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How Car Insurance Premiums Are Calculated: A Guide

11 Min Read
Corrina Allen
How car insurance premiums are calculated: a guide

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Many Canadians have noticed their car insurance premiums creeping up in recent years, but what’s driving those increases isn’t always obvious.

Rising car theft rates, trade tariffs, extreme weather, advanced and specialized technology in vehicles, increased popularity of hybrid and electric vehicles and even the lingering effects of the COVID-19 pandemic on supply chains have pushed insurance costs higher. In 2024 alone, auto theft losses in Canada exceeded $1 billion. These big picture forces affect everyone — but they’re only part of the story.

Your premium is also shaped by factors specific to you, like your age, driving record, and the type of vehicle you drive. While tariffs and inflation may be largely outside your control, some personal rating factors can change over time. Understanding how insurers calculate premiums can help you make smarter coverage choices and find opportunities to manage costs, whether you’re a new driver or a seasoned one.

Key Takeaways

  • Car insurance protects drivers in the event of accidents and is mandatory across Canada, although minimum coverage requirements vary by province and territory.

  • Car insurance premiums are calculated using a mix of personal, vehicle-specific, and external factors.

  • While some factors are out of your control, others are tied to your driving habits and can change over time, which may affect how much you pay for coverage.

  • Insurers may offer discounts to eligible drivers based on factors such as age, driving record, professional affiliations, and driving experience.

Why do car premium calculations matter?

Car insurance is mandatory in Canada, so understanding how premiums are calculated matters. Knowing what goes into your rate can help you confidently compare policies, choose coverage that actually fits your needs, and spot potential opportunities to save on costs.

A clearer picture of how premiums are set can also show which factors may influence your rate — and which ones are largely outside your control. This helps clear up common misconceptions — like the idea that premiums are random or change for no reason — and gives you a better sense of why costs can rise or fall over time.

What is a car insurance premium?

 A car insurance policy helps protect you financially if you’re involved in a car accident, your vehicle is stolen, or it’s damaged in other ways, although the exact coverage depends on your policy. The premium is the amount you pay (usually monthly or annually) to keep this coverage.

When you pay your premium, you maintain active insurance coverage, which means you can file a claim if a covered event happens — like needing repairs after an accident or medical care following a crash. 

How are car insurance premiums calculated?

Car insurance premiums aren’t pulled out of thin air. Insurance companies use statistical models and risk assessment tools estimate risks and set pricing.

Some influences are outside your control, like crime rates or supply chain snags. At the same time, insurers consider personal and vehicle-related details, including your driving history, the type of vehicle you drive, the coverage you choose, and the deductible you select.

The result? A premium that reflects both individual risk and broader market conditions, which helps explain why rates can vary from one driver to another — and why they can change over time.

Five factors that influence car insurance premiums

Insurers look at a number of key factors when setting car insurance premiums. Knowing what they are can make it easier to understand your rate and spot where you might have some price flexibility. Here are five common factors that can influence your car insurance premium:

Your personal details

To start, insurers look at some basic personal details to get a sense of your overall risk as a driver.

Age: Age plays a role in how insurance premiums are set, largely because it’s closely tied to driving experience. Younger drivers — especially those under 25 — tend to pay higher premiums because, as a group, they have more accidents on average than older drivers. As drivers age and gain experience behind the wheel, their risk profile decreases and this could result in their premiums decreasing.

Gender: Your gender can affect your risk profile. For instance, because young men are more likely to be involved in crashes, they generally have higher premiums.

Location: Where you live matters, too. Drivers in urban areas often face higher premiums because of heavier traffic and a greater risk of accidents and car theft.  Premium payments can also vary by province or territory.  For example, drivers in Quebec and Ontario often pay more, partly because of substantially higher car theft rates compared to other regions in the country.

Your driving history

Next up is your driving history — because past behaviour is one of the clearest indicators insurers use when assessing risk.

When you apply for car insurance, insurers look at how long you’ve been licensed and your record behind the wheel. Accidents, speeding tickets, and serious infractions can influence how your premium is priced, while frequent or high-cost claims can signal higher risk. On the flip side, drivers with clean records may be eligible for claims-free or safe driving discounts.

Insurers consider everyone who regularly drives the vehicle. The age, gender, and driving history of additional drivers are all factored into the overall premium, not just the primary policyholder. 

Your vehicle

The type of car you drive plays a big role in how your premium is calculated.

Make and model: Vehicles that are more expensive to repair or replace tend to cost more to insure. That often includes luxury vehicles, high-performance models, and some electric vehicles, which can involve specialized parts or complex technology.

Insurers also look at broader data when it comes to make and model. Some vehicles are stolen more often or parts are expensive or more difficult to access, and those trends play into pricing. If your car falls into one of those higher-risk categories, that information can influence your premiums.

Vehicle age: Newer vehicles typically have a higher value than older ones, which can increase repair or replacement costs after an accident. That said, newer models often come with added safety and anti-theft features that insurers take into account. Does your car have an alarm system, cameras, or driver-assistance technologies? Those bonuses can help offset risk and cut your premiums.

Vehicle use

Are you commuting to an office? Driving for a rideshare service? Taking frequent road trips? How often and how far you drive feed into the equation.

Insurers look at mileage and usage because the more time a vehicle spends on the road, the greater the chance of an accident. For example, drivers with long daily commutes or vehicles used for business purposes are typically priced differently than occasional drivers who work from home or mainly use their car for errands and one-off trips.

Coverage type

Generally speaking, coverage falls into three categories:

  • Third-party liability helps cover costs like medical expenses, repair bills, or legal claims made against you after an accident. However, it doesn’t pay for damage to your vehicle.  In Canada, drivers are legally required to carry a minimum amount of liability insurance, and the exact minimum depends on the province or territory.

  • Collision insurance helps pay for damage to your vehicle caused by a collision with another vehicle or object, or if your vehicle rolls over. If your vehicle is leased or financed, collision coverage may be required by the lender or leasing company.

  • Comprehensive coverage helps cover damage or loss from things other than collisions, such as theft, vandalism, fire, wind damage, or other unexpected events.

Typically, the higher the level of protection you choose, the higher your premium is likely to be. Optional add-ons, such as roadside assistance or  some endorsements, can also boost the price of a policy.

Your deductible

A deductible is the amount you agree to pay out of pocket when a claim is approved, with your insurer covering the remaining eligible costs. You choose your deductible when you purchase your policy, and it applies each time you make a claim.

Choosing a higher deductible can bring a lower premium, but this also means shouldering more of the cost if you file a claim. It’s a trade-off: lower ongoing insurance costs versus higher out-of-pocket expenses after an accident, theft, or other covered event.

How to lower your car insurance premiums

While not every factor is within your control, there are choices you can make that may help reduce premium costs over time. Here’s how you can potentially tip the odds in your favour.

Improve your driving record

Insurers place a lot of weight on your driving history, so keeping it clean really matters. Some insurers may offer discounts for completing an accredited driving course, which can be especially beneficial for new or young drivers. For more experienced drivers, maintaining a squeaky clean driving record — free from traffic tickets, accidents, or other violations — can pay off in the long run by keeping premiums lower.

Choose the right coverage

The type and amount of coverage you choose can greatly impact your premium. Lower deductibles (e.g., $500 instead of $2,000) and optional add-ons usually cost more, so if you can cover higher out-of-pocket expenses, choosing a higher deductible (e.g., $2,000 instead of $500) and fewer extras can help reduce your rate.

A higher deductible can make sense if you have savings or an emergency fund to rely on after an accident. A lower deductible may be a better fit if covering costs upfront would be difficult.

It’s also smart to review your policy regularly to make sure it still matches your needs — especially if your vehicle, driving habits, or circumstances have changed.

Bundle insurance policies

If you already have home or renters’ insurance, you may save money by purchasing car insurance from the same provider. For instance, you may be ale to save up to 10 per cent when you bundle a car insurance policy with a homeowner, condo, or tenant insurance policy with RBC Insurance.

Many insurers also offer discounts by covering multiple vehicles under one policy, which can make bundling a savvy money-saving move for families.

Shop around

Don’t settle for the first quote you get. Comparing quotes from multiple insurers can help you find the best possible rate. It’s also worth looking for insurers that offer discounts for specific demographics, professions, or affiliations you may qualify for.

Many insurance companies also offer telematics programs for drivers. An app tracks different driving habits and gives you a driving score that could result in additional savings on car insurance premiums.

Ask about discounts

It never hurts to ask what discounts are available, as some insurers may offer savings for students, seniors, employee groups, military personnel, or safe drivers. You may also qualify for a loyalty discount if you’ve stayed with the same insurer for several years.

Also, check for discounts tied to post-secondary alumni, or unions. You can ask about extra savings for things like using snow tires, driving an eco-friendly vehicle, having an anti-theft device installed, or adding usage-based insurance apps like Journey.

Find the right car insurance for your needs

Car insurance premiums aren’t random. They’re shaped by a mix of personal, vehicle-related, and outside forces — some you can control, some you can’t. Knowing how these premiums are calculated puts you in the driver’s seat, helping you choose coverage that actually fits your life while spotting smart ways to keep costs in check.

Ready to lower your car insurance premium? Start by reviewing your current policy and identifying where small changes could add up to real savings. An RBC Insurance licensed advisor can help you make sense of your options and make sure you’re getting solid value for your money. Start by getting a car insurance quote online.

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*Home and auto insurance products are distributed by RBC Insurance Agency Ltd. and underwritten by Aviva General Insurance Company. In Quebec, RBC Insurance Agency Ltd. Is registered as a damage insurance agency. As a result of government-run auto insurance plans, auto insurance is not available through RBC Insurance in Manitoba, Saskatchewan and British Columbia.

This article is intended as general information only and is not to be relied upon as constituting legal, financial or other professional advice. A professional advisor should be consulted regarding your specific situation. Information presented is believed to be factual and up-to-date but we do not guarantee its accuracy and it should not be regarded as a complete analysis of the subjects discussed. All expressions of opinion reflect the judgment of the authors as of the date of publication and are subject to change. No endorsement of any third parties or their advice, opinions, information, products or services is expressly given or implied by Royal Bank of Canada or any of its affiliates.

