual Premium

Policy offers discount when paid annually upto 12%

No difference if paid monthly or annually

Why permanent life insurance is worth it

  • Policy stays for life with level premiums
  • Some policies offer limited pay periods for premiums (you only have to pay for a set period of time, not indefinitely)
  • You can grow an investment with the policy

No Medical life insurance / Guaranteed issue life insurance

No medical life insurance is a type of life insurance that does not require you to have a medical exam or an attending physician’s statement (APS) as part of the underwriting process. These policies are ideal for people who are unable to obtain regular coverage due to physical issues, mental illness, criminal records, hazardous employment, or a variety of other circumstances. Due to said qualities, these individuals tend to get unfavourable ratings from life insurance companies. Therefore, no medical life insurance policies that allow people in these challenging conditions to acquire coverage. This coverage tends to be more expensive and has a smaller coverage amount than a fully underwritten policy like term life insurance or permanent life insurance, but it provides peace of mind to those who would not otherwise qualify for any life insurance coverage.

Why No Medical life insurance / Guaranteed issue life insurance is worth it

  • No medical examination is required
  • Reduced approval time
  • Increased probability of approval
  • Coverage for hazardous activities and occupations
  • Coverage for international travel is provided
  • Ignores previous substance addiction and/or criminal background
  • Application process is less time-consuming

Simplified issue life insurance

Simplified issue insurance policies do not require a medical exam, but you must answer certain medical questions on the application. Premiums typically cost more than fully underwritten life insurance policies, but they are definitely reasonable. The number of questions answered varies by insurer and by whether the coverage is deferred or not. Simplified issue life insurance is an option for those who want faster approval or don’t want to take a medical exam, and are generally used for term life insurance products.

Why simplified issue life insurance is worth it

  • Comparable coverage amounts to traditional life insurance policies
  • Typically can accept most people who are declined from traditional life insurance
  • More affordable than no medical life insurance
  • No medical exam required

Critical Illness Insurance

Critical Illness Insurance, like Life Insurance, is a term insurance policy that will pay out a lump sum if you are diagnosed with a serious illness. You have the flexibility to use that lump sum payout to help make ends meet while you’re ill, including medical costs, non-medical expenses such as lost income, transportation/travel costs, and so on, recovery therapies, and more. Your personalized contract will specify which situations your policy covers, such as a stroke, heart attack, or cancer.

Why critical illness insurance is worth it

  • Tax-Free payments
  • Cash flow that is flexible enough to cover expenses or lost income
  • Extended coverage — critical illness insurance pays for expenses that your medical insurance may not cover
  • Finally, peace of mind in a difficult situation

Disability Insurance 

Disability insurance replaces a portion of your income if you are unable to work for an extended period of time due to illness or injury. It can provide you with tax-free monthly income to help you pay your bills if you are unable to work due to illness or an accident. It doesn’t matter if you work full-time, part-time, self-employed, or as a freelancer; if you rely on a paycheque, protecting your income stream is one of the best decisions you can make.

Why disability insurance is worth it

  • Disability insurance protects you and your family financially in the event of death or disability
  • Significantly less expensive than whole life insurance policies
  • Policy terms that can be tailored to your specific requirements
  • Your rates will never change once you’ve locked in your policy
  • Death benefit is guaranteed
  • You’ll have peace of mind knowing your family is safe from financial hardships

Talk to a life insurance broker today!

Best Life Insurance Quotes Canada

Who needs life insurance?

Is life insurance for me?

Every situation is unique, and it really depends on the individual and their specific situation. Life insurance isn’t a necessity, if you are an adult who has no dependents and does not have a mortgage or any outstanding financial debts and obligations, you probably don’t need life insurance. If this is you, maybe it isn’t the right time for life insurance just yet but critical illness insurance or disability insurance might be a good choice for you.

However, if you are an adult who has dependents, if you have a mortgage or a business, or loved ones that you want to protect in the event of your death, then life insurance is definitely something that you should have. The financial burden that your family is left with after your death can be very difficult to manage and lead to prolonged financial hardships. This is where life insurance would be beneficial, it will provide your loved ones the coverage amount upon your death, this can be used by your family to remain financially stable and meet financial obligations even after you pass. There are even others who might want to get life insurance as well, for example a senior doesn’t want their family to have to deal with the financial hardships of a funeral, but also wishes to leave their grandchildren with money for their future education. This senior will want to purchase life insurance because this would be greatly beneficial even though they don’t have any dependants. 

