Life insurance in Canada: An overview of market trends and costs

The purpose behind life insurance isn’t pleasant to think about, but it can help make a devastating time a little less stressful for the people you love. 

For many Canadians, life insurance is one of the most basic elements of responsible financial planning. While purchasing a life policy is especially important for people with children or other dependents, it’s also smart for anyone focused on building a solid financial foundation for the future.

It’s no secret that the cost of living in Canada has skyrocketed in recent years. With everything from food and housing to insurance premiums on the rise, it’s more important than ever to understand what you’re buying, how much coverage you need, and how to find the right policy at a price that makes sense. 

This article breaks down life insurance in Canada, how Canadians buy policies, and why coverage still matters, even as costs continue to rise.

What does life insurance cover, and why does it matter?

It’s a tough time to make big financial decisions. With high interest rates, continued inflation, and global tariffs creating uncertainty, many Canadians are choosing to play it safe by cutting back on spending, delaying investments, and holding off on major commitments. Life insurance might feel like one more thing to put on the back burner.

But now is the most essential time to ensure you’re protected.

If you have a mortgage, personal debt, or a family that depends on your income, life insurance can offer financial stability when it matters. A death benefit pays a lump sum to your beneficiary that they can use to cover living expenses, funeral costs and more. It’s one of the few tools that can instantly create a safety net for the people you love, helping them cover bills, maintain their home, or move forward after an unexpected loss.

According to LIMRA, new individual life insurance premiums in Canada reached a record $2.04 billion in 2024, an 8% increase over the previous year. That jump reflects both growing demand and rising premiums, meaning people are buying more coverage and paying more for it.

And that trend is likely to continue. The longer you wait, the more expensive coverage could become, especially with inflation, rising interest rates and health changes as you age.

The Canadian life insurance market

Canada’s life insurance industry covers more than half of the country’s 40-million+ population. To understand why life insurance is such a key part of financial planning in Canada, it helps to look at these key statistics:

Understanding how Canadians approach life insurance can help you make informed decisions about your own coverage. With rising premiums, spending your dollars strategically will help you have the most significant impact on your family’s financial future.

Type of life insurance policies

Most Canadians choose between three main types of coverage, each with its own pros and cons. Remember, there’s no one-size-fits-all option. The right policy depends on your budget, your long-term goals, and who you're trying to protect. 

Term life insurance

Term life insurance is the most affordable and straightforward option. It covers you for a set period – usually 10, 20, or 30 years – and pays a benefit if you pass away during that time. It’s ideal for temporary needs like a mortgage or raising kids.

Whole life insurance

Whole life insurance is a type of permanent coverage that lasts your entire life. Premiums are fixed, the death benefit is guaranteed, and the policy builds cash value at a steady rate over time. Some policies also pay dividends.

Universal life insurance

Also, permanent, universal life insurance policies offer more flexibility. You can adjust your premiums and death benefit as your needs change, and the cash value grows based on investment performance. You manage the investment side yourself, so it requires more attention.

The main differences between whole vs universal life insurance (both permanent forms of coverage) comes down to control. Whole life is fixed and predictable, while universal life offers flexibility but demands more involvement.

How can you find affordable life insurance coverage in Canada?

You can take steps to minimize your premiums. Here are tips: 

Think about how much coverage you need

The first step to finding an affordable life insurance policy in Canada is determining how much coverage you need to protect your loved ones. Start by adding up your debts, income replacement needs, and future expenses (like education for your kids). A good rule of thumb is 10 times your annual income, but you can also use a life insurance calculator to get a more accurate idea.

Choose the right type of policy

Term life is usually the most affordable, especially if you’re under 40 and healthy. It gives you solid coverage at a lower price. Whole and universal life insurance policies cost more, but they last forever and have a savings component. 

If you already have group coverage through work, consider adding a personal policy so you're not left unprotected if you change jobs.

Also read: Term vs. whole life insurance: which one is right for you?

Start small with a 10-year policy

A short-term policy can be a smart entry point into the Canadian life insurance market. Ten-year term policies are affordable, as low as $10/month for $100,000 coverage, and can be renewed or converted into a long-term policy when ready. (The quote sample is based on a 40-year-old non-smoking male in Toronto, Ontario.) 

An added benefit is that if you choose to renew your coverage, you will not be required to complete a medical exam, which is ideal for older individuals who will face higher premiums. 

Starting with a short-term policy keeps you protected without locking you into expensive long-term rates–a great option when waiting for the economy (or your budget) to stabilize. 

Compare quotes before buying

Prices for life insurance vary between insurers, so comparing quotes will help you avoid overpaying and find the lowest rate with the best coverage for your needs. Use a life insurance quotes comparison tool like Ratehub.ca to shop the market and find the best life insurance policy in Canada based on your needs, health status, and budget. Research may save you thousands of dollars in premiums over the life of your policy.

The bottom line

Life insurance isn’t the most pleasant thing to think about, but it’s one of the smartest financial moves you can make. In a world where costs are climbing and the future feels unpredictable, having the right coverage in place can offer real peace of mind. 

Whether you're just starting your career, raising a family, or thinking about long-term goals, now’s a great time to explore your options. With the right policy, you can feel confident knowing your loved ones will be looked after if something happens to you, without spending a fortune. 

Also read:

• Do you need life insurance under 35?
• The top benefits of life insurance for Canadians
• How does age affect life insurance rates?