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Whole Life vs Universal Life Insurance: What’s the Difference?

11 Min Read
Fiona Campbell

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Life insurance can do more than provide a payout for your beneficiaries after you’re gone — it can also play an important role in financial planning while you’re alive. Permanent life insurance, including whole life and universal life insurance, offers lifelong coverage and includes a savings component to help protect and build wealth over time.

While both are forms of permanent life insurance, they’re distinct products that serve specific needs. This guide explains how permanent life insurance works in Canada, breaks down the key differences between whole life and universal life insurance, and outlines how to decide which option may be right for you.

Key takeaways

  • Whole life and universal life insurance are both forms of permanent life insurance, offering lifelong coverage and a tax-free death benefit.

  • The main difference is predictability versus flexibility. Whole life insurance offers fixed premiums and guaranteed cash value growth. Universal life insurance allows more flexibility in premiums and how the savings portion is structured.

  • Both policies can build cash value on a tax-deferred basis that may be accessed during your lifetime.

  • Whole life is often used for long-term stability and estate planning, while universal life may appeal to people whose needs or income may change over time.

  • When weighing whole life vs universal life, the right choice depends on your goals, budget, risk tolerance, and how involved you want to be in managing the policy.

Understanding permanent life insurance in Canada

Permanent life insurance is designed to cover you for your entire lifetime. Unlike term life insurance, it doesn’t expire after a set number of years. Instead, it generally provides a tax-free death benefit and includes a cash value component that can grow over time. Premiums for permanent life insurance are typically higher than for term life insurance, but they are usually stable once the policy is issued.

Related: How does permanent life insurance work?

Types of permanent life insurance

In Canada, the two main types of permanent life insurance are whole life insurance and universal life insurance.

Both offer lifelong coverage and tax-deferred cash value that may be accessed during your lifetime, either through withdrawals or by borrowing against the policy. Where they differ is in how the cash value grows and how much flexibility and involvement the policy offers.

Because of these features, permanent life insurance is often considered as part of a broader financial or estate plan, particularly for building tax-advantaged wealth or transferring wealth to the next generation.

How whole life insurance works

Whole life insurance provides lifelong coverage with premiums and benefits that are typically set when the policy is issued. As long as premiums are maintained, the coverage stays in place and pays a tax-free death benefit to your beneficiaries when you pass away.

Whole life insurance also includes a built-in savings component, known as the cash value. Over time, this cash value grows at a guaranteed rate, is not tied to market ups and downs, and accumulates on a tax-deferred basis (meaning you don’t pay tax on the growth while it remains in the policy). If needed, you can access the cash value during your lifetime, either through withdrawals or policy loans.

Related: How to choose the best whole life insurance policy in Canada

Key features of whole life insurance

  • Lifetime coverage: Coverage lasts your entire life, not a set term.

  • Fixed premiums: Premiums are generally locked in and don’t change over time.

  • Guaranteed growth: The cash value grows at a guaranteed rate. The savings component grows on a tax-deferred basis and is not affected by market performance.

  • Tax-free death benefit: Beneficiaries receive a tax-free payout, plus any paid-up additions, minus any outstanding loans. Coverage amounts with RBC Insurance coverage generally range from $25,000 to $25 million.

  • Non-participating or participating: Participating (par) policies may pay dividends depending on the insurer’s performance. Non-participating policies don’t pay dividends, but offer fully guaranteed benefits at a lower cost.

  • Potential dividends: If dividends are paid, they can be used in different ways — such as reducing premiums, buying additional coverage, earning interest, or taking out cash.

  • Access to money: Cash value may be accessed by withdrawing funds or borrowing against the policy. The cash value can be used for various needs, such as covering unexpected expenses or supplementing income.

  • Flexibility: Designed to be predictable and largely hands-off.

  • Optional riders: Extra coverage can be added to suit your needs, such as a children’s term rider, accidental death benefits, or supplemental term insurance.

How universal life insurance works

Universal life insurance also provides lifelong coverage, a tax-advantaged savings component, and a tax-free death benefit, but it offers more flexibility than whole life insurance.

With universal life insurance, you have more control over how the premiums are paid and how the savings portion of the policy is allocated among interest options. For instance, with RBC Insurance, you can choose from a range of investments known as interest options, and select between two plans — one with bonus interest, one without.

The accumulated cash value grows on a tax-deferred basis while it remains in the policy. Because policyholders make more ongoing choices, universal life insurance generally requires more involvement and monitoring than whole life insurance.

Key features of universal life insurance

  • Lifetime coverage: Coverage lasts your entire life, not a set term.

  • Flexible premiums: You can choose how much to contribute, as long as payments stay within required minimums and maximums to keep your policy active and tax-sheltered. Premiums can be paid monthly or annually and paying more than the minimum can help the accumulated value grow.

  • Tax-free death benefit: Beneficiaries receive a tax-free payout. You can choose between two death benefit options: level protection, which pays the coverage face amount or the accumulated value (whichever is greater), or increasing protection, which pays the coverage amount plus the accumulated value.

  • Broad range of investments: The savings portion of the policy can be invested in a range of interest options, such as daily interest, guaranteed interest, or market-linked options. These choices can be reviewed and adjusted over time. 

  • Tax-deferred growth: Growth is not taxed while it remains in the policy.

  • Access to funds: Cash value may be accessed through withdrawals or policy loans. The policy can also be surrendered for its full cash value.

  • High flexibility: Premiums, payment timing, and investment choices can be adjusted as income or priorities change.

  • Living benefits: Some policies may offer living benefits, such as a compassionate advance if you become terminally ill or a disability benefit paid from the policy’s accumulated value.

  • Riders: Extra coverage can be added to suit your needs, such as a children’s term rider, accidental death benefits, or supplemental term insurance.

Difference between whole life vs universal life insurance

Both whole life and universal life provide permanent coverage, but the two work differently. The table below highlights the key differences to help you compare both options: 

Feature

Whole Life Insurance

Participating Whole Life Insurance

Universal Life Insurance

Purpose

Lifetime coverage with predictable premiums and guaranteed growth

Lifetime coverage with possible dividend growth

Lifetime coverage with flexible premiums and savings options

Premiums

Fixed

Fixed

Flexible

Death benefit

Guaranteed and stays the same for life

Guaranteed, with potential to increase if dividends are used to buy paid-up additions

Can stay the same, or increase based on the accumulated value

Dividends

No

Yes, but not guaranteed

No

Cash value

Grows at a guaranteed rate

Grows at a guaranteed rate, with possible additional growth from dividends

Grows based on investment performance

Investment options

None

None

Range of interest options

Investment approach

Managed by the insurer

Managed by the insurer

Directed by the policyholder

Access to funds

Withdraw or borrow against the cash value

Withdraw or borrow against the cash value

Withdraw, borrow, or access a compassionate advance (if available)

Flexibility

Low

Moderate

High

Complexity

Low

Low to moderate

High

Tax purposes

Tax-free death benefit and tax-deferred growth within the policy

Tax-free death benefit and tax-deferred growth within the policy

Tax-free death benefit, with option to contribute extra and grow tax-deferred savings

Riders

Available

Available

Available

Risk level

Low risk

Low risk

Moderate risk, as growth depends on investment performance

How to choose between whole life and universal life insurance

Choosing between whole life and universal life insurance depends on your personal circumstances, financial goals, and how involved you want to be in managing your policy over time. Understanding how each policy fits into your broader financial picture — including income, risk tolerance, and long-term objectives — can help clarify which option may be more suitable.

Why whole life insurance might be right for you

Whole life insurance may be suitable if you:

  • Want lifelong coverage with minimal ongoing decision-making

  • Prefer predictable premiums and guaranteed cash value growth

  • Prefer steady, long-term growth and have a lower tolerance for investment-related risk

  • Have reliable cash flow to support fixed premiums

  • Are considering a participating whole life policy that may pay dividends

Why universal life insurance might be right for you

Universal life insurance may be suitable if you:

  • Value flexibility in how and when premiums are paid

  • Want a savings component that can adapt over time

  • Expect your income or needs to change

  • Prefer a more hands-on, self-directed approach to managing the savings and investment component of the policy

  • Are comfortable with some ups and downs tied to the interest options

How to choose the right insurance policy for you

Once you understand the differences between whole life and universal life insurance, the choice largely comes down to your personal priorities, and how involved you want to be. Use the steps below to help clarify what matters most to you.

Define your goals

What do you want this policy help you achieve? Whole life insurance is often used for estate planning or to build financial security, whereas universal life insurance offers more flexibility that can be adjusted to suit changing needs and goals.

Recognize your risk tolerance

How comfortable are you with changes in how the savings grows? Whole life insurance offers guaranteed growth. Universal life insurance can change based on the interest options you choose.

Assess your budget

Can you afford permanent life insurance over the long term? Whole life insurance offers fixed premiums. Universal life insurance allows more wiggle room in how and when premiums are paid, within limits.

Understand the product features and investment options

Do you want the insurer to manage the policy, or are you comfortable making choices yourself?  With whole life insurance, the insurer manages growth. With universal life insurance, you can choose interest options and adjust premiums.

Review your tax and estate needs

How might this policy fit into your long-term plans? Whole life insurance is often used for estate needs, such as covering outstanding debt, future taxes, or leaving a guaranteed legacy to beneficiaries. Universal life insurance is often chosen when flexibility is needed as personal or business needs change.

Work with a licensed insurance advisor

Is this a decision you need help with? Choosing between whole life and universal life insurance can be nuanced, especially when tax, estate, and long-term planning are involved. A licensed insurance advisor can help you understand how each option may fit your situation.

FAQs about whole life vs. universal life insurance

Which is better: whole life or universal life?

Neither is inherently better than the other. The right choice depends on your goals, risk tolerance, and how involved you want to be in managing your policy. Whole life insurance may appeal to those who value predictability and guaranteed growth, whereas those who want more flexibility and choice in how their policy’s savings component is structured may opt for universal life insurance.

