Navigating Life Insurance for Couples in Canada

Talk to one of our experienced advisors, today!

9 minute read

Originally published: March 15, 2023

Life insurance with epilepsy

Navigating Life Insurance for Couples in Canada

Talk to one of our experienced advisors today!

9 Minute read

Originally published: March 15, 2023


Life insurance with epilepsy

Life insurance is a critical aspect of financial planning for couples, providing a safety net for surviving loved ones in the event of an untimely death. It ensures that they are financially protected and can maintain their standard of living, even during difficult times. However, navigating the various life insurance options available in Canada can be overwhelming, particularly for couples who may have different financial situations and goals. That’s why we’ve created this comprehensive guide to help couples make informed decisions about the right coverage for their unique needs and circumstances. We’ll explore the various types of life insurance policies available, including term life insurance and permanent life insurance, and discuss the factors that couples should consider when selecting a policy, such as coverage amounts, premiums, and beneficiaries. With this guide, couples can feel confident in their ability to navigate the life insurance market and secure the right coverage to protect their family’s financial future.


Case Study: A Couples Financial Journey 

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Meet Sarah and Mike, a young married couple with two children. Sarah works part-time and takes care of their children, while Mike works full-time at a software company. They are concerned about what would happen to their family if one of them were to die unexpectedly, and have decided to explore their life insurance options.

After consulting with a financial advisor, Sarah and Mike decide to purchase a joint term life insurance policy with a 20-year term. The policy will provide a death benefit of $500,000 in the event of either spouse’s death, ensuring that their family is financially protected and able to maintain their standard of living. They opt for a first-to-die policy, which will provide financial stability for the surviving spouse and help cover expenses such as mortgage payments, childcare costs, and other living expenses.

Sarah and Mike are also considering purchasing a second-to-die policy in the future, which could help cover estate taxes and provide a legacy for their children. They plan to revisit their life insurance coverage periodically to ensure that it continues to meet their family’s changing needs. 

Thanks to their careful research and planning, Sarah and Mike can feel confident that their family’s financial future is protected in the event of an unexpected death. By exploring their life insurance options and choosing the right coverage to meet their unique needs, they have gained peace of mind and security for themselves and their children.

Understanding the Types of Life Insurance Policies

There are three primary types of life insurance policies available in Canada: term life insurance, whole life insurance, and universal life insurance. Each has its own unique features and benefits, making them suitable for different situations and needs.

Term life insurance

Term life insurance provides coverage for a specific period or “term,” typically 10, 20, or 30 years. If the policyholder dies during the term, the beneficiaries receive the death benefit.

Term life insurance is often the most affordable option, making it a popular choice for young couples starting their financial journey. However, if the policyholder outlives the term, coverage ends, and no benefits are paid out.

Term life insurance is ideal for couples with temporary financial obligations, such as a mortgage or raising children, and those who want affordable coverage while building their assets.

Whole life insurance

Whole life insurance is a type of permanent life insurance that provides coverage for the policyholder’s entire life. It combines a death benefit with a savings component called the cash value.

Whole life insurance premiums are higher than term life insurance, but they remain level for the life of the policy. The cash value grows over time on a tax-deferred basis, and policyholders can access it through loans or withdrawals. However, accessing the cash value may reduce the death benefit.

Whole life insurance is suitable for couples looking for lifelong coverage and a long-term savings vehicle.

Universal life insurance

Universal life insurance is another form of permanent life insurance that provides coverage for the policyholder’s entire life. It offers more flexibility than whole life insurance, allowing policyholders to adjust their premium payments and death benefits.

Universal life insurance enables policyholders to allocate a portion of their premiums to an investment account. The investment component can grow on a tax-deferred basis, but the returns are not guaranteed and can fluctuate with market conditions. This added flexibility comes with additional complexity and potential investment risks.

Universal life insurance is suitable for couples seeking lifelong coverage and investment opportunities, along with the ability to adjust their premiums and death benefits as their needs change.

Assessing Life Insurance Needs as a Couple

A key step in choosing the right life insurance policy is assessing your financial needs as a couple. Consider the following factors:

Current and future financial obligations: Evaluate your current debts, such as mortgages, car loans, and credit card balances, as well as future expenses like childcare, education costs, and retirement savings.

Income replacement: Estimate the income needed to maintain your family’s standard of living if one spouse passes away. Consider factors such as the number of years the income would need to be replaced and the impact of inflation.

Debt management: Assess your ability to repay outstanding debts and cover ongoing expenses in the event of a spouse’s death.

Children’s education and childcare expenses: Consider the cost of raising and educating children, well as potential childcare expenses if the surviving spouse needs to work full-time.

Retirement planning: Evaluate your retirement savings goals and the potential impact of losing one spouse’s income or retirement savings.

Calculating Coverage Amount

There are two common methods for calculating the amount of life insurance coverage needed:

Income replacement method: Multiply the annual income of the spouse to be insured by the number of years the income needs to be replaced. Adjust for inflation and consider factors such as the surviving spouse’s earning potential and existing savings.

Needs-based method: Calculate the total amount needed to cover current and future financial obligations, such as outstanding debts, childcare, education expenses, and retirement savings. Subtract any existing assets and savings to determine the coverage amount required.

Importance of regular policy review and updates: As your life circumstances and financial goals change, it’s crucial to regularly review and update your life insurance policy to ensure it continues to meet your needs. Key life events, such as the birth of a child, purchasing a home, or a change in income, may necessitate adjustments to your coverage.

Joint Life Insurance Policies for Couples

Couples can also consider joint life insurance policies, which cover both spouses under a single policy. There are two main types of joint policies: first-to-die and second-to-die (also known as survivorship life insurance).

