Life Insurance for Young Adults in Canada

Securing your finances at a young age has its benefits!

17 Minute read

Originally published: October 26, 2022

Life Insurance for Young Adults in Canada

Life Insurance for Young Adults in Canada

Securing your finances at a young age has its benefits!

17 Minute read

Originally published: October 26, 2022

Life Insurance for Young Adults in Canada

Life insurance for young adults is an essential component for protecting their assets, loved ones, and themselves in case the unpredictable happens. Contrary to popular belief, life insurance is an absolute bargain for most young adults and even those who might have a health condition or other risks like a criminal record, bad credit, or a hazardous job or hobby,  you can still  find a great life insurance policy. This blog will cover the various reasons why life insurance for young adults is a great way for them to secure their finances and protect their wealth in the future as well! 

What is life insurance?

Firstly,  a life insurance contract is formed between the policyholder and an insurance company. Where  a life insurance policy guarantees that the insurance company will pay a certain amount of money to the designated beneficiaries when the insured dies in exchange for the premiums paid annually or monthly by the policyholder throughout their lifetime or throughout the duration  of their life insurance policy.

A fully underwritten term or whole life insurance application requires an accurate  list of all of the insured’s past and present medical conditions or high-risk activities, for the contract to be valid. This may mean that you will have to get an attending physician’s statement (APS) or a medical exam, but there are some types of life insurance that do not require a medical or even medical questions.

Some forms of life insurance such as simplified life insurance and guaranteed/no-medical life insurance will allow the policyholder to not submit a medical exam or an attending physician’s statement (APS), but simplified life insurance might ask you some basic medical questions but it won’t be as intensive as a fully underwritten life insurance policy’s medical exam. 

Do I need life insurance as a young adult?

This is an age-old question for many young adults who have concerns about how to protect their finances, assets, and loved ones in the event of their death. Not every young adult needs life insurance but it really isn’t that simple, and it depends on each individual and where they are in their life. In fact, a lot more young adults might need life insurance considering that the cost of education leads to having a lot of debts, some young adults are earning high income and purchasing more, and others might be having children earlier. There are some basic questions to consider if you are a young adult and thinking about getting life insurance: 

  • Will my loved ones (partner, children, and dependents) need extra financial assistance to be able to care for themselves if I die?
  • Is there anyone else who relies on me, such as my parents, grandparents, or siblings?
  • Do I want my mortgage to be paid off if I die?
  • Do I want to set aside money for my children’s education?
  • Do I want to leave any money to family members or organizations?
  • Will I leave unpaid debts behind that will reduce the value of my estate or burden my family?
  • Would you like to supplement your retirement income with a permanent life insurance policy?

If your answer is “yes” to any of these questions, then it is likely that life insurance would be a good idea for you. 

Now all of these might not be applicable to you at this very moment, so try to think about if any of these questions could be relative in the future.  Take a look at these examples of if you need life insurance as a young adult. 

Should I get life insurance in my 20s

Example #1: James is a 22-year-old single man pursuing a bachelor’s degree in applied health sciences while working a part-time job to cover some of his basic expenses. He lives with his parents, has no children, no car, and his OSAP loan is the only debt he currently has.

James does not require life insurance because he has few financial obligations and no dependents who will be financially burdened in the event of his death.

Example #2: Raj, a 28-year-old software engineer, he recently purchased a condominium with the assistance of his wife and a mortgage co-sign from his mother. His wife is still in school, so she is only working part-time and slowly paying off her student debt. They are leasing a car together and have numerous other debts and liabilities such as their bills and living expenses.

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 female and she works as a nurse at a local hospital. She currently lives in an apartment with her 35-year-old boyfriend, who works in a warehouse, and the couple has two young children. They recently learned that Abby is expecting another child.

Abby and her boyfriend need life insurance because they are both parents with dependent children. Fortunately, Abby and her boyfriend are both young enough to qualify for a low-cost term life insurance policy.

Example #2: Jose is 38 years old, married to his 37-year-old wife, and the couple have a 2-year-old daughter. They are both teachers who have recently purchased a home together and are excited for their growing family.

Life insurance is worthwhile for Jose and his wife because they have a mortgage and a dependent child who will undoubtedly require financial support throughout their life before becoming adults.