Determining who needs life insurance is a broad question and it really varies case by case. Luckily, we can agree that life insurance is ideal for someone who has dependents or loved ones they want to protect from financial hardships and/or someone who has financial obligations like a mortgage, a business, or outstanding debts. Next in this blog about “Is life insurance worth it in Canada?” we will look at who should have life insurance.

Should I get life insurance?

Figuring out if life insurance is right for you might be a very tough decision to make. To be completely transparent, it is not right for everyone, and it is a great choice for others. A great way to find out if you need life insurance is by considering your age and considering the common milestones that you might have reached so far.

Should I get life insurance in my 20s?

Example #1: James is a 22 year old single male who is working towards getting his bachelor’s degree in applied health sciences and he is currently working a part-time job to cover some of his basic expenses. He lives with his parents, does not have a child, he does not own a car, and his OSAP loan is all that he currently owes. 

James does not need life insurance because he simply doesn’t have many financial obligations, nor does he have any dependents that will be financially burdened in the event of his death. 

Example #2: Raj is a 28 year old software engineer, he recently purchased a condominium with the help of his wife and a co-sign on the mortgage loan from his mother. His wife is continuing her education, so she is currently just working a part-time job and slowly paying off her student debt. They both are leasing a car and have plenty of other open debts. 

Life insurance is worth it for Raj. If he passes, the financial burden would be too much on his mother and his wife. He also has open debts including his mortgage, and his car lease, these are other expenses that need to be paid for in the case of his death. 

Should I get life insurance in my 30s? 

Example #1: Abby is a 32 year old nurse at a local hospital. She is currently renting an apartment with her 35 year old boyfriend, who works at a warehouse, and they have 2 young children together. They recently found out that Abby is expecting another child. 

Life insurance is worth it for Abby and her boyfriend as they are both parents who have dependent children. Luckily, Abby and her boyfriend are both young so they can get a really good rate for a term life insurance policy. 

Example #2: Jose is 38 years old and he is married to his 37 year old wife, and they have a 2 year old daughter. They both are teachers and have purchased a home together just 3 years ago and are excited for their young family. 

Life insurance is worth it for Jose and his wife, they are both dealing with the financial burden of a mortgage, and they also have a dependent child who will definitely require financial support throughout their life prior to becoming an adult.

Should I get life insurance in my 40s? 

Example #1: Mahad is a 45 year old owner of a restaurant, he is married and has 3 children who are all in high school. Mahad and his wife recently purchased a house together.  Mahad’s wife works at Mahad’s restaurant. 

Life insurance is worth it for Mahad, he is a business owner and a homeowner, along with that, they have 3 dependent children, it would be in Mahad’s best interest if he purchased life insurance to protect his house, his business and his loved ones.

Example #2: Lori is a 41 year old bank manager, her husband is a mechanic but they have no children. Lori and her husband purchased a home 8 years ago. They are in a solid financial position with not many expenses. 

Life insurance is worth it for Lori and her husband because the financial burden would be extremely tough if one of them passed. Although they don’t have children, they do have financial obligations such as a mortgage.

Should I get life insurance in my 50s, 60s, 70s? 

Life insurance can be more expensive when you are older, but that being said life insurance is worth it for seniors in Canada. You can find some favourable rates if you are renewing your life insurance or if you are a preferred patient in good health. Life insurance for seniors is definitely beneficial especially because some people might still be paying off a mortgage or their loved ones might be older yet, still be dependent on them. Depending on your situation, life insurance is great to have in the later years of life or as a senior. The peace of mind to know that you will leave your loved ones behind with a lump-sum of money is quite important. Funeral expenses are not cheap, your grandchildren might want to get a post-secondary education, and you might have some final expenses to pay off. 

What is considered by life insurance companies? 

