Purchasing life insurance later in life is different than buying it in your 30s. As we age, it is less about income replacement and more about covering final expenses, offsetting taxes on the estate, and ensuring a surviving spouse isn’t left with debt. A well-chosen policy can be a powerful tool for providing security and ensuring your final wishes are carried out without burdening your family.
Why Do Seniors Buy Life Insurance?
There are numerous essential reasons why purchasing life insurance coverage in your senior years can be highly beneficial:
Pay Off Any Remaining Debts
Many Canadians enter their senior years with outstanding debts, such as a mortgage balance, car loan, or line of credit. A policy ensures these are paid off, leaving your estate’s assets intact for your heirs.
Cover Final Expenses
Funeral costs can put a substantial financial strain on grieving families. From burial and cremation fees to headstones, funeral home services, and memorial events, final expenses add up quickly. A life insurance policy provides immediate cash to cover these expenses, preventing your family from facing a sudden financial hardship.
Leaving A Legacy
The payout from a life insurance policy is a simple way to leave a legacy for children or grandchildren. It’s also an effective tool to equalize inheritances if you have an illiquid asset, like a family business or cottage, that you’re leaving to one child.
Knowing you’ve left an inheritance brings peace of mind that your loved ones will have a financial cushion to continue living comfortably.
Provide Ongoing Income for a Surviving Spouse
Losing a partner’s income stream and financial support can severely impact a surviving spouse’s finances. Life insurance provides funds to continue paying for housing costs, utilities, food, transportation, healthcare, and other necessities, ensuring your surviving spouse can continue covering living expenses and maintain their standard of living.
Supplement Retirement Income
Some types of permanent life insurance, such as whole life or universal life, have cash value life insurance components that grow on a tax-deferred basis. You may access cash value via policy loans or withdrawals to supplement retirement income. This option can be handy for retirees whose pension, retirement savings, or investments may not fully cover their living costs.
Facilitate Estate Planning and Wealth Transfer
Life insurance can facilitate estate planning and the transfer of wealth as part of a holistic financial strategy. The tax-free death benefit can help cover tax liabilities and estate costs (e.g., final tax return obligations, probate/estate administration costs where applicable). This prevents having to sell assets prematurely.
Make a Charitable Gift
By naming a registered charity as your beneficiary, you can make a significant donation that might not have been possible from your regular assets, often with tax benefits for your estate.
Many of my senior clients initially think they’ve ‘missed the boat’ on life insurance. The reality is that modern policies are designed specifically for their needs. It’s about shifting the conversation from ‘what if I die?’ to ‘how can I best protect my assets and family when I die?’ It’s a strategic estate planning tool.
What Life Insurance Products Are Available To Seniors?
There are 3 broad categories of life insurance policies designed to align with the needs, preferences, and budgets of retirees and seniors.
A Quick Summary
| Type | Typical Coverage Size | Cost Level | Best Use Case | The “Key Gotcha” |
|---|---|---|---|---|
| Term Life | High ($100,000 – $1M+) | Low (Initially, but rises with age) | Covering temporary debts (mortgage) or income replacement until retirement. | It expires. |
| Whole Life | Flexible ($10,000 – $500k+) | High (Fixed, guaranteed premiums) | Paying for funerals, final taxes, or leaving a guaranteed legacy. | Pricey. |
| Universal Life (UL) | High ($100,000 – $1M+) | Flexible (You choose payment amounts) | Estate planning for wealthy seniors who want tax-sheltered investment growth. | Complexity. |
| Simplified Issue | Moderate ($5,000 – $300,000) | Medium-High (Higher than standard insurance) | Seniors with moderate health issues who want fast coverage. | Strict questions. |
| Guaranteed Issue | Low ($5,000 – $25,000) | Very High (Most expensive per dollar of coverage) | Seniors with severe health issues | The 2-Year Rule. |
Term Life Insurance
Term life insurance provides affordable coverage for a specific predetermined period, such as 10, 15, 20, 25, or 30 years. It provides pure life insurance protection without an investment component and is best suited for temporary protection needs or income replacement until a certain age. Many term policies include a conversion option that lets you switch to permanent insurance within certain time/age limits.
For seniors, term life insurance suits shorter-term financial needs where coverage is desired for a fixed period. Typical uses are paying off a mortgage, replacing lost income, or providing an inheritance until age 85.
