Life Insurance for Seniors in Canada: A Comprehensive Guide

Purchasing life insurance is an integral part of financial planning for many seniors in Canada. As we age, life insurance provides invaluable peace of mind by helping cover final expenses, pay off remaining debts, and leave an inheritance for loved ones.

This extensive guide delves into everything you need to know about finding the optimal life insurance for seniors.

Why Consider Purchasing Life Insurance as a Senior?

There are numerous important reasons why purchasing life insurance coverage in your senior years can be extremely beneficial:

Pay Off Any Remaining Debts

While we may hope to enter retirement mortgage-free and debt-free, the reality is that many Canadians still carry some debt such as mortgages, personal loans, auto loans, and credit cards into their retirement years.

Life insurance can provide your family with funds to repay any of your remaining debts. This ensures these financial obligations are not passed onto your spouse or other family members after you’re gone.

Whether it’s a mortgage, car loan, personal line of credit, or credit card balance, the payout from a life insurance policy gives your beneficiaries the funds to cover these outstanding debts. This provides peace of mind, knowing your family will not be burdened with any lingering bills or payments.

Cover Final Expenses and Funeral Costs

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.

According to a 2021 survey, the average cost of a funeral in Canada is $9,150. For families unprepared for this expense, it can be financially debilitating during an already difficult time. (source: https://www.canadalife.com/investing-saving/estate-planning/funeral-cost-canada.html)

Having life insurance ensures funds will be readily available to cover your final costs so your loved ones don’t have to. Whether you want a small private gathering or a larger memorial service, your beneficiaries will have money allocated specifically for this purpose.

Leave an Inheritance for Loved Ones

The payout from a life insurance policy also enables you to leave an inheritance for your spouse, children, grandchildren, or other dependents.

This can help provide ongoing financial stability and support for their future after you’re gone. The funds can be used however they see fit – to pay off debts, cover education costs, make mortgage payments, or anything else they may need financial assistance with.

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

For married couples, life insurance helps ensure your surviving spouse can continue covering living expenses and maintain their standard of living.

Losing the income stream and financial support of a partner can severely impact a surviving spouse’s finances. Life insurance provides funds they can utilize to continue paying for housing costs, utilities, food, transportation, healthcare, and other necessities.

Certain policies even offer living benefit payout options that allow you to access a portion of the death benefit while still living if you’re diagnosed with a terminal illness or require long-term care.

Support Any Dependents or Family Members

If you have any financially dependent family members, such as children, grandchildren, siblings, or parents, life insurance will continue providing financial support or care after you’re gone.

By designating dependents as beneficiaries, you ensure funds will be available for their living expenses, education, healthcare needs, or other costs. This provides stability at a difficult time.

Those caring for special needs dependents can also rest assured knowing funds will continue to be available for their assisted living, medical care, and other requirements.

Supplement Retirement Income

Some types of permanent life insurance, such as whole life or universal life, have cash value components that grow on a tax-deferred basis.

Policyholders can take out loans or even make withdrawals against this cash value to supplement retirement income through predictable tax-free funds.

Having this option can be especially useful for retirees whose pension, retirement savings, or investments may not fully cover their living costs. Life insurance cash value gives retirees greater financial flexibility.

Facilitate Estate Planning and Wealth Transfer

Life insurance can be used to facilitate estate planning and the transfer of wealth as part of a holistic financial strategy.

The tax-free death benefit can be utilized to pay estate taxes or equalize inheritances without having to liquidate other assets in the estate. This prevents having to sell assets prematurely.

Permanent life insurance also enables seniors to leave a guaranteed and predictable amount to heirs. This complements other estate planning tools and provides control over legacy planning.

Leave a Gift for Charity

Through life insurance, seniors have a powerful tool to leave a lasting gift to a charitable cause or nonprofit aligned with their values.

By designating a charitable organization as the beneficiary of your policy, you can ensure funds will be available for causes near and dear to your heart long after you’re gone.

Rather than drawing solely from your existing assets, life insurance offers a tax-advantaged method to enhance your charitable impact.

This approach allows you to support causes fighting poverty, advancing healthcare, expanding access to education, protecting the environment, and many other noble pursuits.

What Categories Of Life Insurance Products Are Available To Seniors?