Can I switch from whole life to universal life later?

Generally, no. While some term life insurance policies can be converted to permanent insurance, whole life and universal are distinct products. Switching typically requires surrendering one existing policy and applying for a new one, which may involve fees, tax implications, and new underwriting.

What are alternatives to purchasing whole life or universal life insurance?

A good alternative to whole or life or universal life is term life insurance. Term life is typically a be a lower-cost option for short term needs, though it does not build cash value. Depending on the insurance company, some term policies also let you convert term life to a permanent life policy, as your financial needs change.

RBC Life Insurance

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*Home and auto insurance products are distributed by RBC Insurance Agency Ltd. and underwritten by Aviva General Insurance Company. In Quebec, RBC Insurance Agency Ltd. Is registered as a damage insurance agency. As a result of government-run auto insurance plans, auto insurance is not available through RBC Insurance in Manitoba, Saskatchewan and British Columbia.

This article is intended as general information only and is not to be relied upon as constituting legal, financial or other professional advice. A professional advisor should be consulted regarding your specific situation. Information presented is believed to be factual and up-to-date but we do not guarantee its accuracy and it should not be regarded as a complete analysis of the subjects discussed. All expressions of opinion reflect the judgment of the authors as of the date of publication and are subject to change. No endorsement of any third parties or their advice, opinions, information, products or services is expressly given or implied by Royal Bank of Canada or any of its affiliates.

Home > Advice & Learning > Page 2

What are the Benefits of Life Insurance?

10 Min Read
Tammy Burns

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Most of us don’t like to think about our own mortality. That could be one reason why only 39 per cent of Canadians have a life insurance policy, despite more than half agreeing that life insurance is important.

There are other reasons why people avoid purchasing life insurance. They may believe it’s too expensive, that their claim could be denied, that they won’t qualify, or that they simply don’t have enough assets to warrant life insurance. But the reality is almost anyone can benefit from having a life insurance policy.

For your loved ones, life insurance provides financial stability, especially if you have dependents who rely on your income. If you have any shared debts, such as a mortgage, life insurance can protect the other person’s financial future. For entrepreneurs, life insurance can ensure your business carries on after you’ve passed away.

Life insurance can even be an investment tool by helping you build wealth and earn dividends that you can access while still alive.

Here’s a snapshot of the types of life insurance available and nine compelling reasons why you may benefit from taking out a life insurance policy.

Key Takeaways

  • Life insurance death benefits are tax-free in Canada, meaning beneficiaries don’t pay income tax on the payout.

  • If your estate is tied up in probate, a life insurance policy offers more liquidity to cover final expenses.

  • Permanent life insurance policies build cash value over time that you can borrow from while still alive or leave to your beneficiaries.

  • Participating whole life insurance pays dividends, which you can use to supplement your income in retirement.

  • If you own a business, life insurance can help ensure partners and employees are compensated.

  • You can name a charity as a beneficiary or transfer your policy to a charity, both of which provide significant tax benefits.

Types of life insurance in Canada

Life insurance protects your loved ones if you pass away. You, as the policyholder, pay a life insurance premium and if you pass away, the beneficiaries you’ve designated receive a tax-free cash payout.

There are three main types of life insurance products available to Canadians: term life, whole life, and universal life.

Term life insurance

With a term life policy, you select how long you want to be covered for — anywhere from 10 to 40 years. If you pass away during the term, your beneficiaries will be covered. However, if you pass away outside this term, the coverage is void. For example, if you purchase a 20-year term life policy and have a fatal accident in year 21 and haven’t renewed your policy, your coverage will be expired.

A benefit of term life is that it’s usually more affordable than the other types of life insurance and your premiums won’t change for the duration of the policy. You may also choose to renew your policy (at a new premium) or switch to long-term coverage before the term is up.

Whole life insurance

A whole life policy, also sometimes called a permanent policy, is lifelong. You pay a set guaranteed premium for life, or you can choose to pay off the entire policy sooner, in 10 or 20 years, while still maintaining lifelong coverage.

One of the main benefits of whole life, in addition to having guaranteed coverage for life, is you earn a cash value guarantee from the portion of your premiums, which are professionally invested for you by the insurance company. If you have a participating whole life policy, you’ll receive dividends from those investments. With a non-participating policy, you don’t receive dividends, but your premiums are generally lower to compensate for any gains.  

Another advantage of whole life insurance is you can borrow from your policy while you’re still alive, such as for unexpected costs. But it’s important to note that you will need to repay this amount with interest and any amount not repaid will be deducted from your death benefit.  

Universal life insurance

Another type of permanent policy is universal life insurance. Like whole life, this is lifelong coverage that invests a portion of your premiums.

The key difference is that you can choose how much you want to pay into your policy, how you want to pay your premiums (with set minimums and maximums), and how you want your premiums invested. As such, this type of insurance is best for those who are comfortable with hands-on investing.

This flexibility is the biggest advantage of universal life. You also have the freedom to borrow from your benefits (with interest) while you’re still alive, such as to cover retirement costs and support you if you develop a terminal illness or disability.

Nine advantages of life insurance for Canadians

Life insurance plays an important role in your financial planning, offering protection for you and your beneficiaries. Here are nine key life insurance benefits:

1. Income replacement and provide for loved ones

Life insurance can help cover your loved ones’ expenses, especially if you have dependents who rely on your income to cover things like housing, childcare, and education costs.

In Canada, the death benefit under a life insurance policy is tax-free, which means your beneficiary doesn’t have to report it as income, and therefore doesn’t need to pay income tax on it.

2. Pay for outstanding debts and mortgage

When someone dies, their debts, such as such as outstanding personal loans, credit cards, or mortgage payments, are typically paid off through the estate. Whatever remains is then distributed to the estate’s beneficiaries.

While debt isn’t passed down the family tree like an heirloom, there are exceptions. If you co-signed for a loan or opened a joint account, and those debts are more than can be covered by the estate, that person will become responsible for paying off the debt in full. The tax-free payout from a life insurance policy can help to cover any debts your estate can’t. 

3. Cover final expenses and funeral costs

The average cost of a funeral in Canada can range from $5,000 to $10,000, or more. While final expenses typically come of the estate, this can take a long time. Probate, which is when the courts accept a will or appoint an executor, can take six weeks to 12 months, depending on your province and the complexity of your estate.

Life insurance offers more immediate tax-free liquidity to help you cover those funeral fees, estate settlement costs, and other final expenses.

4. Pay for your child’s post-secondary education

As of 2025, the average four-year undergraduate degree costs nearly $31,000 for tuition alone — and that’s not including students’ other expenses, such as residence fees, or commuting costs, meals, and books.

One option to help you save for post-secondary education in addition to an RESP is to purchase a universal life insurance policy for your child and make contributions to it while they are young.

Since this kind of policy lets you invest a portion of your premiums to earn interest, the policy can grow a cash value that can be accessed while alive. Once your child turns of legal age, you can transfer the policy to them, which they can then use for school or other future costs, like buying a home.

5. Help protect your business

If you own a business, you don’t just need to think about your personal finances, but also the business’s finances after you pass.

Maybe you took out a business loan that’s still being paid off or have business partners who will need financial security and a clear succession plan. Life insurance can help to ensure your debt is covered, partners are compensated, and operational costs aren’t left hanging.

For example, life insurance could be used to fund severance packages if the business closes or pay for transition plans and hiring your replacement if the business continues. 

6. Build wealth

Life insurance can help you grow wealth that you can access while you’re still alive or leave for your loved ones. Participating whole life and universal life insurance accumulates a cash value — as you pay your premiums, a portion goes toward the policy and a portion is invested. The interest earned is tax-deferred while it remains in your policy.

With universal life, you can even choose how your money is invested. Depending on your risk tolerance, you may opt for a more aggressive investment option that enables you to grow your policy’s cash value even further.

7. Supplement retirement income

If you’ve maxed out your RRSPs, TFSAs, and other investments, participating whole life insurance could be another way to supplement your retirement income, as this type of policy pays out dividends.

These dividends can be used any way you want — put toward your premium payments, held to continue earning more interest, or paid out directly to you annually.

Since borrowing from your life insurance incurs interest charges and anything you don’t repay is subtracted from your death benefit, collecting dividends could be a less costly and less risky way to use life insurance as an income source in retirement.

8. Estate planning and wealth transfer

It’s important that your assets go where you want them to. While your will is a way to ensure that your heirs receive their share, life insurance can provide extra estate planning support.

Before the assets in a deceased person’s estate can be distributed, the estate must go through probate. This is when the court confirms who has the authority to act as the estate trustee and verify that the deceased’s will is valid.

Probate can be a long process that takes several months or even a year or more, but a life insurance payout helps fill the financial gap while beneficiaries wait for probate to be completed.

As well, the tax-free death benefit from life insurance can help cushion your beneficiaries if a large portion of your estate needs to go to debts, legal fees, or funeral costs.

9. Charitable giving

Finally, you can use life insurance as a form of philanthropy. You can designate a charity as a beneficiary or even transfer your entire whole life policy to a charity of your choice. Both options come with considerable tax benefits.

If you donate your policy, you’ll receive a donation tax receipt for the value of cash surrendered and any accumulated dividends. If you name a charity as your beneficiary, you’re eligible for a charitable donation tax credit upon death, which can be used in your final income tax return.

Take the next step

While most Canadians make sure their cars and homes are insured, too few of us are doing the same for ourselves. But life insurance is an important tool that can financially protect your loved ones after you’re gone. It can even be used to cushion yourself and your family while you’re still alive.

Whether you have assets you want protected, a dependent you want to support, or a legacy you want to leave, a life insurance policy can give you that peace of mind.

Want to make sure your loved ones are covered? Get a quote online in minutes or contact us to speak to a licensed advisor.

RBC Life Insurance

Protect Your Loved Ones With Dependable Life Insurance.

