Life insurance
A tax-free lump sum for the people who depend on you if you die.
- Paid tax-free
- to the people you name
- For a set term, or for life
- term and permanent
- Sized to what your family would need
- not a rule of thumb
What it is
How life insurance works.
You choose how much coverage to buy and who receives it. If you die while the policy is in force, the insurer pays that amount to the people you named, tax-free and usually within weeks.
They can use it however they need: to pay off the mortgage, replace your income while the children are growing up, or pay the taxes your estate owes.
When people usually look at it
- Someone relies on your incomeA partner, or children at home. Term life insurance
- You have a mortgage or other debtsSo they don’t pass to your family. Term life insurance
- Your estate will owe tax, or you want to leave a legacyCoverage that lasts for life. Permanent life insurance
- You own a businessTo fund a buy-out or protect the company. Business-owned life insurance
Term and permanent life insurance
Which years need coverage?
Most families need the most life insurance while there’s a mortgage and children at home. Term insurance covers a set number of years. Permanent insurance lasts your whole life.
Illustration only. Ages are examples. The right mix of term and permanent insurance depends on your situation.
Types of life insurance
For a while, or for life.
There are two main types. The difference is how long the coverage lasts.
For needs that end
Term life insurance
Coverage for a set period, such as 10, 20 or 30 years, at a lower cost than permanent coverage.
- The premium stays level for the term
- No cash value
- Renew or convert when the term ends
For needs that last
Permanent life insurance
Coverage for life, for needs such as taxes at death, final expenses or a legacy.
- Costs more than term to start
- Some types build cash value
- Three kinds: participating whole life, universal life and term to 100
Many people combine the two: term for the years of heaviest need, and a smaller permanent policy for what lasts.
How much coverage
What your family would need.
Add up what your family would need if you died, then subtract what’s already there. The difference is the coverage to aim for.
See a worked example on the term life insurance page. We’ll work through your own numbers with you.
Cost
What affects the price.
Age and sex
Rates rise with age, and insurers price men and women differently.
Smoking
Smokers pay considerably more.
Health and family history
Your own history, and sometimes your family’s, affects the price.
Coverage amount
The larger the benefit, the higher the premium.
Type of plan or term length
Permanent coverage costs more than term, and a longer term costs more than a shorter one.
Occupation and activities
Higher-risk jobs and pastimes can raise the price.
Engineers, geoscientists, technicians and technologists: your association gives you access to Engineers Canada Term 20 and Term to Age 85 life insurance.
Term 20Term to Age 85Business owners: life insurance can also be owned by your company, to fund a buy-out, protect against the loss of a key person or plan your estate.
Business-owned life insuranceFrequently asked questions
All questionsWhat types of life insurance are available in Canada?
There are two main types. Term life insurance covers you for a set period, such as 10, 20 or 30 years. Permanent life insurance covers you for life, and comes in three main kinds: participating whole life and universal life, which build cash value, and term to 100, which doesn’t.
How much life insurance coverage do I need?
Add up what your family would need if you died: your debts, including the mortgage, the support they’d need until your children are independent, future costs such as education, and final expenses. Then subtract what you already have, such as savings and workplace life insurance, and any income your family would still receive. The difference is the coverage to aim for. The term life insurance page works through an example.
Can I get life insurance with a pre-existing medical condition?
Often, yes. The insurer looks at the condition, how well it’s managed and how recently you’ve been treated, then offers coverage at standard rates, offers it at a higher premium, postpones a decision or declines. If you can’t get coverage that way, guaranteed issue life insurance asks no health questions, but it offers smaller amounts at a higher cost, and usually pays the full benefit for a death from illness only after a waiting period.
Related articles
All articles- Life insurance6 minute readWhole life insurance vs. term life insurance: a clear guide for CanadiansA clear and practical guide that compares term life and whole life insurance for Canadians while explaining when each option makes the most sense and how whole life can support long-term financial planning.
- Life insurance5 minute readLeveraging life insurance: turning protection into a financial strategyLeveraging a permanent life insurance policy allows you to access liquidity, enhance tax efficiency, and strengthen estate planning while keeping your coverage intact.
- Life insurance5 minute readYour complete guide to understanding the insurance application processThis comprehensive guide details each step of the insurance application process, clarifying expectations and procedures.
Related to life insurance
- Term life insurance A set amount of life insurance for a set period, at a lower cost than permanent coverage.
- Permanent life insurance Coverage for life, with options that build cash value.
- Participating life insurance Permanent coverage that can earn dividends and build cash value.
- Universal life insurance Permanent coverage with a tax-advantaged account you invest.
A question about your coverage? Ask us.
No obligation. We’ll tell you plainly what we think, including when you already have what you need.