First-to-die policies: A first-to-die policy pays out the death benefit upon the death of the first spouse. This can help cover expenses such as mortgage payments or childcare costs, ensuring the surviving spouse’s financial stability. First-to-die policies are suitable for couples with shared financial obligations and those who rely on each other’s income to maintain their lifestyle.

Second-to-die policies (Survivorship life insurance): Second-to-die policies pay out the death benefit upon the death of the second spouse. This type of policy can help cover estate taxes, support dependents with special needs, or provide a legacy for children or grandchildren. Second-to-die policies are appropriate for couples looking to minimize estate taxes or provide long-term support for dependents.

For more information on first-to-die life insurance in Canada, we wrote a detailed blog to help you understand the policy!

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This informative infographic is designed to help couples better understand the benefits and drawbacks of two common types of joint life insurance policies: first-to-die and second-to-die policies. It provides a clear visual comparison of the key features of each type of policy, including when the death benefit is paid out, what expenses it can help cover, and which types of couples may find it most appropriate. With this infographic, couples can easily compare the pros and cons of each type of policy, allowing them to make informed decisions about which option is best suited for their unique financial goals and circumstances. Whether couples are looking to minimize estate taxes, provide long-term financial support for dependents, or simply ensure that their surviving spouse is financially stable in the event of an unexpected death, this infographic can help them choose the right type of joint life insurance policy to meet their needs.

Comparing joint policies with individual policies

When choosing between joint and individual life insurance policies, consider factors such as cost, coverage flexibility, and each spouse’s unique needs. Joint policies can be more cost-effective, but individual policies may offer greater customization and allow each spouse to choose their preferred coverage amount and policy type.

Life Insurance and Tax Considerations for Couples in Canada

Tax-free death benefits: In Canada, life insurance proceeds are generally tax-free for beneficiaries. This means the death benefit paid to the surviving spouse or other beneficiaries is not subject to income tax.

Tax implications of cash value growth and withdrawals: For whole and universal life insurance policies, the cash value growth is tax-deferred. However, withdrawals or loans from the cash value may be subject to taxes, depending on the circumstances.

Potential tax benefits of joint policies: Joint life insurance policies may offer additional tax benefits, such as the ability to transfer policy ownership between spouses without triggering tax consequences.

Tips for Choosing the Right Life Insurance Policy

Work with a licensed insurance advisor: An insurance advisor can help you assess your needs, compare policy options, and choose the best coverage for your unique circumstances.

Compare policy options and premiums: Get quotes from multiple insurance providers to ensure you’re getting the best value for your desired coverage. 

Consider riders and additional coverage options: Riders, such as critical illness or disability riders, can provide added protection and customize your policy to meet your specific needs.

Evaluate financial strength and reputation of insurance companies: Choose an insurance provider with a strong financial rating and a reputation for excellent customer service and prompt claims processing.

Common Life Insurance Mistakes Couples Should Avoid

Insufficient coverage: Underestimating the amount of coverage needed can leave the surviving spouse and dependents financially vulnerable. Ensure you accurately assess your financial needs and obligations when determining coverage.

Relying solely on employer-provided life insurance: While employer-provided life insurance can be a valuable benefit, it may not provide sufficient coverage for your needs, and coverage may lapse if you change jobs. Consider supplemental individual or joint policies for adequate protection.

Procrastination and delaying coverage: The cost of life insurance generally increases with age, and waiting to obtain coverage can result in higher premiums or potential denial due to health issues. Obtain coverage as soon as possible to lock in lower rates and ensure protection.

Not regularly reviewing and updating policies: Life circumstances and financial goals change over time. Regularly review and update your life insurance policy to ensure it continues to meet your needs.


Life insurance is a critical component of financial planning for couples in Canada. Understanding the various policy options, assessing your needs, and working with a licensed insurance advisor can help you make informed decisions that protect your family’s financial future. As your life evolves, remember to review and update your policy to ensure ongoing peace of mind and security for you and your loved ones.

Frequently Asked Questions (FAQs) about Life Insurance for Couples

Common types of life insurance policies available for couples in Canada include term life insurance, permanent life insurance, and joint life insurance policies.

Couples can determine the appropriate amount of coverage they need by considering factors such as their income, debts, mortgage, and future expenses, such as their children’s education or retirement savings.

It can be more affordable for couples to purchase life insurance together, as joint policies typically have lower premiums than separate policies.

Yes, couples can purchase life insurance policies that cover both partners through joint policies or policies with rider options.

In the event of divorce or separation, life insurance policies may need to be updated or changed to reflect changes in the couple’s circumstances and beneficiaries.

For more information on life insurance after a divorce check out our detailed blog: Guide for Life Insurance and Divorce/Settlement

There may be tax implications associated with life insurance policies, such as estate taxes or capital gains taxes, depending on the type of policy and other factors.

Yes, couples can purchase life insurance policies for their children, which can provide financial protection for the family in the event of the child’s unexpected death or illness.

For more information on life insurance for children check out our blog: Life Insurance for Children in Canada

Couples should look for a life insurance provider or policy that offers affordable premiums, flexible coverage options, and strong financial ratings and stability, as well as excellent customer service and support.

Finding the right life insurance policy 

Navigating life insurance for couples in Canada can seem daunting, but understanding the available options and taking the time to carefully consider your needs and goals can help you find the right coverage to protect your family’s financial future. 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. 

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, Alberta, and British Columbia, including areas such as Waterdown, Oakville, Edmonton, and Airdrie.  

Talk to an advisor today.

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