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*Home and auto insurance products are distributed by RBC Insurance Agency Ltd. and underwritten by Aviva General Insurance Company. In Quebec, RBC Insurance Agency Ltd. Is registered as a damage insurance agency. As a result of government-run auto insurance plans, auto insurance is not available through RBC Insurance in Manitoba, Saskatchewan and British Columbia.

This article is intended as general information only and is not to be relied upon as constituting legal, financial or other professional advice. A professional advisor should be consulted regarding your specific situation. Information presented is believed to be factual and up-to-date but we do not guarantee its accuracy and it should not be regarded as a complete analysis of the subjects discussed. All expressions of opinion reflect the judgment of the authors as of the date of publication and are subject to change. No endorsement of any third parties or their advice, opinions, information, products or services is expressly given or implied by Royal Bank of Canada or any of its affiliates.

Home > Advice & Learning > Page 2

Guide To Multi-Trip Travel Insurance for Canadians

9 Min Read
Vanessa Chiasson
Multi-trip travel insurance

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Canadians love to travel and we’re not afraid to try new things – from multi-experience holidays to foodie-focused vacations, beach escapes, and cultural exploration.

Canadians also love to get away often – with 11 per cent of us planning multiple travel getaways per year, according to Flight Centre. The cost of taking a French cooking class in Paris or snorkelling in the Caribbean adds up.

One way to save money is with multi-trip travel insurance. This kind of insurance covers you for if you plan to take two or more trips over 12 months. Compared with purchasing several single-trip policies, multi-trip insurance is a cost-effective option, leaving you with more funds for fun.

If you plan to getaway more than once this year, here’s why multi-trip travel insurance might be the best choice to pack along with your sunscreen.

Key takeaways

  • Travel insurance is important as it safeguards you from financial loss and provides valuable assistance should you experience illness or injury.

  • Multi-trip insurance policies cover unlimited travel within a 12-month period. You decide how long your insured holidays will be, with options ranging from 4 to 60 days. Other considerations include what kind of policy you want: classic medical coverage or deluxe coverage.

  • Multi-trip travel insurance options include coverage for trip cancellations, trip interruptions, and baggage delays or loss.

  • There are eligibility requirements for multi-trip trael insurance, including having a valid provincial/territorial health card, a medical questionnaire, and some adventure activities may be excluded, depending on the policy.

  • Multi-trip insurance is flexible and affordable, and suits a wide range of Canadians, including retirees, business travellers, digital nomads, and families or individuals who travel two or more times throughout the year.

Why is travel insurance important?

If you’re in good health, you might wonder why travel insurance is important. You may think you’re not going to need it if you’re enjoying a quiet getaway filled with rest and relaxation, right? However, injury and illness don’t take a holiday, even if you do.

Even the healthiest person could contract a debilitating illness like influenza, or the most seasoned skier could break their leg on the slopes. Travel insurance offers financial protection against injury and illness.

Just how expensive can foreign medical care get? The average cost of a hospital stay in the U.S. is around USD $3,025 per day.

Travel insurance also improves your care and recovery experience.  Becoming hurt or sick in an unfamiliar place can be worrying. With travel insurance, you can have access to 24-hour worldwide emergency medical assistance to help coordinate your care, so you can focus on what matters most: getting well.

Flight cancellations or lost baggage can be more than just minor annoyances – they could end up costing money, as well as time. Travel insurance can also offer protection against trip interruption, covering out of pocket expenses such as paying for an extra night at a hotel, or covering the cost of flying home later than you planned.

What is multi-trip travel insurance?

If you’re an avid traveller, then multi-trip annual insurance should be on your radar. Multi-trip annual travel insurance is designed to cover you for an unlimited number of journeys outside your province or territory over a 12-month period. Want to leave town regularly? Go for it! There’s no need to buy separate policies for every trip.

You need to choose the length of trip you want insured. With RBC Insurance, plans range from 4- to 9- 16-, 30- or 60-day trip options – perfect, whether you’re a weekend warrior or someone who loves deep, immersive travel experiences

Multi-trip vs single-trip travel insurance

Whether you choose multi-trip or single-trip travel insurance, depends on how frequently you plan to get away. Single-trip travel insurance is ideal for Canadians planning a single domestic or international trip and you can tailor the type of travel coverage to meet the specific needs of that one journey.

Multi-trip insurance is designed to cover you for a set number of days multiple times throughout a 12-month period. The advantage of multi-trip travel is it’s typically a more cost-effective option if you’re planning two or more trips in a year.  

What does multi-trip travel insurance cover?

Not all travel insurance policies are the same. That’s why it’s important to understand what you’re covered for, should you need assistance. 

Emergency medical coverage

All multi-trip plans include emergency travel medical coverage. If you become unexpectedly ill while on holiday, it’s reassuring to know you have coverage in place.  Depending on the policy you choose, multi-trip medical travel insurance provides the following emergency treatment:

  • Hospital stays

  • Seeing a licensed healthcare provider

  • Diagnostic testing

  • Prescription drugs

  • Emergency dental care

  • Cost to purchase or rent medical equipment, such as a wheelchair

Transportation benefits

Insurance helps take care of the costs if you need to be transported to another medical facility or back to Canada for medical care, including:

  • Ambulance or taxi

  • Air ambulance

  • one-way economy air fare on a commercial flight

Trip cancellation or interruption coverage

Sometimes, your plans are derailed before you even leave for the airport. If you become ill, or have a death in the family, travel insurance helps minimize the financial burden of these unexpected costs. This travel insurance provides protection if your trip is cut short, interrupted, or delayed by due to covered reasons, like severe weather.

Baggage Coverage

You might have experienced that sinking feeling when you’re standing at the baggage claim carousel, watching the last lonely suitcase go round and it’s not yours. Your luggage is delayed, and you have no idea when you’ll get it back. And if you do get your bag, will it be damaged? What about the contents?

This insurance can cover you for:

  • Lost or damaged baggage

  • Baggage delays

  • Delay of golf clubs or ski equipment

However, it’s worth noting that not everything in your suitcase is protected by insurance. Valuables like jewellery, cash, and professional equipment such as camera gear are excluded items. This coverage is also subject to policy limits.

RBC’s Deluxe Package Multi-Trip Annual Plan and TravelCare Package Multi-Trip Annual Plans both offer trip cancellation and baggage protection.

Multi-trip medical travel insurance exclusions and limitations

No single insurance policy covers every possible circumstance. Many travel insurance policies exclude the following:

  • Pre-existing, medical conditions: Most insurers require that a pre-existing medical condition be stable between 90 to 180 days before departure.

  • High-risk activities: Insurance policies often exclude high-risk activities, such as mountain climbing.

  • Drugs and alcohol: Any medical condition arising during your trip related to the abuse of alcohol, drugs or other intoxicants.

  • Self-harm: Self-inflicted injury, suicide or attempt to die by suicide, as well as claims resulting from illegal activities.

  • Government advisories: If the Canadian government advises against travel to a country and you go anyway, your travel insurance may be negated, should something happen to you related to the travel advisory

Bottom line: It’s important to read the terms and conditions of your travel insurance policy carefully before you leave.

Who is multi-trip travel insurance best for?

Multi-trip travel insurance is best for Canadians who travel frequently in a year. This coverage is designed for retirees who also enjoy travelling year-round, people who frequently cross the border for shopping, family visits, or sightseeing, business travellers, or digital nomads.

Even if you’ve got multiple trips planned in a year, like a destination wedding, a reunion with your college roommates, and a romantic sojourn with a loved one, then multi-trip travel insurance could be cheaper and more convenient than purchasing separate policies for each trip.

Eligibility and requirements in Canada

Eager to embrace your wanderlust and enjoy a fulfilling year of travel? Here’s the common eligibility and requirements for a multi-trip travel insurance policy:

  • You must be a Canadian resident with an active provincial or territorial health insurance plan (i.e., you must have a valid health card from your home province or territory).

  • You must meet the policy’s age restrictions.

  • While you are covered for multiple trips, you must choose the length you want insured – typically from 4- to 60-days.

  • You must be prepared to complete a medical questionnaire, as required.

See more of the world with multi-trip insurance

 Whether it’s a quick weekend getaway or a destination that’s long been on your bucket list, travel introduces us to new experiences, cultures, and people. When you’re on the road, it’s wise to protect yourself with emergency medical coverage, should you need it.

If you’re a frequent traveller, you could save you hundreds of dollars a year compared to buying several one-time policies. Learn how much you’ll save with our free travel insurance quote. Saving on travel insurance means more money in your travel budget for adventure.

With RBC Insurance, you and your family can get out there and enjoy yourself knowing you have the right coverage and 24/7 access to a caring team who’s always on call—no matter how big or how small the emergency.

FAQs about multi-trip travel insurance for Canadians

Does annual travel insurance cover multiple trips?

Yes, annual travel insurance covers you for multiple trips in a given 12-month period, usually between 4 to 60 days. Annual trip insurance may also cover emergency medical expenses, trip cancellation or delays, and lost luggage. 

Is it worth getting multi-trip travel insurance?

It’s worth getting multi-trip travel insurance if you’re planning to travel two or more times throughout the year. Buying a single policy can save you money compared purchasing several single-trip policies. You also have the peace of mind of knowing you’re covered for spontaneous getaways.

Does RBC Insurance have multi-trip travel insurance?

Yes, RBC Insurance offers multi-trip travel insurance. Popular plans include a 4-Day Getaway Multi-Trip Annual Medical Plan, Classic Medical Multi-Trip Annual Plan, TravelCare Medical Multi-Trip Annual Plan, Deluxe Package Multi-Trip Annual Plan and TravelCare Package Multi-Trip Annual Plan depending on your needs.

RBC Travel Insurance

If you need help during your trip for a medical or other travel emergency, help is available 24/7.

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*Home and auto insurance products are distributed by RBC Insurance Agency Ltd. and underwritten by Aviva General Insurance Company. In Quebec, RBC Insurance Agency Ltd. Is registered as a damage insurance agency. As a result of government-run auto insurance plans, auto insurance is not available through RBC Insurance in Manitoba, Saskatchewan and British Columbia.

