Average Cost Of Life Insurance Canada

Average Cost Of Life Insurance Canada

Written by Priyanka Correia
Fact-checked by Caitlin Wood
Last Updated June 29, 2021

Having a life insurance policy in place can give you and your family peace of mind knowing that financial ruin can be avoided in the event of your death, especially if your family heavily relies on your income to pay the bills. 

While life insurance can provide you with financial coverage, it also costs money. Your premiums will be another bill added to the pile. Considering this, it’s helpful to understand how much you would be paying for a life insurance policy and how it can fit within your budget. 

The question is, how much does life insurance cost on average in Canada?

What Factors Affect The Cost Of Life Insurance In Canada?

Insurance providers look at a number of factors to establish the cost of a life insurance policy. Everyone will be charged their own unique price based on these factors, which inevitably paints the picture of how much of a risk a particular individual would be to cover.

Life insurance premiums come down to risk. The longer you are expected to live, the lower your premiums will likely be, and vice versa. Insurance companies are in the business to earn a profit, so any factors that increase your risk to them will translate into higher costs for you.

The following factors will have a direct impact on the cost of your life insurance policy:

  • Age. The older you are, the shorter your life expectancy will be at the time that you apply for a life insurance plan. As such, your premiums will be higher the older you are when you take out a policy.
  • Gender. Men have slightly shorter life expectancies than women, which means they pay more for life insurance.
  • Health. Your health has a direct influence on your longevity. The healthier you are when you apply for a life insurance policy, the lower your premiums will be.
  • Smoking habits. Smokers can pay as much as 3 to 4 times more than non-smokers for life insurance policies.
  • Employment. If your job is considered dangerous, your life insurance premiums may be more expensive.
  • Lifestyle/hobbies. Like your job, hobbies that are considered potentially hazardous can mean higher insurance premiums.

Average Life Insurance Coverage Per Household In Canada

In exchange for premiums paid, you’ll receive a certain amount of coverage as specified in your life insurance contract. This amount will be paid out to your beneficiaries in the form of a death benefit when you pass away. 

In Canada, the average life insurance coverage per household is currently $423,000, and the average age of policyholders is 42 years. That said, the amount of coverage per household varies based on different provinces across Canada, as you can see from the table below.

ProvinceCoverage
BC$442,000
Alberta$542,000
Saskatchewan$457,000
Manitoba$441,000
Ontario$440,000
Quebec$347,000
New Brunswick$354,000
Nova Scotia$335,000
PEI$386,000
Newfoundland$346,000

Average Cost Of Life Insurance

To give you an idea of how much life insurance can cost you, let’s take a look at what a handful of Canadian insurers charge a 42-year old non-smoking male for a 20-year term plan with $500,000 in coverage: 

CompanyPrice
Manulife$50.08
Policy Advisor$57.15
Canada Protection Plan$65.25

Cost Of Term Vs. Permanent Life Insurance

When you take out a life insurance policy, you can choose between a term or permanent plan. A term life insurance policy provides coverage for a specified period of time that you choose based on your needs, budget, and what your insurance provider offers. 

For instance, a 20-year term will provide coverage for 20 years. If you die during that time, your beneficiaries will be paid out a death benefit. Once that 2-year period expires, you will no longer be covered. However, you can choose to take out another policy or convert your policy to a permanent plan. 

Term plans are ideal for those who are on a budget but want coverage during their working years when they still have a mortgage to pay or children to support.

A permanent life insurance policy, on the other hand, provides lifelong coverage. Your plan will remain in effect no matter how long you live, as long as your premiums are up-to-date. 

As you would imagine, a permanent plan is more expensive than a term policy over the long run, simply because of the potentially longer coverage period. Having said that, premiums remain fixed for life. That means premiums won’t go up throughout the years. 

Find out what happens when you miss a life insurance payment.

How To Save Money On Life Insurance

There’s no getting around regular bill payments to keep a life insurance policy active. But that doesn’t mean you have to pay more than you should. Consider the following ways to keep the cost of life insurance down:

Lower Your Coverage Amount

The more coverage you want, the more you’re going to pay for it. A $500,000 policy, for instance, will be more expensive than a $250,000 policy.

Take Out A Term Policy

As mentioned earlier, term life insurance is cheaper than permanent insurance. 

Get Multiple Quotes

Do some comparison shopping with different insurance companies to see where the lower rates are.

Quit Smoking And Stay Healthy

Smokers pay a lot more for life insurance than non-smokers, so if you smoke, consider quitting. And while you’re at it, do what you can to keep healthy in all other aspects of your life to extend your lifespan and reduce your risk in the eyes of your insurance provider. 

Requalify Instead Of Renewing Your Policy

If you come to a point where you want to renew your life insurance policy, consider requalifying for a new policy instead. If your health has improved over the years, you may be eligible for cheaper premiums compared to when you initially took out your original policy. If that’s the case, you may qualify at lower premiums. 

Final Thoughts

Life insurance isn’t mandatory unlike other types of insurance, but it’s certainly good to have. You’ll have the comfort of knowing that your family will be financially protected in the event that you pass away earlier in life. But like any other type of insurance policy, it’s always good to shop around to find the lowest price possible.


Rating of 5/5 based on 2 votes.

Priyanka is a personal finance expert at Loans Canada. She is passionate about money management and educating Canadian consumers about how to take control of their financial lives. She has taken financial control of her life by using Mint to budget and track her expenses while growing her wealth by investing through Wealthsimple. She also believes in having an emergency fund, so she keeps a good sum of money in an easily accessible high-interest savings account. She also uses the American Express Cobalt Card to earn points on all her purchases, further fueling her savings goal. She also uses Loans Canada’s lender directory whenever she wants to compare rates from different lenders.

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