Ben Nguyen 
Life insurance helps protect your loved ones financially if something happens to you. It gives you peace of mind knowing they’ll be supported. However, the cost can differ a lot depending on factors like your age, health, lifestyle, and the coverage you choose.
In this guide, we’ll examine the average life insurance costs in Canada, explore the factors impacting premiums, and provide strategies for getting the best price for your coverage.
What Does Life Insurance Cost on Average in Canada?
The average cost of life insurance in Canada can range from $13 to over $100 per month per $100,000 of coverage, depending on various factors. Here are some examples:
- Term life insurance for a healthy 30-year-old can cost around $13/month for $100,000 coverage
- Premiums for a 60-year-old smoker can exceed $100/month for $100,000 coverage
According to industry data, the average life insurance payout in Canada typically falls between $240,000 and $550,000. However, the specific amount of coverage you need will depend on your unique goals, financial situation, and obligations.
It’s essential to consider your individual circumstances when determining the appropriate amount of life insurance coverage. Factors to consider include:
- Unpaid debts like mortgages, car loans, or credit card balances
- Future financial obligations, like your children’s education expenses
- Ongoing living expenses for your dependents
- Funeral and final expenses
- Legacy or charitable giving goals
A good guideline is to choose coverage that’s 10-15 times your yearly income. But speaking with a financial advisor or insurance expert can help you find the right amount based on your personal situation.
What Factors Impact the Cost of Life Insurance in Canada?
Many elements affect the cost of your life insurance. Insurance companies calculate your personalized premium based on how likely you are to pass away during the length of the policy, also known as your mortality risk.
Here are the main factors that influence your risk profile and determine policy pricing:
Age
Age is the most impactful factor for life insurance rates. As you get older, your premiums increase significantly because insurance companies see you as more likely to pass away during the term and require a payout.
Some insurers use age brackets with set rate hikes between categories. Others calculate pricing on a continuous scale, with your rate inching up every birthday.
For example, consider the following average monthly premiums for a male non-smoker in Ontario seeking $500,000 in coverage:
| Age | 10-Year Term | 20-Year Term | 30-Year Term |
| 30 | $29.67 | $31.29 | $33.50 |
| 40 | $44.96 | $71.49 | $112.75 |
| 50 | $136.32 | $235.62 | $388.00 |
As you can see, premiums increase significantly as the applicant ages, especially when comparing rates for a 30-year-old to those of a 50-year-old.
Gender
Women usually pay lower premiums than men because they tend to live longer on average. According to the Harvard Medical School, women tend to outlive men by about 5 years on average.
Here’s an example comparing the average monthly premiums for men and women non-smokers seeking $500,000 in coverage for a 20-year term policy:
| Age | Premiums for Women | Premiums for Men |
| 25 | $15.00 | $20.00 |
| 35 | $25.00 | $35.00 |
| 45 | $55.00 | $75.00 |
| 55 | $95.00 | $125.00 |
However, some experts argue that gender should not substantially impact pricing in today’s market. Many insurers are moving towards gender-neutral rates. Currently, a 40-year-old woman may still pay around 15% less than a man of the same age and health status, but this gap is narrowing.
Smoking Status
Smokers often pay much higher premiums, sometimes 30% to 300% more than non-smokers. This is because smoking increases health risks. Smoking is linked to various serious health conditions, like cancer, heart disease, and respiratory issues, which can lead to premature death.
Here’s an example comparing average monthly premiums for non-smokers and smokers seeking $500,000 in coverage for a 20-year term policy:
| Age | Premiums for Non-Smoking Women | Premiums for Smoking Women | Premiums for Non-Smoking Men | Premiums for Smoking Men |
| 30 | $20.68 | $37.32 | $29.67 | $55.75 |
| 40 | $33.27 | $90.37 | $44.96 | $138.60 |
| 50 | $82.73 | $233.64 | $136.32 | $380.16 |
To qualify for non-smoker rates, you generally need to be nicotine-free for at least 12 months.
Health & Family Medical History
Pre-existing health conditions, poor health, and a family history of serious illnesses can lead to higher life insurance premiums. Insurance companies look at your health and medical history. They want to see your chance of getting conditions or illnesses that could affect how long you live.
