There are currently 77 life insurance companies operating in Canada, which range from subsidiaries of major banks to small, independent firms. The life insurance industry in Canada is highly competitive, with companies offering a wide range of products and services. There are a number of different factors that consumers should consider when choosing a life insurance company, including cost, financial stability, customer service, and the types of products and coverages offered.
To help you find the best life insurance in Canada, we'll compare the biggest and most popular life insurance companies, take a look at sample quotes and rates, and review their offerings. Then, we'll give you a list of our top life insurance companies in Canada for 2023.
Most people choose to purchase life insurance for the peace of mind that comes with knowing their loved ones will be taken care of financially if something happens to them. Life insurance payouts can help pay for final expenses, cover debts and mortgages, and more. Some people also use life insurance as a way to save money for their families by using it as an investment tool.
When you buy an insurance policy, you're considered to be a policyholder. With life insurance, you're paying a certain amount of money for the insurance company to pay you a certain amount of money if you pass away. The amount of money that you pay is called your "premium", while the amount of money that the insurance company will pay you is called the "death benefit". Insurance premiums are paid monthly, quarterly, or yearly. The death benefit is paid to your beneficiaries, which are people that you'll specify, and it’s tax-free in Canada.
When it comes to life insurance, you'll need to know what to look for in order to compare life insurance companies. Here are some key factors to keep in mind:
The average cost of life insurance in Canada is $96.80 per month. That’s based on statistics by the Canadian Life and Health Insurance Association (CLHIA). In 2021, there were 22 million Canadians covered by life insurance, with $25.556 billion in life insurance premiums paid. That works out to $1,161.63 in life insurance premiums per insured person, or $96.80 per month.
However, the cost of your life insurance can vary dramatically based on your age, location, and whether you are a smoker. Being a smoker can double or even triple your life insurance premiums!
The figure below compares the cost of life insurance between Canada’s major life insurance companies. It's based on sample quotes collected for someone looking for $500,000 coverage for a 10-year term, with monthly payments.
|Age - Gender||Manulife||Sun Life||RBC||TD||Co-operators||BMO||CIBC||Canada Protection Plan|
|20 - Male||Smoker||$44.28||$58.12||$47.52||$51.00||$44.10||$43.20||$39.32||$44.55|
|Company||Age - Gender||Smoker||Non-Smoker|
|Canada Protection Plan||20-Male||44.55||32.4|
Note: Sample quotes are monthly premiums for a 20-year old smoking/non-smoking male for $500,000 coverage with a 10-year term.
Manulife CoverMe Term life insurance only offers terms of 10 years, but it can be renewed up until you are 85-years old without having to answer medical questions each time you renew. Your rate is fixed for the duration of your term, and Manulife offers a 30-day money-back guarantee. Coverage is from $100,000 to $1 million.
Manulife also offers other types of life insurance. Their CoverMe Guaranteed Issue life insurance has guaranteed acceptance, but only offers coverage options from $5,000 to a maximum of $25,000.
Manulife CoverMe Easy Issue is also a type of term insurance, with the difference being that you're only asked two medical questions. However, the coverage is also lower, up to a maximum of $75,000.
FollowMe life insurance gives guaranteed acceptance if you apply within 60 days of when your employer's insurance plan ends, such as when you're leaving your job. There's no medical questions required, with coverage options up to a maximum of $200,000.
Manulife's permanent life insurance options include Manulife Par, Performax Gold, InnoVision, and Manulife UL. InnoVision and Manulife UL are both geared towards investing. Performax Gold guarantees your death benefit, cash value, and lets you pay off your policy in 15 years. Manulife Par lets you choose your premium payments, from 10 years or 20 years, and may pay out annual dividends.
Canada Life is the largest insurance company in Canada, and offers a wide variety of insurance options, such as health and dental insurance, life insurance, disability insurance, and workplace benefits. Canada Life’s term life insurance has flexible term options ranging from 5 years to as long as 50 years.
For permanent life insurance, Canada Life offers two types: participating life insurance and universal insurance. Both types have a cash value component. With participating life insurance, your premiums stay the same with a guaranteed payout. With universal insurance, you get to choose how your money is invested.
To access your money with Canada Life, you can either make withdrawals or borrow from your policy. In both cases, the minimum withdrawal or policy loan is $500. You'll need to pay income tax on your withdrawals.
Sun Life term life insurance lets you choose from terms of 10, 20, or 30 years. Sun Life has four types of term life insurance products: Go Simplified Term, SunSpectrum Term, Go Term, and SunTerm. The difference between them is their ease of qualifying and coverage options, with SunTerm and SunSpectrum Term offering coverage up to $25 million, Go Term up to $1 million, and Go Simplited Term up to $100,000. In all cases, you'll need to apply through an insurance advisor in order to apply for coverage up to $25 million. Otherwise, applying online means you can only apply for up to $1 million in coverage.
