Matt Hands, VP, Insurance and MoneySense
Life insurance is one of the most important financial products you will buy. It's essentially a guarantee that your family and dependents will be taken care of if you were to die. But how much is life insurance? Unfortunately, it’s not an easy question to answer, because life insurance, a lot like life, is complicated! We’ve tried to make it simple.
The approximate cost of Canadian life insurance:
Life insurance premiums are primarily based on your age, health, and your life insurance product. Monthly premiums for a 10-year term policy for a healthy 30-year-old can cost around $13 per $100,000 of coverage. However, premiums for a 60-year-old smoker can be over $100 each month for $100,000 coverage. Get a life insurance quote to find out how much it would cost you.
This is a quick answer to a much bigger question. Read on to better understand how life insurance premiums are calculated, and for some more specific prices you could expect to pay.
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Life insurance transfers your financial risk of death to a life insurance company. In return for your premiums, the company promises a payout to your family to cover certain expenses and needs. In order for that arrangement to make financial sense to your insurer, it charges riskier customers higher premiums. Anything that makes you more likely to die increases your personal risk factor, which will increase the price of your premiums.
Your age is the single most important factor in how expensive your life insurance premiums will be. Older people have a lower life expectancy than younger people, so are more likely to die over any term - some life insurance products are priced purely on age. Older people, no matter how good their health, will always pay more than a younger person, all else being equal.
Your health is another major factor in the cost of life insurance, especially as you get older. If you are in poor health, or at an elevated risk of poor health, your premiums will be higher. Common risk factors include your smoking status, body weight, past medical conditions, and family history. When you’re young, most life insurance products will only require you to answer a health questionnaire before getting insured. These questions will include common risk factors, like whether you have a pre-existing illness, a history of critical conditions (eg heart attack or stroke), or a family history of an illness like diabetes. If you are older, or are classified as high risk on your questionnaire, you may be required to submit a letter from your doctor and/or sit a medical exam. Once your life insurance company has determined your risk rating, they will use that to determine your life insurance premium.
Of any health risk factor, Smoking is a particularly important one for your life insurance premium. Being a smoker will make a significant increase to your premiums, often causing them to double in price. Every life insurance policy asks your smoking status, so you won’t be able to escape it... unless you quit! 12 months without smoking will allow you to register as a non-smoker, assuming you stay that way. Vaping and smoking cannabis both generally count as smoking too, although this will depend on the insurer.
Gender plays a small but significant factor in determining your life insurance premiums. Women have a longer life expectancy than men, so present a lower level of risk to life insurance companies. As a result, life insurance premiums for women are 10-25% lower than those for men.
Occupation and hobbies
How you spend your time also impacts your life insurance premiums. People with dangerous occupations like drivers, roofers, manual labourers, miners etc, are more likely to die within a given term than people working in low risk jobs, like in an office or a school. As such, high risk workers will be charged a higher life insurance premium. This also applies to people who engage in high risk hobbies, like extreme sports.
Now you have an idea of what impacts the price of life insurance premiums, here are some examples of the premiums you might pay. Please keep in mind that every life insurance company is different, every person’s risk factor is different, and the ‘generic’ price of insurance can fluctuate day to day, based on the interest rate and expected market returns.
As a result, the numbers below will not be accurate for you. To get a true quote, you’ll need to compare life insurance quotes and see what’s available to you.
For a typical 10 year term life insurance plan with a $100,000 death benefit, below is what a male non-smoker living in Ontario might pay, rounded up to the nearest dollar. Remember that under a 10 year term life insurance policy, these rates are guaranteed not to change for 10 years.
- Age 30: $13 monthly or $148 a year
- Age 40: $16 monthly or $183 a year
- Age 50: $28 monthly or $329 a year
- Age 60: $65 monthly or $771 a year
- Age 69: $172 monthly or $2060 a year
Here’s another set of premiums based on the same person, but with a 20 year term. Because the rates are guaranteed for 20 years, they are more expensive than a 10 year term. This is to accommodate the increased risk of insuring someone as they get older.
- Age 30: $15 monthly or $172 a year
- Age 40: $21 monthly or $252 a year
- Age 50: $46 monthly or $544 a year
- Age 60: $124 monthly or $1480 a year
- Age 69: $214 monthly or $2559 a year
These numbers are for $100,000 coverage, which is a standard minimum coverage amount. For every additional $100,000, you can get a close estimate of the typical premium by multiplying the above premiums as needed.
Females will typically pay around 10-25% less than the male rate. Smokers will generally pay between 50-100% more than non-smokers. Other factors may come into play after this, but whether you are asked about them will vary between companies and products.
Get a life insurance quote.
Life insurance is complex, and getting the right quote for you requires a lot of comparison (or a bit of help). We can do both - get a free quote today to find your best rate.
Permanent policies, like whole life insurance and universal life insurance, are different beasts altogether. They are similar to term life insurance, but will cover you for your entire life. As a result, permanent insurance is far more expensive over the long term, as your policy is guaranteed to pay out at some point. However, because premiums are calculated long term, they are typically steady for life, so you’ll pay the same premium now as you will in 30 years. The trouble with permanent insurance is that there’s typically an investment component to it, either through cash accumulation or active investing, depending on the product. There are also tax benefits you can take advantage of. These, along with other complicating factors, make it virtually impossible to offer a generic quote example for permanent insurance. To properly compare the cost of permanent life insurance you’ll need to compare quotes and speak to an insurance broker or agent. There’s no risk in doing this, as you’re never obligated to buy a policy.
Ratehub.ca is not affiliated or otherwise associated with Hub International Canada.
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Matt Hands, Business Director of Insurance
With 6+ years of experience at Ratehub.ca, Matt’s focus has been on growing its newest business unit, Insurance. He is a thought leader and a valuable resource to respected publications across Canada. read full bio
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