This article is intended as general information only and is not to be relied upon as constituting legal, financial or other professional advice. A professional advisor should be consulted regarding your specific situation. Information presented is believed to be factual and up-to-date but we do not guarantee its accuracy and it should not be regarded as a complete analysis of the subjects discussed. All expressions of opinion reflect the judgment of the authors as of the date of publication and are subject to change. No endorsement of any third parties or their advice, opinions, information, products or services is expressly given or implied by Royal Bank of Canada or any of its affiliates.

Home > Advice & Learning > Page 2

How to Write a Will: What Canadians Need to Know

12 Min Read
Fiona Campbell
How to write a will 1

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Most Canadians understand that having a will is important — yet many still don’t have one. Fewer than half have a will, and among those without one, a common reason is  simply not knowing where to start.

Thinking about what happens after you die isn’t exactly fun dinner table conversation. But putting off a will can leave loved ones in the lurch during an already difficult time. The good news? Writing a will is usually far easier than many people expect.

This guide explains what a will does, who needs a will (spoiler alert: almost everyone!), the main types of wills, how to create one, and what happens if you die without one.

Key takeaways

  • A will is a legal document that sets out what happens to your assets and dependents after you die.

  • In Canada, if you die without a will (known as dying intestate), your estate is settled according to provincial or territorial law.

  • You should consider making a will if you are married or in a common-law relationship, have dependents, own property, investments, or a business, or have a life insurance policy or other assets.

  • The four most common types of wills in Canada are a simple will, formal will, holographic will, and living will.

  • Common mistakes in making a will include letting it go out of date, not signing or witnessing the will properly, using vague or confusing language, and forgetting to name an alternate executor and beneficiaries.

What is a will?

A will is a legal document that sets out what happens to your assets and dependents after you die. It gives clear instructions, so your affairs are handled the way you intended.

While every will is different, most typically include:

  • Your identity and confirmation that the document replaces any previous versions.

  • The name of an executor — the person responsible for carrying out the instructions and managing the estate.

  • The names of your beneficiaries — the individuals or organizations who will receive your money, property, or specific gifts.

  • Instructions for dependents, such as naming a guardian for minor children.

  • Directions for how assets should be managed and distributed.

Why you need a will

A will answers a few practical questions: who will manage your estate, who should receive your assets, and who should care for any dependents. Regardless of the size of your estate, having a will can help:

  • Provide clarity for your loved ones. A will spells out who receives what, helping to reduce uncertainty and the likelihood of disagreements.

  • Keep decisions in your hands. With a will in place, your estate is usually distributed according to your instructions, rather than default provincial or territorial laws.

  • Protect dependents and loved ones. A will can help support the timely and orderly transfer of assets to a spouse, children, or other loved ones.

  • Make the process easier to manage. Clear direction can simplify estate administration. Without a will, assets may be tied up until a court appoints an administrator.

Read more: What is estate planning?

What happens if you die without a will in Canada?

If you die without a will (known as dying intestate), your estate is settled according to provincial or territorial law — not your personal wishes. That means the courts decide who inherits what, even if that’s not how you would have divided things. That can lead to delays, court involvement, family conflict, and increased costs to wrap up the estate.

Who needs a will?

When it comes to who needs a will, the short answer is: almost everyone.

While a will isn’t legally required, most adults can benefit from having one, especially if you:

  • Are in a common-law relationship. A surviving partner does not automatically have the same legal rights as a married spouse.

  • Have dependents. A will allows you to name a guardian for minor children and provide direction for the care of other dependents.

  • Own property, investments, or a business.

  • Have life insurance or other assets that need direction.

  • Want to leave a charitable or personal legacy.

Types of wills in Canada

There’s no one type of will in Canada. The right type depends on your situation and how complex it is.

One thing to keep in mind: wills follow provincial or territorial rules. Each province has its own requirements for things like signing, witnesses, and in some cases, handwritten wills, so make sure you’re covering all your bases.

Here are four common types of wills in Canada:

Simple will

A simple will (or basic will) is a basic legal document that sets out your final wishes. It typically covers the essentials, such as naming an executor, identifying beneficiaries, and if applicable, setting out guardianship for minor children or pets.

For many Canadians, a simple will can often be enough. If your situation is more complex, you may want to explore other options.

“Simple” refers to your situation, not the legal format of the will. In practice, most simple wills are still attested (confirmed to be genuine) and are properly signed and witnessed.

Formal will

A formal (or attested) will refers to how a will is legally completed — not what’s in it. It’s any written will, usually typed, that’s signed by the person making it in the presence of two witnesses, who also sign the document.

In most cases, the witnesses also complete a sworn statement (called an affidavit) confirming they saw the will being signed and had no reason to believe the person making it lacked the capacity to provide legal instructions.

While a lawyer is not required, many people choose to have a will prepared with legal assistance when their circumstances are more complex or when added certainty is important.

Holographic will

Despite the sci-fi name, this type of will has nothing to do with 3D images or Star Trek reruns. A holographic will is an entirely handwritten document, with no typed or printed text allowed, that’s signed and dated by the person making it. Witnesses are generally not required.

However, the trade-off with a holographic will is more room for mistakes or misunderstandings that can lead to problems or challenges from beneficiaries later. Courts may also require proof during probate that the handwriting matches that of the testator (the person writing the will).

Holographic wills may not be legally valid in every province and territory, so it’s important to check the rules depending on where you live. Because of these risks, holographic wills are generally better suited to limited or urgent situations, rather than long-term planning.

Living will

A living will is a legal document that sets out your wishes for medical treatment if you’re still alive but unable to speak for yourself due to illness, injury, or old age. It can guide medical decisions, including what types of treatment you would be willing to receive, and at what point you would want interventions to be limited or stopped if recovery is unlikely.

While rules on what constitutes a legally valid will vary by province or territory, a will is generally considered valid in Canada if it:

  • Is in writing (with the exception of British Columbia)

  • Is made by someone of legal age and of sound mind

  • Is signed by the person making the will

  • Is properly witnessed, unless an exception applies (such as a holographic will).

There are also rules about who can act as a witness and extra technical details can apply depending on the type of will and where it’s made. Because of that, it’s important that your will follows the rules where you live.

How to write a will 2

How to write your will: A step-by-step guide

If making a will feels like a lot, you’re not alone. Writing a will is usually easier if you break it down into a few manageable steps.

Step 1: Take stock of what you own — and owe

Start by listing what makes up your estate. Think about property, vehicles, bank and investment accounts, insurance, pensions, personal belongings, and digital assets (like online accounts, loyalty programs, etc.)

Outstanding debts, such as mortgages, credit cards, and loans, are typically settled as part of estate administration, so it helps to be aware of them too.

Step 2: Choose your beneficiaries

Beneficiaries can include individuals, charities, or organizations. It’s up to you! Some people also name alternate beneficiaries in case their first choice can’t inherit, or a trustee if the beneficiary is a child not of the age of majority.

Read more: What is a life insurance beneficiary?

Step 3: Decide who will handle your estate

You’ll also name someone to carry out your wishes and manage your estate after death. This role is often called an executor, though the title varies by province.

The executor can be a family member, trusted friend, or professional. What matters most is that the person is willing and able to take on the responsibility.

Read more: What is probate and how does it work?

Step 4: Make arrangements for dependents

If you have minor children or other dependents, you can express your wishes around guardianship. Without that guidance, courts may need to step in.

Step 5: Choose an approach

In general, people take one of four options:

Creating an online or DIY will

Some people use online tools or templates to create a DIY will. These options are often used for relatively simple situations and still need to meet provincial or territorial requirements — including proper signing and witnessing — to be legally valid.

Online wills platforms, such as Epilogue, offer a fast and convenient way to create a legal will. Typically, you complete the will online, print it and then have it witnesses according to provincial regulations.

Working with a lawyer

Others choose to work with an estate lawyer, particularly when their circumstances are more complex. Legal professionals can help navigate trickier issues like blended families, business ownership, or assets in multiple jurisdictions, and ensure the will meets local legal requirements.

Hybrid approach

Some people combine the two approaches — drafting a will using an online tool and have a legal professional review it for added reassurance. They may also use a notary who verify your identify, capacity to make a will and ensure your will is legally valid, based on where you live.

Step 6: Finalize your will

A will needs to be properly signed and witnessed to be legally valid. Notarization usually isn’t required, though there are exceptions.

Step 7: Store your will

A will can only serve its purpose if it can be found. Keep it somewhere secure and accessible, whether that’s at home, with a lawyer or notary, a safety deposit box at the bank, or another safe place. And don’t forget to tell your executor where it’s stored!

Step 8: Revisit your will as life changes

Wills aren’t set-and-forget documents. You should review your wills after major events — like moving, a change in family circumstances, or a financial shift — to make sure everything still lines up with your intentions.

Common mistakes to avoid

Even a simple will can run into problems if a few basics are overlooked. Common pitfalls can include:

  • Letting a will go out of date, especially after major life changes.

  • Not signing or witnessing the will properly, which can affect whether it’s considered valid.

  • Using vague or confusing language, such as “divide everything fairly,” without explaining what that means.

  • Forgetting to name backups, like alternate beneficiaries or an alternate executor.

Take the next step

Writing a will is about the mark you leave behind. It’s how you decide what matters, who matters, and how the things you’ve built and cared about carry forward.

A will puts your intentions into writing — not just about money or property, but about responsibility, fairness, and care. It helps ensure that what you leave reflects your values, and that your story doesn’t end in confusion or conflict.

Whether you choose an online option or work with a professional, taking this step is a way to be deliberate about your legacy and thoughtful about what comes next.

FAQs about making a will

Is a handwritten will legal in Canada?

A handwritten, or holographic, will is generally legal in Canada if it is written entirely by hand and signed by the person making it. However, the rules vary by province and territory, and handwritten wills may not be accepted everywhere.

Yes, online will kits are generally legally valid, so long as they meet provincial or territorial requirements and are properly signed and witnessed.

Can I write a will without a lawyer?

Yes. A lawyer isn’t required to make a valid will, but it still needs to comply with the estate laws where you live.

How often should I update my will?

