The Best and Worst Life Insurance Policies in Canada

Life insurance may not be on the top of anyone’s expenses list, but when it’s time to invest in your family’s future, you want to know you’re getting the best coverage at the best price rather than a huge monthly expense. 

Before you hand the cash to just any broker, you need to first determine how much life insurance you need. Our online tool Needs Analysis Calculator can let you know how much is just enough.

Difference in life insurance cost in Canada

It’s no secret that life insurance rates vary widely from company to company. Knowing what separates the best life insurance policies in Canada from the worst ones can save you thousands upon thousands of dollars. Many brokers only work with one or two companies. This limits your options, and each company also has different underwriting guidelines. Company A may issue a policy standard for a male who is 6’1″ and 270 pounds and otherwise in good health, whereas Company B may issue the same policy with a 50% rating. This can dramatically impact the premium. 

Here is an overview of 2018 life insurance rates for various policyholder profiles*. We use as an example a life insurance policy with $250,000 coverage.

* Please note that all the rates shown above are generated in September 2018 and based on life instant quotes and can strongly vary based on a personal profile of a policyholder. All rates shown here are directional and do not substitute a full quoting process with an insurance broker / insurance company.

 Insurance renewals and conversion features can also differ sharply between companies. Industrial Alliance plans are convertible to 65, whereas Empire Life’s plans are convertible to 75. This can be huge to a policyholder who develops a serious illness after 65 and wants to convert their coverage. The type of policy the insured can convert to is also very important. Some companies, like RBC Insurance, have a limited number of conversion options. But Industrial Alliance allows the insured to convert to over seven different policies. 

The Guaranteed Renewal feature also differs among companies. Some companies only offer one guaranteed renewal, while others renew to 75, 80, or 85. Empire Life offers the gold standard, with guaranteed renewals to age 100. The insured should also compare the cost of the renewal. For example, both companies could offer premiums on Plan A at $60 a month, but one company’s guaranteed renewal premium could be $150 a month, and another company’s could be $260 a month. This can translate into you paying thousands of extra dollars.

People with health issues should be extra cautious when purchasing life insurance. If you are declined, this could limit the amount and type of plan you could qualify for in the future. Each insurance company has its underwriting protocols. Some companies will treat someone with high blood pressure who’s 30 pounds overweight as at excessive risk and offer a rated policy — that is, a policy that charges a surplus premium. But other companies will give the same person standard rates.  

Most companies offer so called no medial life insurance policies tailored to the needs of those who might have difficulties in getting standard life insurance. 

An important note: many of the hard-to-insure / no medical life insurance policies have a two-year waiting period on non-accidental deaths.

Direct life insurance sales vs insurance brokers

Another area to watch out for is these so-called direct sellers. These insurance companies bypass the broker and sell direct to the public. At first glance, many people like the idea of not having to meet with a high-pressure salesperson. But consider the following. Many direct sellers offer premiums that are often 20% or even more expensive than policies sold through independent brokers. Also, many of these people you speak with on the phone have quotas to meet, so you may actually experience more sales pressure. Lastly, the level of expertise and service from a call centre operator is going to be far below that of a qualified insurance broker. 

Insurance brokers also have access to a wide variety of carriers and products, so you’re not pigeon-holed into one company. As an example, LSM Insurance brokers work with over 20 Canadian life insurance companies to get you the best life insurance. They can shop around and get you the best life insurance rates in Canada. And they are there to help you after the sale or help walk your family through the claims process at the time when they need guidance and support.