When thinking about if life insurance worth it in Canada, life insurance companies will consider plenty of factors when you are applying to purchase life insurance. Fully underwritten life insurance policies typically look into these categories: 

Factors that life insurance companies consider

Reason to buy life insurance

There are plenty of reasons to buy life insurance and they might be reasons that are applicable to you. As mentioned earlier, not everyone needs to buy life insurance but this all comes down to personal factors that might make acquiring life insurance a no-brainer. Below is a list of reasons why you should buy life insurance: 

1. Financial security for your family

  • The most significant benefit of life insurance is its financial purpose. Paying life insurance premiums per month in exchange for a large sum of money when you die, is a small price to pay to financially support your loved ones for the long run. A sufficient death benefit can cover future living expenses such as a mortgage and college tuition for your children. It can also serve as a financial buffer for unanticipated expenses. The death benefit is paid out as a tax-free lump sum, thus life insurance is key to protecting your family even after you pass.

2. Affordable investment

  • Life insurance policies can be extremely affordable depending on if you have a preferred health rating and are a relatively low risk client based on some of the factors that are considered by life insurance providers. There are rates as low as $26 dollars per month if you are a 30 non-smoking year old male who is in good health. This small monthly investment is greatly beneficial and is a small price for the amazing financial impact that life insurance coverage will grant to your beneficiaries in the event of your death.

3. Life insurance options for everyone

  • Being that there are simplified issue life insurance policies and there are also guaranteed issue life insurance policies, it is very easy to obtain life insurance. No matter what your health condition is, your job is, or your lifestyle choices are, you are most likely able to get a life insurance policy. Aside from fully underwritten life insurance policies, you can find great coverage amounts available for simplified issue and guaranteed issues life insurance policies, though they can be a bit pricier than fully underwritten policies, they are still worth it indeed.

Reasons not to buy life insurance? 

The reasons not to buy life insurance might be that you do not have any dependents, debts or financial obligations. This would definitely be a reason not to buy life insurance as it is probably best to just focus on your savings at this point in life. The other reason not to buy life insurance is if you are simply not in the financial position to take on another bill to pay per month. Although life insurance can be cheaper than a cup of coffee per day, it might be smart to just save your money if you are not in the position to afford monthly life insurance policies. In this case, we recommend that you continue to save, and look into safe forms of investing (GICs) with savings accounts like TFSAs and RRSPs

How much life insurance do I need in Canada?

The amount of life insurance that you need is dependent on many different factors, you must consider your debts, your income, your spouse’s income, the mortgage (if you have one), if you have children who have educational expenses, and many other factors. Luckily, it is much easier to evaluate and figure out how much life insurance you need in Canada. Here are some of the best ways to figure out how much life insurance you need: 

The DIME formula

The DIME formula

Annual Income Times Ten

The quickest way to find out how much life insurance coverage you will need in order for your family to maintain their financial stance and to not become financially burdened is to multiply your annual income by ten. Simply take the yearly amount you make currently and multiply it by ten, for example if your annual income is $65,000, then take $65,000 X 10 = $650,000. This calculation determines that you need $650,000 in life insurance coverage in order for your loved ones to continue to live comfortably after your death.

Other considerations

Everyone has a unique situation in their personal life and it isn’t easy to decide on how much life insurance coverage you need. There are many things that are needed to be considered as well, always consider your own age and your own health as well as your spouse’s, consider how many family members you will be listing as your beneficiaries, consider future family members (grandchildren, in-laws) and finally, consider what the future looks like for yourself and your family. 

Finding the right life insurance policy

A life insurance policy can be purchased from a life insurance company or from a major financial institution. It is strongly recommended that you work with an insurance broker. Our insurance brokers provide award-winning services for free, we will evaluate a needs and wants assessment, and after that, we will try to find out the best life insurance policy for you. Working with a broker allows you to take a look at all of your options, therefore it allows you to decide on which company, which policy and which rates work with you. A life insurance broker is a professional who is licensed and only will work with other professional and established life insurance companies, this is a great way to avoid any life insurance scams. Here are some frequently asked questions about If life insurance worth it in Canada

Frequently Asked Questions about Life Insurance

A term life insurance policy is the simplest, purest form of life insurance: You pay a premium for a period of time – typically between 10 and 30 years – and if you die during that time a cash benefit is paid to your family (or anyone else you name as your beneficiary).