Permanent Life Insurance
Permanent life insurance is designed to provide lifelong coverage regardless of when you pass away. It also has an investment component that allows you to grow the policy’s cash value on a tax-deferred basis.
The two main types of permanent life insurance are whole life and universal life:
Whole Life Insurance: Offers guaranteed level premiums, a guaranteed death benefit, and guaranteed cash value growth. It’s predictable and stable, making it ideal for final expense planning and leaving a guaranteed inheritance.
Universal Life Insurance: Provides more flexibility. You can often adjust your premium payments and death benefit amount. The cash value growth can be tied to a simple interest rate or linked to market investments, offering higher potential growth (and higher risk).
No Medical Exam Life Insurance
No medical exam life insurance products are designed to provide coverage options for seniors who may not qualify for traditionally underwritten policies.
There are two main types with differing levels of health screening:
- Simplified Issue: No medical exam is required, but you must answer a short list of health questions. It’s designed for individuals with moderate, controlled health issues. Coverage is often available up to $500,000.
- Guaranteed Issue: No medical exam and no health questions asked. Acceptance is guaranteed for applicants within the eligible age range (usually 50-75). Crucially, most of these policies have a two-year waiting period. If the insured dies from natural causes within the first two years, the insurer will only refund the premiums paid, not the full death benefit.
How Do Medical Conditions Affect Eligibility and Premiums for Seniors?
Having pre-existing medical conditions can make it more difficult and expensive for seniors to qualify for life insurance coverage under traditionally underwritten policies.
During the underwriting process, the insurance company reviews your medical history, prescriptions, and lifestyle to assess risk factors and determine premiums.
Some key considerations:
- Minor conditions like asthma, acid reflux, or mild depression may have little impact as long as they are controlled with medication and treatment.
- More serious conditions like heart disease, stroke, or cancer often lead to higher premiums or difficulty qualifying for preferred rates. Controlled conditions have a better chance of approval.
- Multiple chronic health problems increase risk factors and chances of denial of coverage.
- Tobacco use, obesity, high cholesterol, or other risky lifestyle factors, such as having high-risk occupations or extreme sports hobbies, also raise rates.
While pre-existing conditions make qualifying for traditional policies more challenging, options are still available:
- You will likely pay higher premiums for the same coverage amount.
- You may be declined for preferred term insurance and need “simplified issue” or “guaranteed issue” insurance instead.
- You can reapply for better rates after 1-2 years of conditional stability.
- Working with an independent broker can help find companies willing to provide coverage.
Important: Be open and honest about your health history during the application. Failing to disclose a condition can lead the insurer to deny a claim in the future.
Factors Affecting the Costs of Life Insurance for Seniors in Canada
Monthly premium costs for life insurance policies for seniors depend primarily on the following factors:
- Amount of Coverage: Higher death benefit amounts increase premium costs.
- Age: Costs rise significantly as age increases due to shorter life expectancy. (Check out: Life Insurance Rates By Age Chart in Canada)
- Health Status: Any chronic conditions lead to higher rates or difficulty qualifying.
- Gender: Women often pay less than men on average, based on mortality rates.
- Type of Policy: Permanent insurance costs more than temporary term insurance.
You Should Know: The Cost of Waiting
One of the most critical factors in life insurance pricing is age. Premiums are locked in based on your age at the time of application. For every year you wait, the cost for the same coverage can increase significantly. Acting sooner secures a lower lifetime premium. Read extensive guides on life insurance for Canadian seniors at different ages at:
- Life Insurance for Seniors Over 50
- Life Insurance for Seniors Over 60
- Life Insurance for Seniors Over 70
What Are the Best Life Insurance Companies for Seniors in Canada?
When researching insurance providers, seniors should look for companies offering competitive products designed specifically for retirees. Top insurers stand out through financial stability, various senior-specific policies, strong customer service, premium affordability, and a positive reputation.
Here are some of the leading life insurance companies serving the needs of seniors across Canada:
- Canada Life: A financial giant known for a wide range of competitive term and permanent products and policies available up to age 85.
- Sun Life: Offers flexible term policies and permanent options with strong brand recognition and an easy digital application process.
- Manulife: Features competitive pricing and the innovative Vitality program, which offers premium discounts for healthy living.
- Empire Life: A strong competitor in both term and permanent insurance, known for its straightforward digital process and participating whole life products.
- Industrial Alliance (iA): Offers highly customizable term lengths (10-40 years) and is often competitive for seniors.
