Life Insurance for Rideshare and Delivery Drivers

Being self-employed as a rideshare driver for Uber or Lyft, or a food delivery driver for Skip the Dishes or UberEats, means being responsible for your financial planning. One critical aspect of this planning is life insurance.

Life insurance provides a financial benefit to your loved ones if you were to pass away, and can provide essential support during a difficult time. In this article, we’ll explore the importance of life insurance for drivers, the types of policies available, and the potential costs of obtaining coverage.

In this article:

• Do Rideshare and Delivery Drivers Need Life Insurance
• Factors Affecting the Cost of Life Insurance
• How Does Being an Independent Contractor Affect Life Insurance Coverage
• Types of Life Insurance Policies and What They Cost
  • Term Life Insurance
  • Permanent Life Insurance
  • No Medical Life Insurance
• Critical Illness and Disability Insurance for Drivers
• Do Rideshare and Delivery Companies Offer Life Insurance to Drivers?
• Case Study Example: Life Insurance for a Rideshare Driver
• Frequently Asked Questions (FAQs)

Do Rideshare and Delivery Drivers Need Life Insurance

Yes, like all Canadians, rideshare and delivery drivers will likely benefit from having a life insurance policy. Life insurance can be used to provide financial security and peace of mind for both you and your loved ones. Here are some of the main benefits of life insurance for Canadians:

Factors Affecting the Cost of Life Insurance

Certain factors can significantly impact the cost of life insurance premiums. The cost of life insurance is influenced by various personal and policy-specific elements, such as your age, health, lifestyle, and the type and amount of coverage you select. Here is an overview of the factors that may affect the cost of life insurance for you:

How Does Being an Independent Contractor Affect Life Insurance Coverage

As a driver, you are considered an independent contractor for the rideshare or food delivery company you work with. Independent contractors do not have access to workplace benefits and often face fluctuating income. This makes it important to consider the flexibility and affordability of the life insurance policy you choose. To avoid complications when budgeting for premiums, look for a policy with flexible payment options and be sure to plan conservatively, taking into account periods of lower income when determining the premiums you will be able to afford.

To determine how much life insurance coverage you will need as an independent contractor, start by tallying any existing debts, future financial obligations, funeral costs, the amount of income you receive annually, and any other expenses you would like the policy to cover. Then, deduct the amount of any savings and assets you already have. This calculation will help you identify the appropriate amount of coverage needed to ensure your family’s financial security.

Types of Life Insurance Policies and What They Cost

In Canada there are three main types of life insurance policy that you may benefit from as a rideshare or delivery driver. The policies are term life insurance (affordable, temporary coverage), permanent life insurance (lifelong coverage, with investment options), and no medical life insurance (term or permanent coverage that doesn’t require medical underwriting). Here is an overview of these three policy types:

Term Life Insurance

Term life insurance offers coverage for a specified term, typically ranging from 5-20 years. It is the most affordable type of life insurance and is a great option for those who expect their financial situation to fluctuate and change in the coming years.

Here is a look at the monthly premium rates for males and females aged 40 for a 10-year term plan with $100,000 in coverage.

Permanent Life Insurance

Permanent life insurance offers lifelong coverage and, while it is more expensive than term insurance, it provides fixed premiums that never increase with age or the onset of medical conditions, making it more economical in the long run. These policies also offer the option to accumulate a cash value within the policy that can be invested and grown over time. This makes permanent life insurance ideal for older individuals who want to avoid rising premiums and for those interested in the investment component.

Here is a look at the monthly premium rates for males and females aged 40 for a minimum-funded universal life insurance plan with $100,000 in coverage.

No Medical Life Insurance

No medical life insurance is typically offered as a permanent policy, though it can also be offered as term insurance. While standard term and permanent policies require applicants to undergo a medical exam and submit their health history, no medical life insurance does not. This makes it ideal for individuals with serious medical conditions, which may make it more difficult to qualify for standard policies.

Here is a look at the monthly no medical life insurance rates for males and females aged 40 for a 10-year term with $100,000 coverage.

Critical Illness and Disability Insurance for Drivers

Two other types of insurance that can benefit rideshare and delivery drivers is critical illness insurance and disability insurance. Both these types of insurance can be used if you become unable to work due to the onset of an illness or disability. Both policy types can be purchased as a standalone policy or as a rider on certain life insurance policies.

Critical illness insurance covers illnesses such as stroke, heart attack, or cancer and can be used towards medical costs, non-medical expenses like lost income, transportation/travel costs, etc., recovery therapies or whatever else you need. Disability insurance covers disabilities such as arthritis, mental health disorders, or multiple sclerosis and can be put towards your recovery and monthly expenses, allowing you the financial freedom to focus on your health.

Do Rideshare and Delivery Companies Offer Life Insurance to Drivers?

While some rideshare and delivery companies offer limited insurance to drivers, the answer is no—life insurance is not typically offered to drivers through these companies. For example, insurance offered through Uber to its drivers in Ontario, Quebec, and Alberta include $2 million of third party liability coverage which covers your liability to third parties while actively working. While this can be helpful if you are in an accident, this type of insurance coverage is limited and not useful for long term financial planning.

If you are interested in a life insurance policy, you cannot get it through a rideshare or delivery company and will have to apply for a policy outside of your occupation. If you need help understanding your options or have questions about your specific situation, feel free to contact one of our experienced advisors for free customized advice.

Case Study Example: Life Insurance for a Rideshare Driver

Daniel is a 30-year-old rideshare driver living in Toronto. He works full-time for a popular rideshare company and wants to ensure his family is financially protected in the case of his unexpected passing. He decides to explore life insurance options.

Here is what Daniel considers when determining his coverage needs:

• Daniel and his partner have $200,000 remaining on their mortgage, which they plan to pay off in 15 years.
• Daniel earns about $50,000 annually from his rideshare job. He wants to ensure his family can replace at least two years of his income to cover living expenses which totals to $100,000.

With these considerations, Daniel determines he needs a total of $300,000 in life insurance coverage. Daniel maintains a healthy lifestyle and doesn’t smoke, exercises regularly, and has no major pre-existing medical conditions. He discusses his situation with a knowledgeable life insurance broker who helps him review his policy options. Daniel decides to apply for a 15-year term life insurance policy with $300,000 in coverage. This term aligns with the time remaining on his mortgage, ensuring that his family will be protected until the loan is paid off, and allows him to update his coverage after the term ends.

Frequently Asked Questions (FAQs) about Life Insurance for Rideshare and Delivery Drivers

Find the Right Solution for You and Your Family

If you have specific questions related to your situation, feel free to reach out to one of our expert financial advisors. At Protect Your Wealth we’ve been helping clients find affordable and comprehensive life insurance coverage since 2007. Contact us today or call us at 1-877-654-6119 and we can give you free customized advice and help you find a policy that’s right for you and your family.

We’re proudly based out of Hamilton, and service clients anywhere in Alberta, Ontario, Manitoba, and British Columbia, including areas such as Oakville, Abbotsford, Steinbach, and Grande Prairie.