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Canadians often buy life insurance from a bank if they already have accounts with one of the top providers like BMO, RBC or TD.
Banks may upsell/oversell you on life insurance when you buy another product (i.e. mortgage), because their insurance agents are commissioned.
Bank-owned life insurance is sometimes also called corporate life insurance and business-owned life insurance.
Differences Between COLI vs BOLI
You may have heard the acronyms, BOLI and COLI being thrown around recently, leading you to wonder, when did you get so behind on the newest slang words?
Don't worry though, these trendy acronyms are actually stand for Corporate-Owned Life Insurance (COLI) and Bank-Owned Life Insurance (BOLI). Most banks do offer life insurance policies for their customers. Before you seal the deal with your bank, it is important to understand what you are signing up for when purchasing a bank-owned life insurance policy.
Luckily, you're in the right place. We'll make it simple so you can see which one suits your business best.
What is bank-owned life insurance (BOLI)?
Bank-owned life insurance (BOLI) has two meanings: a policy banks buy to insure an employee or a personal life insurance policy bought from a bank.
BOLI that banks buy is used to offset employee compensation and benefits costs, like health and life insurance and pension plans.
BOLI that a person buys from a bank to provide a tax-free death benefit (payout) to a person's family if they pass.
What is corporate life insurance (COLI)?
Corporate life insurance (COLI) is life insurance purchased by a bank or a corporation.
COLI is used for insurance on key employees at the corporation, like a boss or a founder. Just like regular life insurance, it's a financial safety net, but in this case, it's for the company instead of a family.
COLI is also called corporate-owned life insurance and business-owned life insurance.
What's the best bank-owned life insurance in Canada?
The best bank-owned life insurance in Canada is RBC if you're looking at affordability. But that's just one consideration; the best option depends on your specific needs.
For starters, here are rates for term life insurance from bank-owned insurance compared to PolicyMe.
Here's a look at the top bank-owned life insurance companies with quotes (for a 34-year-old non-smoking man, coverage for $500,000 over 20 years):
BMO life insurance: best for stability
Takeaway: BMO has a wide range of life insurance policies, which is good for customers that want options. But compared to other providers, there are more medical requirements at the time of application.
More info about BMO life insurance
Sample quotes
$32.40 per month for term life insurance
$283.16 per month for universal life insurance
Expert opinion on BMO life insurance
“BMO is a reputable, established brand. But the caveat here is that they may not put a particular product focus on insurance, so you may not get specialized advice.”
Canada Life insurance: best for participating policies
Takeaway: Canada Life has the largest participating fund in Canada, sitting at $49B (compared to Sun Life's $16B and Manulife's $13B.) This makes them a viable choice for participating permanent life insurance.
More info about Canada Life insurance
Sample quotes
$32.90 per month for term life insurance
Quotes for participating are not available without an advisor call.
Expert opinion on Canada Life insurance
“Because of the sheer size of Canada Life as a company, you may feel like you're just a number as a customer. You may not feel like your service is personalized.”
— Philippe Charbonneau, Licensed Insurance Advisor
Takeaway: Desjardins has a variety of life insurance products you'd expect most insurance companies to have, including term and permanent life insurance options.
More info about Desjardins life insurance
Sample quotes
$31.50 per month for term life insurance
Expert opinion on Desjardins life insurance
“Desjardins has a dedicated insurance division. In comparison, their insurance products are better developed and advisors are better trained.”
Manulife life insurance: best for combined insurance
Takeaway: Manulife has a host of insurance products: term life insurance, permanent life insurance, universal life insurance, etc. They also have the option to combine insurance policies.
More info about Manulife life insurance
Sample quotes
$32.62 per month for term life insurance
$195.75 per month for life, critical illness and disability insurance
Expert opinion on Manulife life insurance
“Synergy is certainly an interesting product, but the payout is comboined. So that means if you use your critical illness or disability coverage, you may have nothing left to provide your family as a death benefit.”
— Philippe Charbonneau, Licensed Insurance Advisor
Takeaway: RBC is the highest revenue bank in Canada. Their term life insurance options are quite wide-ranging, with rates that can be pretty competitive.
More info about RBC life insurance
Sample quotes
$31.23 per month for term life insurance
Expert opinion on RBC life insurance
“RBC's term policies are renewable and convertible. As a company, they focus on the young professional crowd, so they keep prices relatively competitive.”