Some health conditions that may result in higher premiums or even denial of coverage include:
- Cancer
- Heart disease
- Stroke
- Diabetes
- High blood pressure
- Mental health disorders
Family medical history is also considered, as certain conditions like heart disease, diabetes, and some cancers can have a genetic component. If you have a family history of serious illnesses, your premiums may be higher.
Here’s an example of how diabetes can impact average monthly premiums for a non-smoker seeking $500,000 in coverage for a 20-year term policy:
| Age | Premiums for Women without Diabetes | Premiums for Women with Diabetes | Premiums for Men without Diabetes | Premiums for Men with Diabetes |
| 30 | $20.68 | $31.02 | $29.67 | $44.51 |
| 40 | $33.27 | $48.41 | $44.96 | $67.44 |
| 50 | $82.73 | $124.10 | $136.32 | $204.93 |
Lifestyle & Occupation
Engaging in high-risk hobbies or having a dangerous job can result in higher premiums, as insurers see these activities as raising the chance of premature death.
High-risk hobbies that may impact your life insurance premiums include:
- Skydiving
- Scuba diving
- Rock climbing
- Motorsports
- Aviation (private piloting)
Dangerous occupations that could lead to higher premiums include:
- Logging and forestry workers
- Fishers and related fishing workers
- Roofers
- Construction helpers
- Truck drivers
- Farmers, ranchers, and agricultural managers
Your driving record and criminal history may also be considered, as reckless driving, DUIs, and criminal convictions can indicate a higher level of risk.
Type & Amount of Coverage
The type of life insurance policy you choose (term vs. permanent) and the amount of coverage you require will directly impact your premium costs. Generally, larger coverage amounts and permanent policies are more expensive than term insurance with lower coverage.
Term life insurance provides coverage for a specific period, typically 10, 20, or 30 years, and is generally the most affordable option. Permanent life insurance, such as whole life or universal life, provides lifelong coverage and often includes an investment component, making it more expensive.
Here’s an example comparing average monthly premiums for term and whole life insurance for non-smokers seeking $500,000 in coverage:
| Age | Term Life Premiums for Women | Whole Life Premiums for Women | Term Life Premiums for Men | Whole Life Premiums for Men |
| 35 | $22.93 | $261.10 | $31.29 | $314.25 |
| 45 | $51.25 | $434.25 | $71.49 | $522.00 |
| 55 | $167.81 | $663.75 | $235.62 | $830.70 |
As for coverage amounts, here’s an example of how increasing coverage impacts average monthly premiums for a 20-year term policy for a 35-year-old male non-smoker:
| Coverage Amount | Monthly Premium |
| $250,000 | $15.00 |
| $500,000 | $27.00 |
| $750,000 | $39.00 |
| $1,000,000 | $51.00 |
| $2,000,000 | $96.00 |
How Do Life Insurance Companies Calculate Your Premiums?
Life insurance companies use a process called underwriting to assess your personal risk factors and, based on these pieces of information, determine your premium rates. During this process, insurers will consider:
- Your age, gender, and overall health
- Your lifestyle, including smoking status and engagement in high-risk activities
- Your occupation and income
- Your family’s medical history
As part of the underwriting process, you may be required to complete a health questionnaire and/or undergo a medical exam. The insurer will then assign you a risk rating, which is used to set your premium price.
Insurers use statistical data and actuarial tables to calculate the likelihood of a person with certain characteristics passing away within a given timeframe. They then use this information to determine the premium they need to charge to cover the potential payout and maintain profitability.
How Much Does Permanent Life Insurance Cost Compared to Term Insurance?
Permanent life insurance policies, such as whole life and universal life, are significantly more expensive than term insurance. This is because permanent policies provide lifelong coverage and often include an investment component.
While permanent life insurance premiums are typically level for life, the total cost is higher since coverage lasts a lifetime. Comparing permanent policies can be complex due to the investment aspect and potential tax implications. It’s best to speak with an experienced insurance broker or agent to obtain personalized quotes and guidance.
Here’s an example comparing average monthly premiums for a $500,000 20-year term policy and a $500,000 whole-life policy for non-smokers:
| Age | Term Life Premiums for Women | Whole Life Premiums for Women | Term Life Premiums for Men | Whole Life Premiums for Men |
| 35 | $22.93 | $261.10 | $31.29 | $314.25 |
| 45 | $51.25 | $434.25 | $71.49 | $522.00 |
| 55 | $167.81 | $663.75 | $235.62 | $830.70 |
As you can see, whole life insurance premiums are significantly higher than term life premiums for the same coverage amount.