Considering these examples it is clear that life insurance is indeed a great way for young adults to secure their loved ones and their finances. So if you’re wondering if you need life insurance as a young adult, consider your own situation in life now and in the near future.  If you are still unsure, please contact our life insurance experts and we can definitely have a look at your situation and help you find out if life insurance is right for you.

Types of life insurance in Canada

There are several major types of life insurance available to you, each designed to fit a variety of circumstances and lifestyles. The following are the various types of life insurance:

Term life insurance 

Term life insurance protects you for a limited time. Term life insurance policies can be purchased for terms ranging from 5 to 40 years and then can be renewed when the term is about to expire. These policies are the cheapest kind of life insurance policy you can have, and are quite simple because you make a monthly payment, and in the event of your death, a lump-sum payout is made to your beneficiaries. Term life insurance is a common pick amongst young adults, so if you want to learn more, check out our blog The cost of a 10 year term life insurance.

Permanent life insurance

Permanent life insurance is a type of life insurance that does not expire and pays a benefit upon the insured’s death. Many permanent life insurance policies include a cash value component, which means that a portion of your premium payment is allocated to cash accumulation, which grows tax-free. You can borrow against the cash value, but the interest on these loans quickly accumulates and reduces the death benefit. Permanent life insurance, like any other type of insurance, has benefits and drawbacks. Permanent life insurance is classified into two types: whole life insurance and universal life insurance.

No medical/guaranteed issue life insurance

A type of life insurance that does not require a medical exam or an attending physician’s statement (APS) as part of the underwriting process is known as no medical life insurance. These policies are ideal for people who cannot obtain regular coverage due to physical issues, mental illness, criminal records, hazardous employment, or a variety of other factors. Because of these characteristics, these people receive poor ratings from life insurance companies. As a result, there are no medical life insurance policies that allow people in these difficult situations to obtain 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 still provides peace of mind to those who would  typically not qualify for any life insurance coverage.

Simplified issue life insurance

A medical exam is not required for simplified issue insurance policies, but you must answer certain medical questions on the application. Premiums are typically higher than for fully underwritten life insurance policies, but they are still reasonable. The number of questions answered varies depending on the insurer and whether or not the coverage is deferred. Simplified issue life insurance is typically used for term life insurance products and is an option for those who want faster approval or do not want to take a medical exam. 

Best life insurance for young adults 

The best life insurance policy that is out there for young adults is term life insurance and it is the best policy by far! Term life insurance is extremely cheap if you have a good rating (low risk rating) and are young. You can find awesome fully underwritten term life insurance policies that are under $20 a month when you are under 40 years old, but as you can the price of premiums will rise as you get older that is why locking in to a good life insurance policy at a younger age will save you money in the long term. 

Coverage Amount

Age 25

Age 35

Age 45

Age 55

Age 65


$13.95 / mo

$14.18 / mo

$24.75 / mo

$63.23 / mo

$193.95 / mo


$22.05 / mo

$22.50 / mo

$42.35 / mo

$97.83 / mo

$360.45 / mo


$30.83 / mo

$30.84 / mo

$61.72 / mo

$144.95 / mo

$540.67 / mo


$36.00 / mo

$36.90 / mo

$74.97 / mo

$188.19 / mo

$666.07 / mo

Coverage Amount

Age 25

Age 35

Age 45

Age 55

Age 65


$10.58 / mo

$11.03 / mo

$18.00 / mo

$43.65 / mo

$131.42 / mo


$14.40 / mo

$16.65 / mo

$28.80 / mo

$74.21 / mo

$247.05 / mo


$19.35 / mo

$22.15 / mo

$42.78 / mo

$109.51 / mo

$364.94 / mo


$23.40/ mo

$27.00 / mo

$52.16 / mo

$132.66 / mo

$496.80 / mo

The best thing about term life insurance aside from the price, is the fact that you will be able to cover yourself for how long you need. Since term life insurance is provided in terms going from 5 year all the way up to 40 years, you can pick a term that makes sense for your situation, for example if you just want to have life insurance until your children become adults then maybe a 20 year term might be a good choice for you. Take a look at some of the main pros about term life insurance:

Pros of term life insurance 

  • In the event of your death or disability, you and your family will have financial security

  • 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

Why young adults should have life insurance

Young adults should have life insurance depending on their situation. As mentioned earlier, life insurance is not for everyone but it is for: those who have financial assets that they want to protect, those who have loved ones who they want to protect from financial burdens, or if you have a mortgage or any other large debts. 