— Philippe Charbonneau, Licensed Insurance Advisor
Scotiabank: only available to Scotiabank customers
Takeaway: Scotiabank life insurance is only sold to existing banking customers. They generally have less expertise in the insurance space.
More info about Scotiabank life insurance
Sample quotes
$31.50 per month for term life insurance
Expert opinion on Scotiabank life insurance
“They have a full department to upsell insurance to existing customers. There's not a lot of focus on customer education on what their policy actually entails.”
— Javade Williams, Licensed Life Insurance Advisor
Best non-BOLI Alternative: PolicyMe
Takeaway: PolicyMe is a Canadian insurtech company that offers affordable term life insurance, with a no-brainer online application process. Here's why you might consider PolicyMe over a bank:
Affordable: Premiums are between 5 to 20 per cent cheaper than other insurance solutions on the market in Canada.
Fast and simple: Apply online in 20 minutes or less. We've streamlined the risk assessment process so you get the same quality coverage, just faster!
Honest advice: Our experienced insurance advisors can give you personalized advice via phone or email, without pushy upselling.
Responsive: Get an email response in one business day (versus three-plus days for a big bank). And an advisor is often available to take calls immediately.
Backed by giants: PolicyMe is backed by federally-regulated insurance giant Canadian Premier.
Canadian bank-owned life insurance: pros & cons
Buying life insurance through a bank may not be the best option for everyone. Need some pointers? Here are some examples of what an advisor can help with:
Getting honest advice so you aren't over- or under-insured
Saving money by getting only the coverage you need, nothing more
Learning how to apply and what to expect during the process
Understanding the 101 of life insurance (eg. choosing beneficiaries, term vs. perm, making a claim)
The bottom line? Our advisors read the fine print so you don't have to.
How do you buy life insurance through a bank?
There are two main ways to buy life insurance from a bank in Canada — either from the insurance division of the bank or an independent insurance broker.
How to get the best life insurance from a bank in Canada
Let's get into some tips to get the best banked-owned life insurance Canada has to offer.
Financial health: It's important to choose a financially stable bank for your life insurance policy. For the most part, major banks are in good standing.
Underwriting: When applying, insurance providers will ask you questions to determine your "risk" level, which impacts your premiums. Some providers have more complex processes than others.
Application and policy delivery: To speed up approval, choose a bank that lets you apply and get your documents online. This way, you won't be at the mercy of snail mail or need to physically go into the bank.
Price: Don't assume that a lower price means the bank is untrustworthy or shady. It may just be pricing policies more competitively to attract customers.
FAQ: Canadian bank-owned life insurance (BOLI)
Where can I purchase life insurance?
You can purchase life insurance policies from a few key sources in Canada, and not just your bank! These include financial institutions such as insurance companies, insurtech companies, brokers and banks.
Insurance companies are a popular place, offering a wide range of policies, including term, universal and permanent life insurance. Banks also offer life insurance policies, but their selection is limited and they may not be able to give you the personalized attention you need. Ultimately, the best place to buy life insurance depends on your needs and budget.
What is business-owned life insurance?
Business-owned life insurance is a policy that a company takes out on the life of an owner, key employee, or partner. The business is the beneficiary, meaning if the insured person passes away, the company receives the payout. This money can be used to cover losses, settle debts, or even buy out the deceased's shares in the company. It's a smart way for Canadian businesses to protect themselves from unexpected disruptions and financial strain, especially when key individuals are critical to the company’s success.
In Canada, business-owned life insurance can also be a tax-efficient way to manage company finances. Premiums are typically paid with after-tax dollars, but the death benefit is usually tax-free for the business. This type of insurance isn't just for big corporations; even small and medium-sized businesses can benefit from the financial security it provides. It’s a practical tool that helps ensure your business can weather the unexpected and continue to thrive, no matter what happens.
Want to learn more about other life insurance options? Here are more reviews of Canadian life insurance companies:
Background research and fact-checking by Jordan Rodrigues, licensed life insurance specialist at PolicyPlan.ca have been pulled from a subject matter expert interview conducted in 2023. All reviews were fact-checked and updated with new information.
Term Life Insurance Quote Online | TD Insurance. (n.d.). https://www.tdinsurance.com/products-services/life-insurance/quote/en#!/
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