Many people review their will after major life changes, or every few years to make sure it still reflects their wishes.

RBC Life Insurance

Protect Your Loved Ones With Dependable Life Insurance.

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*Home and auto insurance products are distributed by RBC Insurance Agency Ltd. and underwritten by Aviva General Insurance Company. In Quebec, RBC Insurance Agency Ltd. Is registered as a damage insurance agency. As a result of government-run auto insurance plans, auto insurance is not available through RBC Insurance in Manitoba, Saskatchewan and British Columbia.

This article is intended as general information only and is not to be relied upon as constituting legal, financial or other professional advice. A professional advisor should be consulted regarding your specific situation. Information presented is believed to be factual and up-to-date but we do not guarantee its accuracy and it should not be regarded as a complete analysis of the subjects discussed. All expressions of opinion reflect the judgment of the authors as of the date of publication and are subject to change. No endorsement of any third parties or their advice, opinions, information, products or services is expressly given or implied by Royal Bank of Canada or any of its affiliates.

Home > Advice & Learning > Page 2

Understanding Car Insurance for New Drivers: A Guide

14 Min Read
Vanessa Chiasson
new driver insurance

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Getting your driver’s licence is a significant milestone. Whether you’re a young driver or getting your licence later in life, sitting in the driver’s seat can bring a new sense of freedom, responsibility, and independence — along with questions. One of the biggest? Auto insurance.

For new drivers in Canada, understanding how auto insurance works, and how to choose the right coverage, may feel overwhelming at first. While it can seem overwhelming, this guide breaks down car insurance for new drivers in straightforward terms, from coverage options to what affects insurance costs, so you can feel confident every time you get behind the wheel.

Key takeaways

  • Auto insurance is mandatory in Canada and helps protect you, your vehicle, and everyone else on the road.

  • While each province and territory set out its own mandatory requirements, auto insurance in Canada typically includes third-party liability (required by law), collision (covers damage from crashes or rollovers), and comprehensive coverage (covers things like theft, vandalism, and weather-related damage), with optional add-ons available for extra protection.

  • Auto insurance pricing varies and is calculated based on many factors, such as the driver’s personal details, driving experience, the vehicle model, and where you live.

  • Building driving experience and maintaining a clean driving record could make a difference in insurance premium pricing.

  • Driving experience and your driving record can make a difference in insurance premium pricing.

  • There are ways to help manage costs, like accredited driving courses, bundling insurance coverage, and looking for available discounts.

  • Comparing options and understanding your coverage helps you choose a policy that fits your life as a new driver.

What is car insurance and why is it important?

Car insurance is a type of policy that helps cover the costs if something goes wrong while you’re driving — like an accident, vehicle damage, or theft. In Canada, car insurance is legally required. Driving without it can lead to personal liability due to injury or damages to third party, and/or lawsuits, or consequences, including fines, licence suspension, and having your vehicle impounded.

Depending on your policy, car insurance can help pay for repairs or replacement of your vehicle, along with liability claims if you’re responsible for an accident that causes injury or damage. Without insurance, those costs would come out of pocket — and can add up quickly.

Types of auto insurance coverage

Car insurance isn’t one-size-fits-all. Policies are made up of different types of coverage, each designed to protect you in specific situations. For new drivers, understanding these options can make it easier to compare coverage and know what protection you’re actually paying for.

Third-party liability insurance

Third-party liability insurance (also called liability insurance) helps protect you financially if you injure someone or damage another person’s property or vehicle while driving. It helps cover costs like medical expenses, repair bills, or legal claims made against you after an accident. What it doesn’t do is pay for damage to your vehicle — that’s handled through other types of car insurance.

In Canada, drivers are legally required to carry a minimum amount of third-party liability insurance The exact minimum depends on your province or territory. For example, the required minimum is $200,000 in Ontario and New Brunswick, while the minimum requirement for mandatory auto insurance in Quebec is $50,000 in Civil Liability.

However, most drivers may opt to purchase more than the required minimum coverage to protect themselves in the case of a serious accident. If the cost of an accident is higher than the limit on your policy, you could be liable for paying the difference.

Collision and comprehensive coverage

Collision and comprehensive coverage are types of insurance that help pay for damage to your vehicle. These two are often lumped together, but each one helps protect against different risks.

Collision insurance helps pay for damage to your vehicle caused by a collision with another vehicle or object, or if your vehicle rolls over (also called “upset”). That can include situations like sliding off an icy road and flipping over or hitting a guardrail or pole. If your vehicle is leased or financed, Collision and Comprehensive coverage is often required by the lender or leasing company.

​Comprehensive insurance helps cover damage or loss from things other than collision or upset — like most thefts, vandalism, fire, flying debris, a natural disaster, or other unexpected events.

Optional car insurance coverage

Beyond mandatory coverage, you can add optional coverage to your car insurance policy. These are called endorsements, and they’re meant to give you extra protection in certain situations. Here are some common options:

    • Family Protection endorsement is an optional endorsement that can help if you or eligible family members are injured by a driver who are uninsured, underinsured, or can’t be identified. In those situations, this coverage may allow you to seek compensation through your own policy. Family Protection coverage is not available in every province, but is available in Ontario, Alberta, and Atlantic Canada. Other provinces offer similar coverage through their government insurance.

    • Waiver of depreciation endorsement. If your vehicle is seriously damaged and considered a total loss, this add-on may prevent depreciation from being applied. Instead of receiving what the car was worth at the time of the claim, the settlement may be based on the original purchase price or replacement value – whichever is less.

    • Alternate transportation benefits (known as “Loss of Use”). If your car is being repaired after a covered claim, this coverage may help pay for temporary transportation, such as a rental car, so you’re not left scrambling.

    • Accident Rating Waiver endorsement may help keep your premium from increasing following your first at-fault accident.

    • Comprehensive emergency roadside and driver assistance program can help with emergency roadside issues, like a flat tire, a dead battery, running out of fuel, or being locked out of your car.

Factors that can affect car insurance premiums for new drivers

When calculating a premium for a new driver, insurers typically look at several factors to estimate risk and set pricing. Some of these factors are about the driver, others may be about the type of vehicle and where you live. That’s why rates can vary from one new driver to the next.

Here are some of the key factors that could influence car insurance premiums:

Personal details and driving experience

When calculating insurance rates for new drivers, insurers may look at a mix of basic details and driving experience. Factors like age and gender can come into play — and this is not based on a single individual. Insurers generally use driving data to estimate risk across group characteristics and set pricing. For example, data shows that younger drivers, particularly teenagers, have more accidents on average than older drivers. That’s why the rates are typically higher for young adults.

New drivers — at any age — usually start with higher premiums simply because there isn’t much of a driving history to go on. Over time, as you build claims-free experience and a clean driving record, that information can carry more weight.

The good news is that no single detail decides your rate. How you actually drive and the record you build over time are an important part of the bigger picture.

Vehicle type

It’s not just about who’s driving — the car itself plays a role in how insurance rates are determined. When you’re getting a quote, insurers look closely at the make, model, year, value, and potential repair costs of the vehicle you’re insuring.

Reliable compact cars, sedans, small SUVs, and minivans with good safety features, low theft risk, and affordable repairs are typically the cheapest to insure. Vehicles with good safety features may help you avoid accidents or reduce the severity of damages, leading to lower claim costs, meaning less risk for insurers.

On the opposite end of the spectrum, you’ll find the most expensive vehicles to insure: high-performance cars, luxury cars, large SUVs, and trucks. However, exceptions exist to every trend. Your vehicle’s size and sticker price doesn’t guarantee a high or low insurance premium.

Driving record

Previous accidents, speeding tickets, driving convictions, driver training experience, licence suspensions and how long you’ve had your licence can affect the price of your premiums. In general, the better your record, the lower your premium. However, there are other factors involved that determine the overall premium. Switching insurers doesn’t change your driving history, so your premiums will still reflect any past convictions or insurance claims. 

Location

Where you live can also affect your car insurance premium. Rates are generally higher in urban areas, where traffic volume, accidents, and vehicle theft tend to be more common, and lower in many rural areas where the risks are typically reduced.

How to lower car insurance rates for young drivers

Getting a quote for car insurance for young drivers can be a bit like sticker shock. The upside? As you build a clean driving record, premium may start to come down over time, all other things being equal. In the meantime, there are ways to help manage costs while still keeping the right protection in place.

Choose the right car

Cars with strong safety ratings, less theft risk, and potentially lower repair costs are typically less expensive to insure. On the flipside, high-performance and luxury models typically come with pricier premiums simply because they’re more costly to repair or replace.

Pro tip: Consider getting a quote on different vehicles before you buy a car, as the premium can vary greatly.

Credible sources like the Insurance Bureau of Canada’s How Cars Measure Up and Consumer Reports can be a helpful starting point when comparing safety ratings and reliability.

Take an accredited driving course

Safe driving is a crucial skill – but how do you develop it? Most insurers may offer discounts if a driver completes an accredited driving course. More importantly, these programs focus on building safe, defensive driving skills, like anticipating hazards and maintain safe distances to prevent a head-on collision and navigating icy roads — habits that can stick with a driver for life.

Increase your deductible

Your deductible is the amount you pay out of pocket if you need to make a claim. Choosing a higher deductible may lower your monthly insurance premium, but it also means paying more if an accident happens.

A higher deductible can make sense if you have some savings or an emergency fund to fall back on if you’re involved in an accident. Whereas a lower deductible might be worth paying for if you don’t have enough cash to front costs right away.

Maintain a good driving record

Building a good driving record takes time, but it’s one of the most effective ways to influence insurance costs in the long run. Safe driving habits also help reduce the risk of accidents and injuries — which matters far beyond premiums. A few practical habits can make a real difference and some of the following have legal implications if you don’t obey traffic rules:

    • Limit distractions. Staying focused on the road is key. Using a phone or other devices while driving can increase the risk of collisions. Data from Transport Canada data shows distracted driving contributes to an estimated 22.5 per cent of fatal collisions and 25.5 per cent of serious injury collisions.