It is also good to remember the cost of education. The cost of going to school is a major burden that many young people carry with them well into adulthood, and with the cost of education skyrocketing and wages remaining stagnant all over the country, it isn’t surprising that debts take longer to pay off.

Student debt in Canada

Aside from the debts of school, consider your personal debts such as: your line of credit, your car payments and most expensive of all, your mortgage. Mortgage rates are high and making your monthly mortgage payments is your priority but what would happen to your family in the event of your death, or if you became critically ill or disabled? Would they be able to pay off the debts that you have acquired? This is an important question to ask yourself, and if you think that they would struggle to pay off any of your debts, then getting a life insurance policy is a really important way to make sure that your loved ones don’t carry  financial burdens in the event of your death. It’s always better to be safe than sorry, and making sure that your loved ones will be protected from financial instability is important. 

Life insurance is a good investment for young adults

Life insurance is an investment, because it benefits your loved ones and can even benefit you. Specifically, permanent life insurance including universal life and whole life insurance allows your life insurance policy to be an investment for you. 

Universal life insurance 

For universal life insurance, this can be an investment by generating a cash value over time. The cash value specifically in a universal life insurance policy is the accumulation of funds within your specific policy. This portion may increase or decrease depending on the investments made. Because the death benefit provided to your loved ones is always guaranteed, it is paid in addition to that payment. The cash value of the policy, which grows with each premium payment, can also be withdrawn at any time. The flexible cash value portion of the policy distinguishes universal life insurance from its competitors in the permanent life insurance market.

The cash value of your universal life insurance policy grows when you pay more than the bare minimum. Investments are another source of growth during the policy’s implementation.This cash value is not only a benefit, but also a way for policyholders to borrow money if necessary. This can include policy cancellation, withdrawals, or loans. To learn more about Universal life insurance, visit this blog: Permanent Life Insurance: Universal Life vs Whole Life vs Term 100.

Whole life insurance

Whole life insurance works in the same way that the cash value of a universal life insurance policy does. It has the potential to grow and accumulates a portion of the money you pay in premiums on a regular basis. The policyholder can access this growth tax-free at any time during the policy’s term, but any money withdrawn will be taxed. The guaranteed return rate provided by the majority of whole life insurance policies is typically low and only serves as an estimate of how much your cash value will increase.There are also non-guaranteed return options for whole life insurance, in which the return rate is determined by dividends that can be applied to your cash value each year, but no estimate of how much this will be.

Whole life insurance, like universal life insurance, accumulates cash value over the course of the policy through premium payments and investments. Marketers promote this cash value as a benefit and a means for policyholders to borrow money if needed. This can include policy cancellation, withdrawals, or loans. Depending on the policy of the life insurance company, this may or may not result in interest being charged.

If you want to make a withdrawal from your whole life insurance policy, you can contact your insurer to find out how much money is available to you. They will also be able to determine whether or not you will be taxed on the loans and what interest rate will be used. You will withdraw the specified amount from your investments, as well as any potential growth. Before cancelling your policy, review its terms and conditions because the death benefit may be reduced.

What young adults should consider when buying life insurance

When buying life insurance there are many factors that you need to consider. Ideally, you should consider how much life insurance coverage you need, if there are any health factors that you have which the life insurance company might have to consider, and finally some future needs. 

Life insurance coverage

Your particular situation will determine how much life insurance coverage you require when buying life insurance in Canada. We strongly advise that you conduct a needs analysis and speak with a life insurance specialist to determine how much life insurance you actually need and which life insurance plan is best for you. You can estimate how much life insurance coverage you need in a number of different ways, though.

Times Ten

One of the simplest ways to figure out how much life insurance you need is by using this formula. Basically, multiply your annual income by 10. Take $50,000 as an example and multiply it by 10 to get $500,000 ($50,000 X 10 = $500,000). You will need to buy $500,000 in life insurance to make sure that your family can maintain their standard of living without experiencing financial instability in the event of your passing. Consider adding an extra $50,000 to $100,000 of coverage for every child you have. Considering your future potential and income is a particularly important thing to consider as well, as a young adult you might not be making the most income that you can, but this is fine and you can always revise your life insurance policy if you want to increase your coverage amount when you get a higher income. Therefore, as a young adult it is ideal to get a life insurance policy and coverage amount that is according to your current income, then in the future you can raise the coverage amount if needed.