Sun Life's permanent life insurance includes whole life insurance, participating life insurance, and universal life insurance. Applying online only allows coverage up to $25,000, while an advisor can go up to $25 million.
Desjardin’s suite of insurance products include home insurance, auto insurance, travel insurance, health insurance, and loan insurance, such as mortgage protection insurance. Desjardins offers terms of 10, 20, and 30 years for their term life insurance policies. You can also convert your term insurance into a permanent insurance plan, or switch to a longer term.
For permanent life insurance, you can personalize your coverage to pay premiums for either 10, 15, or 20 years. You can also choose a death benefit from $1,000 to as high as $10 million. Their permanent life insurance also offers some coverage for critical illness and long-term care, in the form of a cash advance. Desjardins also offers participating life insurance and universal life insurance.
iA (Industrial Alliance) offers two types of term life insurance: Access Life and Pick-A-Term. With Access Life, there's no medical exam, but coverage is only up to $500,000. With a medical exam, Pick-A-Term allows for coverage up to $10 million. In both cases, you can convert your term life insurance into permanent life insurance before you turn 71 years of age. Access Life has terms of 15, 20, or 25 years. Pick-A-Term has terms of 10 to 40 years.
iA Financial similarly offers a variety of permanent life insurance products: Whole Life, Access Life, Child Life & Health Dua, and Life and Serenity 65. Child Life & Health Duo is unique in that it makes sure that your premiums are fully paid off when your child turns 30 years of age. The Life and Serenity 65 plan pays out a monthly annuity if you lose autonomy.
Coverage for iA's Whole Life insurance is up to $10 million, or up to $500,000 with no medical exam with iA's Access Life plan.
A unique life insurance product offered by Co-operators is their one-year term life insurance, called Term Life 1. It offers $50,000 to $475,000 in coverage for a one-year term. That's much shorter than the 5 to 10 year minimum terms of other insurance companies. However, it's only available for those aged 18 to 49.
Co-operators also has more standard offerings, such as their Versatile Term insurance. It allows terms between 10, 15, 20, 25, or 30 years. You can also convert to a permanent life insurance policy before you turn 70 without having to undergo a medical assessment.
Unique permanent life insurance policies include Infinity Term, which is a permanent life insurance policy without a savings component. This reduces your premiums if you don't need to have a cash value in your insurance plan, such as if you want to invest using your RRSP or TFSA instead. Infinity Term is structured so that premiums are fully paid for by the time you turn 110 years old. Co-operators’ Responsibility insurance requires no medical exam, but only allows up to $25,000 in coverage. It's mostly used to cover final expenses, such as funeral costs or debts.
Canada Protection Plan offers life insurance, travel insurance, critical illness insurance, and health & dental insurance. Unique to their life insurance offerings are their guaranteed acceptance and deferred life insurance policies. These have guaranteed acceptance even if you have a serious pre-existing condition. Coverage is limited to $50,000 for their guaranteed acceptance policy. Their Simplified and Preferred life insurance policies are whole life and offer coverage up to $1 million for Preferred and $500,000 for Simplified.
Insurance companies usually collect more in premiums than the benefits that they pay out. The difference between what an insurance company pays out in benefits and the premiums collected is called the "float". Many insurance companies invest the money that they have collected in premiums but have not yet paid out in claims. The float can also be a source of profit for insurance companies. This profit is known as the "underwriting profit", which excludes investment income from the float.
The float can also be used as a measure of an insurance company's financial strength. A strong insurance company will have a large float, which gives them more flexibility to pay claims and weather economic downturns.
For 2021, Canada Life had the highest payout ratio out of Canada’s five major insurance companies. Canada Life collected $50.6 billion in premiums and paid out $43.4 billion in benefits and claims, giving a payout ratio of 85.8%. This means that for every dollar collected in premiums, Canada Life paid out $0.86 in benefits and claims.
Sun Life had the second highest payout ratio, at 73.3%. Manulife was next, with a ratio of 70.2%. Desjardins had a significantly lower ratio of 59.5%, while iA Financial (Industrial Alliance) had the lowest ratio of all five companies, at 54.2%.
There are two main types of life insurance: term life insurance and whole life insurance. Term life insurance is temporary for a set period of time and only pays out a death benefit if you die within the term of the policy. Term lengths are for a certain number of years, such as 10 years or 20 years. Whole life insurance is also called permanent life insurance as it pays out a death benefit no matter when you die. There’s an alternative to whole life insurance, called universal life insurance, that adds in investment options.
