How to Save on Life Insurance in Canada
Having a life insurance policy can help take care of your family should you no longer be around to look after them. If you decide to get insurance, there are many factors to consider that will help you save on your premiums.
Term or permanent
There are two broad types of life insurance to choose from: term or permanent. Term life insurance is for a specific amount of time (such as 5, 10 or 20 years), whereas permanent life insurance is meant to provide protection for your entire lifetime.
Premiums on term insurance can initially be much lower than permanent insurance. However, term insurance premiums increase when you renew your policy, whereas permanent insurance premiums stay the same throughout your life, therefore permanent life insurance is typically less expensive than term later in life, due to renewal costs with term life insurance. That said, each person has different needs, so it’s best to lay out a life insurance plan with a professional.
If you buy term life insurance, your premiums will be lower when you’re younger. Your premiums remain constant for the term but increase when you renew your insurance policy based on your age at that time. Essentially, if you get a permanent policy at a young age, you’ll be paying high premiums earlier in life to save on your premiums later in life.
It’s common to look around for the best deal whenever you buy groceries; the same can be said for life insurance. There are dozens of insurance providers to choose from. You’ll want to compare the prices of the different types of policies and plans to see which one is right for you, and speaking with an agent will help you make that decision.
The latest data from Statistics Canada reports that more than 18% of Canadians over the age of 12 were smokers. Unfortunately, that means they also have to pay more for health insurance.
If you’re not a smoker, your premiums will be lower. And if you do decide to kick the habit, you’ll get to pay less as well but it may take a year before you’ll be able to take advantage of lower premiums. Even if you enjoy the occasional cigar, your costs could be higher because some insurers may consider you a smoker.
Some insurance companies also offer lower premiums if you maintain a healthy lifestyle, aren’t overweight, and drink little or no alcohol.
Bundle and save
When you have phone, Internet, and cable with the same services provider, you’ll often receive a discount. If you have auto and home insurance with the same financial services company as your life insurance, you may also be eligible for a discount—around 10% to 15% off, depending on the provider.
If you’re working, you likely have life insurance through work and your employer will often cover part of the premium. This can be a lot cheaper than buying insurance on your own because your organization affords you a discount. That said, if you’re young and healthy, a term life insurance plan could be cheaper.
Also, group insurance might not be enough for your needs. Also, if you’ve downsized or move to another company, there may be a period of time where you have no insurance, as group insurance doesn’t go with you if you leave your job.
There are often perks of being part of a professional association or attending college and university, such as getting preferred rates on life insurance, or being included in a group life insurance plan for that organization. Expect a discount of about 10% off.
- Did you know?
- 73% of Canadians say they can’t afford life insurance.1
- Consider this…
- $84/month for coffee2 vs. $24.08/month for $250,000 life insurance.3
- Life Insurance is affordable!
References and Notes
- LIMRA: Canadian Life Insurance Ownership Study, 2013.
- Initial monthly cost for a healthy, 40 year old female, non-smoker purchasing $250,000 of Empire Life Solution 20 life insurance as of December 7, 2016. Price increase every 20 years.