Life Insurance
Life Insurance Payout in Canada: What Is It and How Does it Work? (2023)
June 1, 2023
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5 minutes
Key takeaways
“What makes something the “best” life insurance for parents? I’d define it as the affordable option for the coverage they need," says life insurance advisor Ivana Govedarica.
"The best life insurance for young parents, single parents or anyone looking for affordable yet robust coverage is term life insurance."
Term life insurance is a great choice for parents because:
Even though it's so important for parents, 33% of parents stated they don't have life insurance. The majority of which citing costs as the main reason why. But you might be surprised to find out how budget-friendly term life insurance can actually be.
And with PolicyMe, every policy comes with comes with $10,000 of free life insurance for each of your children.
For most parents, term life insurance is better than whole life insurance. There are two key reasons for this:
1. Term life insurance allows parents to tailor their coverage; buying just enough to cover them until the kids are grown or until retirement. For many people, there’s no need to have life insurance past those milestones.
Ideally, your home will be paid off, your outstanding debts cleared, and your children will be financially independent.
So limiting your coverage to a set period of time is actually a good decision. You likely won't need life insurance your entire life.
2. A permanent life insurance policy for parents can be very expensive.
Most young families just starting out won’t want to allocate such a significant portion of their budget towards this type of life insurance — they could use that money for other things.
"But because whole life insurance policy is so expensive, you may want to consider purchasing a small permanent plan in conjunction with a larger term policy in order to minimize costs," says Govedarica.
With so many insurers out there, how can you know which one offers the best policies for you and your family?
Here’s a quick rundown of the best life insurance in Canada for parents to help you decide.
Who they are: Backed by Canadian Premier and fully underwritten (which means better rates for you), PolicyMe was founded in 2018. They offer Canadian life insurance products online, making it easy and accessible for anyone to get the coverage they need.
In November 2022, PolicyMe announced the launch of their critical illness insurance product, with up to $1 million in coverage.
What they offer: PolicyMe offers some of the lowest term life insurance premiums in the country. In addition, their licensed advisors aren’t commission based, so you can be confident you’re getting the best advice for your situation.
The convenience factor is a big plus for busy parents. PolicyMe has made it easy to get a quote in a few clicks, paired with an application you can complete in minutes.
Cost: rates start at around $23/month for a 35-year-old woman and $31/month for a man of the same age.
Perks
Drawbacks
Get affordable term coverage without cutting into the daycare budget. See how much PolicyMe coverage might cost you in just a few clicks.
Who they are: First founded in 1817, the Bank of Montreal (also known as BMO) offers a full slate of banking and insurance options for Canadians.
In November 2022, they were named the top ranked financial institution by the World Benchmarking Alliance's for "helping make progress in support of a just and sustainable economy."
What they offer: Choose from various standard life insurance options, including both term and permanent policies.
If you’re interested in purchasing a policy through BMO, you can get an estimated life insurance quote online, but you’ll have to go through one of their advisors and possibly even meet them in person.
Cost: Rates for term life insurance start at $26/month for a woman and $33/ month for a man, on average.
Perks
Drawbacks
Who they are: Canada Life is the country’s second-largest insurance company. The company recently celebrated 175 years of business, founded in 1846. They have a financial strength rating of A+ and manage over $220 million in assets.
What they offer: While Canada Life provides many of the same life insurance options as their competitors, they do have a pretty extensive list of add-ons and riders so that you can customize your policy.
Cost: Rates start at $29/month for a 35-year-old woman and $36/month for a 35-year-old man, on average. The entire process, from quote to application to approval, requires an advisor; you can’t complete it online.
Perks
Drawbacks
Who they are: Founded in 1896, Wawanesa provides investment services, employee benefits and insurance; with life insurance representing just a small slice of their business.
AM Best, a credit ranking agency, has given them a score of A for their Life/Health services. What does that mean, exactly? AM Best states: "The ratings reflect its balance sheet strength, as well as its adequate operating performance, neutral business profile and appropriate ERM."
What they offer: Wawanesa offers a range of term and permanent life insurance policies. Their term policies are renewable, convertible and available in lengths of 10, 15, 20, 25, 30 and to age 80.
Cost: Rates start at around $28.80/month for a woman and $36.66 per month for a man.
Benefits
Drawbacks
If you or your partner have serious health issues, finding affordable life insurance can be challenging. But it’s possible! Here's our recommended 4-step course of action for parents with health issues:
Yes, it’s a good idea for both parents to have life insurance. Life insurance provides financial security against a worst-case scenario: if one or both of you pass away.
While it’s generally unlikely if you’re young and healthy, if there's only one insured parent, this leaves a gap in your protection. For example, what if the uninsured partner passes?
Even if only one parent works outside the home, it’s still worth considering purchasing a policy for the stay-at-home spouse.
If they were no longer in the picture, new life expenses would crop up (and add up!). It’d likely cost a significant amount to cover the work they do around the home, like childcare, cleaning and general family management.
Applying for life insurance to protect your family is easy and convenient. Get started with our no-obligation rate calculator below!
Parents need life insurance coverage to protect their families if something happens to them. Life insurance is a critical tool for providing financial protection for their loved ones (like kids!) who depend on their income.
If you know your partner will have trouble juggling the expenses involved in raising the kids, making the mortgage payments and paying off any debts you share, then it only makes sense to have a life insurance policy in place. So is it smart for parents to get life insurance? Absolutely!
Ideally, a parent needs to buy enough life insurance to help their families maintain their current standard of living in the event they pass away. To get started, we recommend looking at your current expenses, debts and financial obligations.
Many parents will purchase enough coverage to pay off the home, handle the bills, cover funeral costs and help with post-secondary costs for their children.
You’ll also need to consider how long you want your policy term to be. For example, some families will choose coverage until the children are financially independent. Others may prefer to have coverage up until they retire.
Our life insurance calculator for Canadians can help you with the decision and give you some ballpark life insurance rates.
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