Term life insurance is the most popular type of life insurance in Canada. Only 12% have a whole life insurance policy, while 75% have a term life insurance policy.
|Type of Life Insurance||Market Share|
|Term Life Insurance||75%|
|Whole Life Insurance||12%|
|Universal Life Insurance||13%|
Term life insurance is the simplest and most affordable type of life insurance. It provides protection for a specific period of time, known as the term, after which coverage expires. If you die during the term, the death benefit is paid to your beneficiaries. If you do not die during the term, there is no death benefit paid out.
The cost of term life insurance is lower than whole life insurance because term lengths are limited. This means that you’ll need to renew your term life insurance policy once the term is over. Since you’ll be older, your renewed term life insurance will have a higher premium. In other words, term life insurance usually has a lower premium that gradually increases over time as you renew.
Term life insurance is best suited for people who need coverage for a specific period of time, such as people with young children or people who are in their working years and need coverage only until they retire.
Whole life insurance, also known as permanent life insurance, has a higher premium but doesn't have a set term length. This means that your coverage will last as long as you live, as long as you continue to pay your premiums. It also means that your insurance premium is fixed and won't increase, which means that you know for sure how much you will need to pay for the rest of your life.
One of the biggest advantages of whole life insurance is that it is permanent coverage. Some also build up cash value that you can use in the future. However, whole life insurance also has some drawbacks that you should be aware of.
The biggest disadvantage is that whole life insurance policies are typically much more expensive than term life insurance policies. They might also have an investment component that forces you to save money, but can be inefficient when compared to other investment options, such as an RRSP or TFSA.
Is whole life insurance worth it? The answer depends on your individual circumstances. If you need permanent coverage and are comfortable with the higher costs, then whole life insurance may be a good choice for you. However, if you are looking for cheaper coverage and you only need it to last for a specific period of time, then term life insurance may be a better option.
An option for buying life insurance is to purchase it directly from the insurer. Insurance companies will have insurance advisors to help you select and customize a life insurance policy. You can also buy life insurance through an insurance broker.
If you are a member of a group, such as a professional association, a trade union, or alumni, you may be able to get group life insurance rates. These rates may be lower than individual rates. You can also buy life insurance through your employer. Some employers offer group life insurance as a benefit to their employees.
|Type of Life Insurance||Market Share|
In Canada, most Canadians purchase individual life insurance. In fact, the Canadian Life and Health Insurance Association (CLHIA) estimates that over 80% of life insurance in Canada is sold to individuals through an insurance agent or advisor. Only 17% of life insurance policies in Canada are group plans, such as through an employer. That's a lot different when compared to health insurance, where 90% of health insurance in Canada is through a group plan.
Did you know that the average Canadian household has $458,000 in life insurance protection? However, the average life insurance coverage varies by province, with Alberta being the most insured province ($562,000 per household) and Nova Scotia being the least insured province ($346,000 per province). This roughly aligns with the median age of each province. The lower the median age of the province, the higher the average insurance coverage amount.
|Province||Average Household Life Insurance Coverage|
|Prince Edward Island||$392,000|
|Newfoundland and Labrador||$355,000|
The cost of life insurance goes up the older you are. Here's a look at how age affects life insurance premiums.
Note: Rates shown are sample quotes by Manulife for non-smoking males for a 10-year term.
The cost of life insurance is usually higher for males compared to females. For example, a 20-year old male has a sample quote of $25.81 per month, while a 20-year old female has a sample quote of $17.12 per month. The figure below compares the cost of life insurance by gender.
|Age||Smoking Status||Monthly Premium|
Note: Rates shown are sample quotes by Manulife for non-smoking users for a 10-year term.
Smoking greatly increases the cost of life insurance. Smoking is defined by smoking in a 12-month period, which can include cigarettes, cigars, pipes or use of tobacco in any other form. This may also include using nicotine products. If you currently smoke or have smoked in the past year, you're considered a smoker for life insurance purposes. How much more do smokers pay for life insurance? Smoking can double or even triple your life insurance rates. The figure below compares life insurance quotes for smokers vs. non-smokers in Canada.
|Age||Smoking Status||Monthly Premium|
Note: Rates shown are sample quotes by Manulife for males for a 10-year term.
Based on data by the CLHIA, Ontario has the most insurers operating in the province. There are 59 insurance companies operating in Ontario, with 40 insurance companies headquartered in Ontario. In comparison, 55 insurance companies operate in BC, with one company headquartered there. Quebec has 10 insurance companies headquartered in the province, with 56 companies operating there.
|Province||# of Insurers Operating in the Province|
|Prince Edward Island||52|
|Newfoundland and Labrador||50|