- Canada Protection Plan (CPP): The leading provider of No Medical and Simplified Issue life insurance, making it the go-to for those with health concerns.
Doing due diligence across providers lets you find the best-fit company based on your budget, financial needs, and preferences.
How Do Seniors Get Accurate Life Insurance Quotes?
Seniors have a few options to get personalized quotes for life insurance before purchasing coverage:
Use an Online Quote Tool
Most insurance company websites have instant quote calculators that provide estimates based on your age, gender, smoking status, health class, coverage amount and type of policy. This gives you an approximation, but rates can vary significantly depending on other factors.
Work with an Independent Broker
Brokers can shop rates from multiple insurers to match you with your best options. They’ll ask detailed questions to return the most accurate quotes possible. This is the best way to get premium estimates explicitly tailored to your situation as an individual.
Apply Directly with an Insurer
You can apply directly through a life insurance company’s website or phone. The insurer will request your complete medical history before finalizing an exact quote. The benefit is receiving a guaranteed rate, but it requires going through full underwriting first.
Independent brokers provide the most customized rate estimates without requiring underwriting. This gives you leverage to compare options from top providers before applying.
What Steps Do Seniors Need To Take To Purchase Life Insurance?
If you determine life insurance is beneficial for your financial plans, here is an overview of the typical process seniors go through to purchase a policy:
1. Calculate Your Coverage Needs
Consider any debts, dependents, final expenses, inheritance plans, income replacement, etc., to decide on the appropriate type of policy and death benefit amount.
2. Get Quotes for Comparison
Use an online calculator or broker to get quotes from multiple providers. Provide your age, gender, health class, smoking status, and coverage amount.
3. Select a Preferred Insurer & Policy
Based on the quotes and your research, choose the insurer and policy type that best suits your budget and needs.
4. Complete the Application Paperwork
The application asks for personal details, medical history, family history, financial information, and beneficiary designations.
5. Undergo Medical Requirements
For traditionally underwritten policies, you must complete a medical exam and labs or doctor records. Simplified issue or guaranteed issue policies have fewer or no medical requirements.
6. Get Approved
It typically takes 1-2 weeks for the insurance company to review your application and inform you if it is approved. If denied, your broker can help you reapply.
7. Begin Paying Premiums
Once approved, you’ll begin paying monthly, quarterly or annual premiums to put your policy in force.
8. Designate Beneficiaries
Choose beneficiaries who will receive the death benefit and assign percentages if splitting among multiple recipients.
Working with a broker simplifies the purchasing process by advising you through every step, from quotes to application to approval.
The Bottom Line: Securing Your Legacy
Life insurance in your senior years is a strategic financial decision that provides certainty in an uncertain world. By acting promptly and leveraging insurers catering to retirees in your 60s and 70s, you can find an affordable plan that meets your coverage needs and keeps premiums reasonable well into your 80s and 90s.
The optimal solution depends entirely on your health, budget, and circumstances. Working with an experienced advisor simplifies the complex process of researching plans, getting accurate quotes, and purchasing a policy from a reputable provider.
FAQs on Life Insurance for Canadian Seniors
How does life insurance work for seniors in Canada?
Life insurance for seniors provides a death benefit payout to designated beneficiaries after the policyholder passes away. Seniors can purchase term life insurance for temporary coverage or permanent life insurance for lifelong protection. Policies help cover final expenses, debts, and leave an inheritance.
What is the best life insurance for seniors over 60?
For seniors in their 60s, term life insurance often provides the most affordable coverage. 10 or 20 year terms allow them to get temporary coverage aligned with financial obligations. Permanent life insurance is also an option for lifelong protection and leaving an inheritance.
What is the maximum age for getting life insurance in Canada?
The maximum age to qualify for life insurance is typically 85 for permanent life insurance and 75 for term life insurance in Canada. Beyond age 85, there are very limited policy options available.
What medical conditions affect life insurance eligibility for seniors?
Serious conditions like heart disease, cancer, stroke, diabetes, dementia, COPD, and kidney disease can impact seniors' life insurance eligibility and cause higher premiums or difficulty qualifying. Milder conditions may have little effect.
What information do I need to apply for life insurance as a senior?
Seniors need to provide personal details, family history, medical history, prescription list, financial information, and beneficiary designations when applying for life insurance. A medical exam may also be required.