What Riders Can Be Added to a Life Insurance Policy, and How Do They Impact Cost?
Life insurance riders are optional add-ons that provide additional coverage and benefits beyond the base life insurance policy. Some common riders include:
- Critical illness rider: Pays out a lump sum if you are diagnosed with a covered critical illness, such as cancer, heart attack, or stroke.
- Family insurance rider: Extends coverage to your spouse and/or children, providing additional protection for your family.
- Accidental death & dismemberment rider: Provides an additional payout if death occurs due to an accident or if you suffer a covered dismemberment, such as the loss of a limb or eyesight.
- Disability waiver of premium rider: Waives your life insurance premiums if you become disabled and unable to work, ensuring that your coverage remains in force even if you can’t make payments.
Adding riders to your life insurance policy will raise the total cost, as they give you more protection and benefits. The cost of each rider will depend on factors such as your age, health, and the specific coverage provided by the rider.
You need to carefully think about which riders you really need. Compare the extra cost to the benefits. An insurance agent can help you decide which riders fit your budget and needs.
How Can I Get the Best Price on Life Insurance?
To secure the most affordable life insurance premiums, consider the following strategies:
Buy early
Purchase life insurance when you’re young and healthy to lock in lower rates. As you age, premiums generally increase, so starting early can result in significant savings over the life of your policy.
Quit smoking
Being nicotine-free for at least 12 months can qualify you for non-smoker rates, which are significantly lower than smoker premiums. The difference in cost can be substantial, with smokers paying anywhere from 30% to 300% more than non-smokers.
Maintain a healthy lifestyle
Living healthy can help avoid higher insurance costs. So, it is recommended to build good habits like exercising regularly, maintaining a healthy weight, and managing conditions like diabetes or high blood pressure. This will not only help you improve your overall health but also reduce the risk of premium increases due to medical conditions.
Choose term insurance
Term life insurance usually costs less than permanent insurance. This make them a more affordable option for many people in Canada. If your main goal is to provide financial protection for your loved ones and family during your working years, term insurance may be the most cost-effective option.
Avoid overinsuring
Only purchase the amount of coverage you need to keep premiums manageable. While it’s important to have sufficient coverage to protect your family’s financial future, overinsuring can lead to unnecessarily high premiums.
Compare quotes
Get life insurance quotes from different life insurance providers to find the best rates. Because each insurer has its own underwriting guidelines and pricing strategies, comparing options can help you find the most affordable policy for your needs.
Work with a broker
An experienced independent insurance broker can help you compare policies from various insurers and find the most suitable coverage for your needs and budget. They can also offer helpful guidance and support during the application process that you can take advantage of.
The Bottom line
The cost of life insurance in Canada varies greatly. Costs depend on factors like age, gender, health, lifestyle, and coverage amount. Learning about these factors helps you find good rates and affordable insurance.
Remember, life insurance is mainly to financially protect your family if you die unexpectedly. Cost matters, but getting enough coverage is most important. It is ideally recommend to talk to an insurance agent to review your needs and find comprehensive, affordable life insurance.
FAQs related to How much does life insurance cost in Canada?
What factors affect the cost of life insurance in Canada?
The main factors affecting life insurance costs in Canada are your age, gender, health/medical history, lifestyle behaviors, occupation, policy type, length of term, and amount of coverage. As you get older or represent higher mortality risk, rates increase.
Why does life insurance cost more as you get older?
Life insurance costs more as you age because older individuals statistically have a higher risk of passing away during the length of the policy, meaning insurance companies are more likely to have to pay out on your claim. Higher risk equals higher premiums.
How much does smoking increase life insurance rates?
On average, smokers pay between 50-100% more for life insurance compared to non-smokers of the same age and gender. Smoking significantly increases health risks, so insurers charge smokers higher premiums.
Should I choose term or permanent life insurance?
Term life insurance is the more budget-friendly temporary coverage option, while permanent insurance is meant to last your entire life but costs significantly more. Term policies suit most families' needs at affordable rates.
How much extra will insurance riders increase my premium?
Common life insurance riders like accidental death, critical illness, or waiver of premium can increase your base rate anywhere from 10% to over 100% depending on the rider and your personal risk factors. Avoid unnecessary add-ons to keep costs down.