There are several broad categories of life insurance policies designed to align with the needs, preferences, and budgets of retirees and seniors:

Term Life Insurance For Seniors

Term life insurance provides affordable coverage for a specific predetermined period of time, such as 10, 15, 20, 25, or 30 years. It is best suited for temporary protection needs or income replacement until a certain age.

Some key features of term life insurance:

• Typically more affordable premiums compared to permanent insurance options
• Shorter coverage terms ranging from 10 to 30 years
• Flexibility to choose the length of term needed
• Option to renew at the end of the term period, up until approximately age 80
• Convertible to permanent coverage when term renews
• Ideal for coverage tied to specific obligations or ages
• Provides pure life insurance protection without an investment component

For seniors, term life insurance suits shorter-term financial needs where coverage is desired for a fixed period of time. Common uses are paying off a mortgage, replacing lost income, or providing an inheritance until a certain age like 85.

Term life insurance gives seniors continued peace of mind knowing their family has funds for these pursuits for the duration of the term in the event of their passing.

Permanent Life Insurance For Seniors

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 cash value within the policy on a tax-deferred basis.

The two main types of permanent life insurance are whole life and universal life:

Whole Life Insurance For Seniors

Whole life insurance offers lifelong permanent coverage along with guaranteed premiums and death benefits. Your beneficiaries will receive the same payout no matter when you pass away.

Some key features of whole life insurance:

• Lifelong permanent coverage
• Level premiums that don’t increase
• Guaranteed minimum cash value that grows over time
• Guaranteed minimum death benefit payout
• Dividends paid out on participating policies
• Ideal for final expenses and leaving a legacy

For seniors, whole life insurance is most applicable for estate planning and leaving an inheritance or funds for final wishes. It also provides seniors with continued control over assets that may be needed in later years of retirement.

Universal Life Insurance For Seniors

Universal life insurance (UL) is another form of permanent cash value life insurance that offers greater flexibility. You have options to adjust premiums, death benefit amounts, and how your cash value is invested.

Key features of universal life insurance:

• Flexible premium payments – pay more or less within limits
• Adjustable coverage amounts – increase or decrease the death benefit
• Choice of cash value investment options – pick aggressive or conservative growth
• Tax-deferred cash value growth
• Lifelong coverage
• Caters to changing needs in retirement

For seniors, universal life insurance appeals to those wanting permanent coverage with greater control and flexibility over their policy. It adapts well to changing financial needs in advanced retirement years.

No Medical Exam Life Insurance For Seniors

No medical exam life insurance products are designed specifically 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 Life Insurance For Seniors

Simplified Issue life insurance only requires applicants to answer a few health history questions. No medical exam or bloodwork is required.

Some key features:

• No medical exam
• Simplified health questions
• Approval in days
• Ideal for seniors with some pre-existing conditions
• Coverage limits may apply

Guaranteed Issue Life Insurance For Seniors

Guaranteed Issue life insurance is offered with no health questions or exams. Approval is guaranteed regardless of your health status.

Some key features:

• No medical exam or health questions
• Guaranteed approval
• Up to $25,000 in coverage
• Limited policy options
• Typically include a waiting period before full coverage starts

For seniors unable to qualify for other life insurance, guaranteed issue provides a coverage option where no health screenings are required.

How Do Pre-Existing Medical Conditions Affect Life Insurance 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 well 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.
• After 1-2 years of conditional stability, you can potentially reapply for better rates.
• Working with an independent broker can help find companies willing to provide coverage.
• No medical exam policies eliminate the underwriting of health conditions.

The key is to be open and honest about your health history during the application process. Even applicants with some medical issues can still find coverage through newer simplified issue or guaranteed issue products.

What Are the Average Costs of Life Insurance for Seniors in Canada?

Monthly premium costs for life insurance policies for seniors depend primarily on the following factors:

• 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.
• Amount of Coverage – Higher death benefit amounts increase premium costs.

Here are examples of average monthly costs for common policies:

Term Life Insurance Costs For Seniors

Term premiums rise steeply after age 70 as term limits end. Many seniors switch to permanent insurance by this point.

Full review: Life Insurance for Seniors Over 50

Permanent Life Insurance Costs For Seniors

Whole life rates start higher but increase gradually with age due to lifelong guaranteed premiums.