    • Obey speed limits. Slowing down can reduce the risk and severity of collisions — for each 1.6 km/hour reduction in speed could reduce collisions by 5 per cent, according to the Ottawa Safety Council. Obeying speed limits also helps avoid costly tickets that can impact your driving record.

    • Avoid impaired or fatigued driving. Driving under the influence of drugs or alcohol, or when overly tired, can increase the risk of a crash. On long journeys, schedule breaks to reduce fatigue and improve concentration. If you’re under the influence of alcohol or drugs, find alternative transport or wait until you’re no longer impaired.

    • Drive for the road conditions. Snowstorms, traffic, other road users, visibility, and construction zones can affect road safety. Giving yourself extra time and space can help reduce risk, especially in poor conditions.

Bundle insurance policies

In some cases, bundling car insurance with property insurance — like tenant or homeowner insurance — can unlock discounts.

Pay your premium upfront and annually

Some insurers may offer the ability to pay your full annual premium upfront instead of in monthly installments, saving you on an additional installment fee surcharge for monthly payments. It can be a hefty amount to come up with once a year — especially for young drivers — so it may not be realistic for everyone.

How much will new driver insurance cost?

There’s no single price tag for new driver insurance in Canada. Costs can vary depending on things like age, gender, location, and the vehicle model.

The best way to understand what insurance might cost in your situation is to get a personalized quote. This car insurance quote tool can help with an estimate.

How to choose the right car insurance policy for new drivers

Choosing first time car insurance can feel like a lot but breaking it down into a few simple steps can help make the decision clearer and hassle-free.

Assess your needs

Start with how you’ll actually use your car and what fits your budget. Things like your vehicle’s value, how often you drive, commute distance, and comfort level with risk can all help shape the amount of coverage you choose for your own policy.

Compare quotes

Insurance rates and coverage options can vary widely. Compare quotes and see how different policies stack up for your situation.

Pro tip: Insurance advisors need to ask you many questions to prepare an accurate quote. Take a few minutes to jot down key dates in your driving history. When did you get your license? How long have you owned your car? Do you have a copy of completing a driver’s ed course?  Have you ever had an accident or driving conviction?

Understand the policy terms and conditions

Before choosing a policy, take some time to look beyond the price and review the details. Understand key terms like:

        • Your premium – what you pay

      • Deductible  – what you pay out of pocket if you make a claim

      • Coverage limits – the maximum amount your insurance will pay for a covered loss

      • Exclusions – situations or damages that aren’t covered

Taking a few minutes to read the fine print can ensure your insurance works the way it’s intended.

Look for discounts for new drivers

Keep an eye out for discounts for new drivers, including

  • Graduated licensing discounts

  • EV/hybrid vehicle discounts

  • Theft Recover Device discounts

  • Driver education graduate discounts

  • Bundled policy discounts

  • Alumni association discounts

  • Workplace and union-based discounts

Also consider enrolling in a telematics program, such as Aviva Journey. These programs track your driving habits to provide personalized discounts. Many companies provide a discount when you first sign up.

There’s also one discount that drivers, new and experienced, often overlook: Snow tires! Using snow tires in winter may result in a discount on your insurance premiums.

Get expert advice

Unsure about what coverage makes sense for your situation? Speaking with a licensed insurance advisor can help. They can walk you through options, answer questions, and help find a policy that fits your needs as a new driver.

Hit the road with confidence

They say you never forget your first car and getting your driver’s license opens up a whole new level of flexibility — spontaneous plans, fewer rideshares, fun road trips, and everyday convenience. But driving also means new responsibilities, including making sure you have the right car insurance in place. When you understand your coverage and choose a policy that fits your life, you’re setting yourself up to drive with confidence — not crossed fingers.

Do the prep, get covered, and then enjoy the ride. That’s when driving really starts to feel like freedom.

Get Your Free Car Insurance Quote

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*Home and auto insurance products are distributed by RBC Insurance Agency Ltd. and underwritten by Aviva General Insurance Company. In Quebec, RBC Insurance Agency Ltd. Is registered as a damage insurance agency. As a result of government-run auto insurance plans, auto insurance is not available through RBC Insurance in Manitoba, Saskatchewan and British Columbia.

This article is intended as general information only and is not to be relied upon as constituting legal, financial or other professional advice. A professional advisor should be consulted regarding your specific situation. Information presented is believed to be factual and up-to-date but we do not guarantee its accuracy and it should not be regarded as a complete analysis of the subjects discussed. All expressions of opinion reflect the judgment of the authors as of the date of publication and are subject to change. No endorsement of any third parties or their advice, opinions, information, products or services is expressly given or implied by Royal Bank of Canada or any of its affiliates.

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Guide to Common Tax Deductions and Credits for Canadians

15 Min Read
Sandy Yong
Common tax deductions and credits for Canadians

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Enjoying a hot chocolate and ice skating are classic winter activities for Canadians. These activities also signal that tax season is approaching. Getting a head start on preparing your taxes ensures that you can maximize claiming tax deductions and credits, enjoy a smoother tax filing experience, and reduce last-minute stress.

Begin by saving the date in your calendar. For the 2025 tax year, the deadline to submit your personal tax return to the Canada Revenue Agency (CRA) are April 30, 2026. If you’re self-employed, you have until June 15, 2026 to file your tax return.

This guide will show how you can prepare for the tax season to help maximize your tax refund or reduce the amount you owe. To give you a head start, we’ve compiled the top 10 tax deductions and the 10 most popular tax credits that caregivers, business owners, students, and homeowners may claim. We’ll explain what they are, who’s eligible, and the amount you could expect to receive in 2026.

How to prepare for tax season

Giving yourself ample time to organize your taxes will help avoid errors and ensure a seamless experience. You can file your taxes yourself or have a tax expert assist you, especially if your situation is more complex.

Start early

As the saying goes, “the early bird gets the worm.” Getting a head start on your taxes allows you to organize your financial records and find any missing information that you may need. Some people prefer a physical folder with printed documents, while others opt for a digital record. The earlier you file your tax return, the sooner you should receive a tax refund – if you’re expecting one. Plus, it reduces the stress that often comes with last-minute filing.

Gather necessary documents

Before you fill out your tax return, you’ll need to collect the supporting documents. These probably include income statements and registered contribution slips. As an example, you may have a T4 slip for employee earnings and a T5 slip for investment income from a Tax-Free Savings Account (TFSA).

You may also have business receipts, medical expenses, childcare costs, or donation receipts that you’d like to deduct from your income. Although you don’t necessarily need to submit every receipt along with your tax return, you’ll want to keep them on file in case the CRA asks to view them. Best practices: CRA recommends keeping supporting records and documents for a period of six years.

Understand tax deadlines

Knowing when to file your taxes can help you plan and complete your tasks on time. Here are the key filing deadlines for the 2025 tax year:

  • Personal tax return: April 30, 2026.

  • Business tax return: June 15, 2026.

  • Paying your taxes: April 30, 2026.

Being mindful of these key dates can help ensure you don’t miss the deadlines and avoid paying interest and penalties for filing late.

Top 10 tax deductions for Canadians in 2025

A tax deduction helps reduce your taxable income, which in turn, can lower the amount of tax you owe, depending on your tax bracket. Generally, these deductions relate to childcare costs, employment expenses, or registered investment contributions.

The following are 10 of the most common tax deductions you may be eligible for when filing your 2025 tax return.  

1. Childcare expenses

Parents and caregivers may claim childcare expenses when they pay someone to care for their child so they can work, attend school, or conduct research for a grant. In Canada, eligible childcare expenses include daycare, nursery schools, babysitters, nannies, day camps, and boarding schools. If you live with your partner or spouse, usually the person with the lower income makes the child care claim on their tax return.

2. Registered Retirement Savings Plan (RRSP) deduction

If you’ve earned income in 2025, you may allocate a portion of your money to your Registered Retirement Savings Plan (RRSP). You can contribute up to 18 per cent of your income, with a cap of $32,490 for 2025. One benefit of contributing to your RRSP is that it lowers your taxable income.

Remember, the last day to make a contribution towards your RRSP for the 2025 tax year is March 2, 2026 – so there may still be time to reduce your taxable income.

One way to help reach your retirement goals and reduce taxes is through, a Guaranteed Investment Funds (GIF). These segregated funds that can be held within an RRSP, alongside traditional funds, and are designed to preserve your wealth by offering a maturity guarantee and a death benefit.

3. First Home Savings Account (FHSA)

Countless Canadians aspire to have the keys to their dream home someday. To help make this a reality, the federal government designed the First Home Savings Account (FHSA), so potential homeowners can save towards their future home.

To qualify, you need be a first-time homebuyer and can contribute up to $8,000 per year, with a lifetime contribution limit of $40,000. The bonus? These contributions are deductible from your income tax.

4. Medical expenses

Taking care of your health is a top priority for many Canadians. Whether it’s a visit to the dentist, prescription medication, or therapy, these expenses may be claimed on the tax return. You can claim these medical expenses for yourself, your spouse or common-law partner, children under 18, and dependents.

You can only claim the amount that you paid out of pocket and haven’t been reimbursed through group benefits. The amount you can claim is based on 3 per cent of your net income.

Typically, if you have a spouse or common-law partner, it may be ideal for the person who has the lower income to claim the medical expenses. Be sure to keep your receipts and supporting documents to claim accurate medical expenses.

5. Small business expenses

Running your own business typically requires various upfront and ongoing costs to make a profit. Entrepreneurs and small business owners may be eligible to deduct their work-related expenses.

The most common types of business expenses to claim include rent, utilities, marketing and advertising costs, meals and entertainment, office supplies, banking fees, mobile phone plan, internet, fuel and vehicle expenses, travel, employee wages and salaries. The best practice is to keep your business receipts organized so that you can make accurate claims.

Read more: Life insurance for small business owners

6. Employment expenses

If you’re an employee who was required to pay for  expenses  in order to do your job, you may be able to claim them on your taxes. It’s important to note that Canadians can only claim out-of-pocket expenses that your employer didn’t reimburse you for. Typical employee expenses include motor vehicle expenses, advertising fees, paying for parking, hotels, or food and entertainment expenses while travelling for work, or home internet fees if you work from home.