DIME formula

The DIME formula makes calculating the approximate amount of life insurance you might require simple. This takes into account the fundamentals, including debts, income, a mortgage, and education. When determining how much life insurance one needs, the DIME formula is a fantastic tool.

The DIME formula

Medical factors

When you are getting life insurance, especially a fully underwritten life insurance policy, your medical conditions and overall health will be examined. There is a rating that your life insurance company will give you when you are applying for life insurance, this rating will rely on your overall health and determine how much of a risk you are to be insured by the life insurance company. Also, your rating can be affected by your criminal record, your credit, driving history etc. Nonetheless, you can always get life insurance no matter what your medical condition is and no matter what your rating is. Keep in mind though that your rating will affect the cost of your monthly premiums and will change what kind of life insurance type you can have. We always suggest that you contact a life insurance broker to help you find out the right life insurance plans for your situation. We can help figure out what the cost of your life insurance policy will be and we have access to seeing the various different plans provided by life insurance companies in Canada. 

Plan for the future

You might want to consider that the future is very unpredictable and this is why life insurance companies offer riders. There are two popular riders which are critical illness insurance and disability insurance and these can be very important to have just so that you are prepared for the unpredictable. 

Critical illness insurance

A critical illness insurance policy provides a tax-free lump sum payment in the event that you experience a predetermined illness, a health event like a stroke, or need to receive treatment for one of these conditions during the predetermined coverage period. The more than 26 critical illnesses that can be covered as part of the package include cancer (in all of its forms), aplastic anemia, blindness, kidney failure, heart attack, and more. 

Additionally, even though not all critical illnesses are fatal, they are still quite common in Canada. This kind of insurance gives you the financial freedom to decide what’s best for your recovery, your family, or making the most of your remaining time.

Check out our guide if you’re unsure if critical illness insurance is right for you.

Disability insurance

Disability insurance is designed to replace a sizable portion of your income in the event that you get sick or injured and it interferes with your ability to work. It gives you regular monthly payments while you get better from your condition or until the end of your predetermined coverage period, whichever comes first.

Similar to critical illness insurance, the benefit can be used however you like, but the monthly payment schedule is designed to look like your paycheque and is typically meant to cover your mortgage or rent as well as other living costs while you are recovering.

Check out our complete guides if you’re unsure about whether disability insurance is a good fit for you.

The cost of life insurance for young adults

The cost of life insurance for young adults varies depending on your rating but it can be extremely cheap for young adults especially if they are in good health. The cost can easily be less than $20 a month for a great coverage amount. This being said, there are many things that can change the cost of your life insurance for young adults such as being a smoker, having a hazardous hobby or occupation, and medical conditions. But the cost of life insurance for young adults can definitely be amazing if you have a preferred rating. This is an example of how much the cost of a 20 year term life insurance policy can be if you are a male or female who is 30 years old, non-smoker, with a preferred rating and looking for $250,000, $500,000 and $750,000 in coverage:

Cost of life insurance for 30 year olds

Frequently Asked Questions (FAQs) about life insurance for young adults

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).

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.

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.

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.
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.

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.

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.

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.

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.

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.

Thinking of planning for your future?

Buying life insurance in Canada is simple and we are here to find out about all your needs and wants to find the right life insurance policy for you! At Protect Your Wealth, we work with and compare policies and quotes from the best life insurance companies in Canada to ensure the best solution for you and your needs. We provide expert life insurance solutions, including no medical life insurance, critical illness insurance, term life insurance, and permanent life insurance to build the best package to give you the protection you need. We also can help you with your financial plan and help you determine what accounts are right for you, we can assist you in opening a LIRA, RESP, RRSP, or a TFSA

If finding life insurance is something you are interested in, contact Protect Your Wealth today for free advice on finding the right life insurance policy for your needs. We are proudly based out of Hamilton, servicing clients anywhere in Alberta, British Columbia, and Ontario, including areas such as Edmonton, Hamilton, Kitchener, Red Deer and Surrey.

To find out more about why you should get life insurance, talk to an insurance expert today.

Best Life Insurance Quotes Canada