Male non-smoker aged 60:

• 10-year $500,000 Term Life = $201 monthly
• $500,000 Whole Life = $402 monthly

Full review: Life Insurance for Seniors Over 60

As shown, term insurance is significantly less expensive than permanent insurance for equivalent coverage amounts at younger senior ages.

Insuring female non-smokers comes with an average savings of 15% compared to males. Rates for smokers can be over double that of non-smokers, depending on age and policy type.

Full review: Life Insurance for Seniors Over 70

What Are Some of the Best Life Insurance Companies for Seniors in Canada?

When researching insurance providers, it’s important for seniors to look for companies offering competitive products designed specifically for retirees.

Top insurers stand out through financial stability, a variety of 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

• Extremely strong financial ratings (A.M. Best: FSR of A+)
• Specializes in both term and permanent life insurance for seniors
• Offers competitive rates for all coverage types
• Policies available up to age 85
• Range of term lengths from 5 to 40 years
• Renowned for knowledgeable advisors and customer service

Full review: Canada Life Insurance

Sun Life

• Offers both term and permanent insurance for seniors
• Policy eligibility up to 85 years old
• Competitive pricing on 10-year term life plans
• Also has products for seniors with health issues
• Term insurance offerings from 10 to 30 years
• Conversion options on term life plans
• Fast and easy e-Application process

Full review: Sun Life Insurance Canada

Industrial Alliance (iA)

• Customizable term life insurance terms from 10 to 40 years
• Affordable rates and policy features aimed at seniors
• Accessible application process with eSignatures available
• Can get term insurance up until age 75
• Also offers permanent life insurance products
• Fast approvals with no medical exam for smaller policies
• Strong reputation and over 120 years in business

Full review: Industrial Alliance Life Insurance

Canada Protection Plan (CPP)

• Specializes in no medical exam life insurance
• Simplified issue plans available with easy enrollment
• Ideal for seniors unable to qualify for traditional coverage
• Offers guaranteed issue policies with no health questions
• Quick application approvals within days
• Strong reputation servicing challenged cases

Full review: Canada Protection Plan

Manulife

• Competitive pricing across a wide range of products
• Vitality program rewards healthy habits with premium savings
• Digital tools simplify application and account management
• Offers guaranteed issue life insurance up to age 75
• Term life insurance available up to $1 million in coverage
• Choice of 10 or 20-year renewable term life insurance
• Fast ePolicy delivery

Full review: Manulife Life Insurance Canada

Empire Life

• Specializes in both term and permanent life insurance
• 10-year term life insurance available up to age 75
• Conversion options on term life plans for seniors
• Participating whole life insurance products available
• Competitive pricing for all types of senior coverage
• Fast and easy fully digital application process
• Policies available with an option for joint last-to-die

Full review: Empire Life Insurance

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 Before Purchasing a Policy?

Seniors have a few options to get personalized quotes for life insurance prior to 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 tailored specifically to your situation as an individual.

Full review: How to Find the Best Life Insurance Broker in Canada

Apply Directly with an Insurer

You can apply directly through a life insurance company’s website or over the phone. The insurer will request your full 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 Apply For and 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

Choose the insurer and policy type that best fits your budget and needs based on the quotes and your research.

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 will need to complete a medical exam and potentially 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 premiums monthly, quarterly or annually 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.

Conclusion: Securing Coverage for Peace of Mind as a Senior

Life insurance remains a fundamental element of a holistic financial plan, even into your retirement years. Taking the time to educate yourself on the available options and seek expert guidance gives seniors and families peace of mind.

The optimal solution depends entirely on your health, budget, and individual circumstances. Working with an experienced advisor simplifies the complex process of researching plans, getting accurate quotes, and purchasing a policy from a reputable provider.

While pre-existing conditions, age, and other factors limit possibilities compared to younger applicants, viable life insurance solutions exist for most seniors.

In your 60s and 70s is an ideal time to secure your preferred term or permanent policy at excellent rates. By acting in a timely manner and leveraging insurers catering to retirees, you can find an affordable plan that meets coverage needs and keeps premiums reasonable long into your 80s and 90s.

Protecting your legacy, loved ones’ financial future, and funeral wishes begins with education and partnering with specialists who understand the needs of your demographic. Contact Lifebuzz to take control over this important element of your retirement planning for reassurance and stability.

Frequently Asked Questions About Life Insurance for Canadian Seniors