Be sure to ask your employer to complete the Form T2200, Declaration of Conditions of Employment. You’ll also need to fill out the Form T777, Statement of Employment Expenses.

7. Carrying charges and interest expenses

Investors who pay interest to borrow money to earn investment income, such as dividends, can deduct interest expense on their tax return. Alternatively, if you pay fees to have your unregistered investments managed or to receive investment advice, you could claim these carrying charges.

Another situation where you can claim an expense is when you paid an accountant to help file your tax return for income from a property or business. However, you cannot claim brokerage fees or commissions to trade securities.

8. Moving expenses

If you’ve relocated for work purposes as an employee, self-employed individual or for full-time studies at a post-secondary institution within Canada, you may be eligible to claim your moving expenses. Your new home must be at least 40 kilometres closer to your new work location or school.

Related costs that you may claim include transportation, storage, temporary lodging, lease cancellation fees, buying and selling your home, or maintaining your home while vacant (up to $5,000). Be sure to fill out the Form T1-M, Moving Expenses Deduction, to claim these amounts.

9. Union or professional dues

If you pay annual dues for a trade union or professional association membership, you may claim these expenses on your tax return in Canada. Annual membership dues must be related to regular operating costs. You can retrieve the amount from your T4 slip or your receipts. Also, if you paid GST/HST on your dues, you may be eligible for a rebate.

10. Student loan interest

After you graduate, it’s not uncommon to still be paying off student loans with once you begin working. The interest that you pay on your student loans can be used as a tax deduction. Although the federal government permanently eliminated student loan interest as of April 1, 2023, each province has its own rules regarding student loan interest.

You can claim interest paid in 2025 and any of the preceding five years if you haven’t claimed them already on your tax return. Claiming this tax deduction can help alleviate the financial burden of paying down your student debt.

Top 10 tax credits for Canadians in 2025

One way to optimize your taxes is by utilizing the tax credits available to you. There are two types of tax credits: refundable and non-refundable. Refundable tax credits help to reduce your tax bill and give you a refund (if the CRA owes you money). However, non-refundable tax credits reduce the amount of income tax you pay, but don’t result in any refunds to you.

Here are the standard tax credits that you should know about and may be eligible for when filing your 2025 taxes.

1. Canada Child Benefit (CCB)

Families raising children under 18 may qualify to receive the Canada Child Benefit (CCB), which is a tax-free monthly payment. The amount you receive is contingent on your household income, marital status, and the number of children you’re caring for.

For instance, a family with a household income below $37,487 could be eligible to receive a CCB benefit up to $666.41 per month for a child under the age of 6 or $562.33 per month for a child between the ages of 6 and 17. Benefit payments are calculated in July from the previous tax year. Therefore, payments from July 2026 to June 2027 will be based on the 2025 tax year.

2. Canada Caregiver Credit (CCC)

Taking care of a spouse, common-law partner, or a dependent who has a physical or mental impairment may qualify you to claim the Canada Caregiver Credit (CCC). The non-refundable tax credit is designed to support caregivers who need to provide basic necessities for their dependents. On your tax return, you can claim the following amounts:

  • Your spouse or common-law partner: $2,616.

  • A dependent 18 years or older: $2,616 and up to $8,375.

  • A child under the age of 18: $2,616.

The CRA may request a signed statement from a medical practitioner explaining when the impairment began and how long it may last.

3. Canada Training Credit (CTC)

Canadian residents aged 26 to 65 who paid tuition and fees at an eligible educational institution may qualify to claim the Canada Training Credit (CTC). On your notice of assessment (NOA), you’ll find the Canada Training Credit Limit (CTCL), which is the amount you can claim on your tax return or up to 50 per cent of your tuition and fees, whichever is less.

If you owe less in taxes than the credit amount, you may receive a tax refund for the difference. Every year when you file your tax return, you may qualify for an increase of $250, with a lifetime maximum of $5,000.

4. Child Disability Benefit (CDB)

The Child Disability Benefit (CDB) helps families who take care of a child under 18 who has a physical or mental impairment. To receive the tax-free monthly payment, you must be eligible for the Canada Child Benefit (CCB), and your child must be eligible to receive the Disability Tax Credit (DTC).

The amount you can expect depends on the number of children who qualify and your household income. For payments from July 2025 to June 2026, the amount will be determined based on the 2024 tax return. You could receive up to $284.25 per month ($3,411 per year) for each child. Payments for the 2025 tax year will be adjusted accordingly for the period from July 2026 to June 2027.

5. Disability Tax Credit (DTC)

If you have a disability or you care for a family member who has a severe or prolonged impairment, then you may be eligible to receive the Disability Tax Credit (DTC). This non-refundable tax credit helps to reduce your income tax to alleviate the costs related to the impairment. To qualify, you’ll need a medical practitioner to help complete the form T2201, Disability Tax Credit Certificate, so that you can submit it to the CRA.

For the 2025 tax year, an individual 18 years or older may claim up to $10,138 on their tax return. Children ages 18 and under have an additional $5,914 in tax credits to claim, for a total of $16,052.

6. GST/HST tax credit

The Goods and Services Tax/Harmonized Sales Tax (GST/HST) tax credit helps modest-income individuals and families offset the cost of goods and services tax they pay. You’ll be considered for this tax credit when you file your annual tax return.

Payments are distributed quarterly. The January 2026 and April 2026 payments are based on the 2024 tax return, whereas the July 2026 and October 2026 payments are based on the 2025 tax return. For instance, for January 2026 and April 2026 payments, you could receive up to:

  • $533 if you’re an individual.

  • $698 if you’re married or in a common-law relationship.

  • $184 per child who is under 19.

7. Tuition Tax Credit (TTC)

Investing in your education is an important step to pursue your career goals. Yet, tuition fees at post-secondary schools have been rising steadily in recent years. To provide financial relief, eligible students can apply for the Tuition Tax Credit (TTC). To qualify, individuals must be 16 years or older and have studied at a post-secondary educational institution to learn or improve their skills in an occupation.

Your educational institution will issue you a tax receipt that has the amount of tuition you paid. You can claim tuition fees if you paid $100 or more in 2025. Eligible expenses include admission fees, application fees, examination fees, and membership or seminar fees. However, if your employer reimbursed you or a job training program covered your fees, then you cannot claim the tuition amount on your tax return.

8. Rebate for first-time home buyers

Without a doubt, buying a home is one of the biggest financial purchases for Canadians. Fortunately, first-time home buyers may receive financial support through the First Time Home Buyers’ Tax Credit (HBTC) on your principal residence. This non-refundable tax credit is calculated by multiplying $10,000 by the lowest federal personal income tax rate (14.5% in 2025). That equates to $1,450 in tax relief for qualifying first-time home buyers.

Recently, the 2025 federal budget proposed a First-Time Home Buyers’ (FTHB) GST/HST rebate. This proposed legislation would grant first-time home buyers a rebate of up to $50,000 for a home worth $1 million, while homes priced between $1 million and $1.5 million receive a reduced rebate. If Bill C-4 gets the green light, first-time home buyers would be able to stack both rebates.

Once you become a homeowner, an important consideration is how you’ll protect your property and belongings. Having the proper home insurance coverage will help secure your investment and safeguard your most valuable assets.

9. Charitable donation tax credit

Canadians are known for their generosity by donating to charitable causes. When you donate money to a registered charity, you should receive a donation receipt. You can claim this amount on your tax return to receive a non-refundable tax credit. Here’s how much you can receive in tax credits:

  • Federal: 15% on the first $200 donation, then 29% for donations of $200 or more.

  • Provincial: Ranges from 4% to 25% on the first $200 and those above $200.

If you’re looking to leave a legacy by donating money to a noble cause, a life insurance policy may support your final wishes.

10. Home Accessibility Tax Credit (HATC)

Renovating your home to make it more accessible, functional or safer for a senior (65 and older) or an individual who is eligible for the Disability Tax Credit (DTC) may qualify you for the Home Accessibility Tax Credit (HATC). You may expense materials and labour performed by professional contractors, such as an electrician or plumber. However, you cannot claim the labour performed by yourself or a family member, unless they’re registered to collect GST/HST and meet the criteria outlined by the CRA. 

The maximum amount you can claim in a given year is $20,000 for the non-refundable tax credit. Be sure to keep a record of your signed contracts, invoices, and receipts.

Optimize your taxes today while protecting your future

Preparing for tax season can go a long way in optimizing your tax return and ensuring you file on time. Now that you understand which tax deductions and tax credits you can take advantage of, it’s essential to maintain accurate records so that you can make the most of your tax return.

Besides tax planning, it’s a good idea to consider how to protect your financial nest egg, grow your investments, and pass on your wealth once you’re gone. Depending on your situation, insurance could support your financial goals, provide tax-efficient strategies, and assist with estate planning.

By taking a broad approach that includes tax strategies, insurance, and financial planning, you’ll be able to safeguard your assets and provide a lasting legacy for those who matter most.

RBC Retirement Investment Solutions

Whether you’re building up your nest egg or ready to turn your hard-earned savings into retirement income, our solutions can help you make the most of your money. Have an RBC Insurance Advisor call you to learn more.

*Home and auto insurance products are distributed by RBC Insurance Agency Ltd. and underwritten by Aviva General Insurance Company. In Quebec, RBC Insurance Agency Ltd. Is registered as a damage insurance agency. As a result of government-run auto insurance plans, auto insurance is not available through RBC Insurance in Manitoba, Saskatchewan and British Columbia.

This article is intended as general information only and is not to be relied upon as constituting legal, financial or other professional advice. A professional advisor should be consulted regarding your specific situation. Information presented is believed to be factual and up-to-date but we do not guarantee its accuracy and it should not be regarded as a complete analysis of the subjects discussed. All expressions of opinion reflect the judgment of the authors as of the date of publication and are subject to change. No endorsement of any third parties or their advice, opinions, information, products or services is expressly given or implied by Royal Bank of Canada or any of its affiliates.