Most modern term life insurance policies do not expire until you reach age 95. Even though you may have a 10-year term life policy, your coverage will not end after 10 years. What does end, however, is the “rate guarantee” on that policy.

The right type of life insurance for you should be decided based on a number of factors. The key difference between whole life insurance and term life insurance is that term coverage only protects you for a limited number of years. Whole life insurance provides lifelong protection, but only if you can keep up with the premium payments charged by life insurance companies for this luxury. The difference in cost can range up to almost 15 times for the same amount of death benefit.

Term life is the better option if you:

  • Only want life insurance to cover a short-term need
  • Want the most affordable coverage
  • Think you might want permanent life insurance but you can’t afford it right now
  • Don’t want to use life insurance as a possible investment vehicle

Whole life is the better option if you:

  • Can comfortably afford the higher premiums
  • Want to leave money for your heirs
  • Have a lifelong dependent life a child with disabilities
  • Want life insurance that builds guaranteed cash value

These two types of permanent life insurance are comparable and similar in their lifelong coverage and are composed of two parts: a savings or investment portion and an insurance portion. They both share higher premiums and an option to borrow from the cash value of the policy, but they do have a few key differences. Whole life insurance offers consistency with fixed premiums and guaranteed cash value accumulation, while universal life insurance provides flexibility in their premium payments, death benefits and savings element of their policies. The right life insurance option for you will depend on your family structure and financial situation, alongside your appetite for risk and desire for flexibility.

Term life insurance provides coverage for a set period of time, typically between 10 and 30 years, and is a simple and affordable option for many families. Whole life insurance lasts your entire lifetime and also comes with a cash value component that grows over time.

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.

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 10-year term life insurance policy has a level (unchanging) premium and a specific death benefit. As long as premiums are paid, your coverage will remain intact. This helps to ensure your beneficiaries are protected if you pass away. Once you reach the end of the policy term, the policy ends.

Yes! Absolutely you can get life insurance with any health or medical condition, there are certain types of life insurance made just for this, for example, no medical or guaranteed issue life insurance policies, are a great option for you, especially if you have been denied a life insurance policy before.

Interested in learning more? Read our blog Guide to Life Insurance with a Medical Condition.

A 20-year term life insurance policy has a level (unchanging) premium and a specific death benefit. As long as premiums are paid, your coverage will remain intact. This helps to ensure your beneficiaries are protected if you pass away. Once you reach the end of the policy term, the policy ends.

There is currently no limit on how many life insurance policies you can have, and in some cases, having multiple life insurance policies may help you meet your goals for your financial future.

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.

This depends on the details of your life insurance policy. If your policy is revocable, this means you can change the beneficiary on file at any time without needing to notify the previous beneficiary. Your policy could also be irrevocable, which means the owner of the policy is not able to change the beneficiary without the original individual’s consent.

Is whole life insurance taxable in Canada? Some whole life insurance policies, such as a participating whole life insurance policy, provide tax-free growth while you are alive through premium payments and investments. This cash value component is guaranteed to grow in a tax-advantaged way and it will not decline in value. So long as this money is left to gain in your policy, you will not owe taxes on it.

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.

Simplified issue life insurance will ask health questions and do a full underwriting outside of the traditional medical exam. This means you will need to be in good health in order to qualify for affordable rates. Guaranteed issue life insurance, on the other hand, requires no health questions, underwriting and guarantees approval. This comes at a higher cost than traditional life insurance policies.

So, is life insurance worth it in Canada?

If you’re still wondering “Is life insurance worth it in Canada?” Consider if you want to secure your estate, your business or make sure that you loved ones are not financially burdened in the event on your death, having life insurance can be extremely important. Many different examples show that most people who have any assets, or financial liabilities would be better off if they had a life insurance policy to provide them with coverage. 

At Protect Your Wealth, we work with and compare policies and quotes from the best life insurance companies in Canada to create the best solution for you and your needs. We’ve been providing expert life insurance solutions since 2007, including no medical life insurance, term life insurance, and permanent life insurance, to build the best package to give you the protection you need.

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, ON, and service clients anywhere in Ontario, British Columbia, Manitoba, and Alberta including areas such as BurlingtonOshawa and Springfield.

To find out Is life insurance worth it in Canada, talk to an expert today!

Best Life Insurance Quotes Canada