If you’re juggling debt and a family, it’s natural to think about their future–especially if something happens to you. Life insurance provides a financial safety net for them with a one-time, tax-free payout. It’s affordable, provides immediate coverage and it starts with an easy online application.

What to consider before getting life insurance online

It can be daunting to think about life insurance (and what happens after you die), but once you understand the purpose, benefits and limitations of buying life insurance online, you can easily find a policy that meets your needs.

Why buy life insurance?

There are many reasons to buy life insurance but perhaps the main one is to provide financial security to those who depend on you after you pass away. Upon your death, your beneficiary, such as your spouse, receives a one-time, non-taxable lump-sum death benefit.

This money can be used however it is most needed, such as:

• Covering the cost of funeral or cremation expenses

• Paying off the mortgage and/or other household debt

• Replacing lost income for childcare expenses or household bills

• Funding your child(ren)’s tuition or other education expenses

• Creating a tax-free inheritance

When is the best time to apply for life insurance?

There is no best time to buy life insurance but typically, if you apply when you are young and healthy, your premiums will likely be lower.

Some people time their purchase of life insurance to coincide with a major life event, such as getting married, buying a house or having a baby. Once you have other people depending on your income, or if you have debt (such as a mortgage) that will remain after your death, then it’s a good idea to apply for life insurance.

You should likely consider purchasing life insurance now if you:

• Are expecting a baby or have kids or other dependents

• Share financial responsibilities with a spouse or partner

• Have debt, such a mortgage, personal loans or a car loan

• Do not have enough savings to cover end-of-life expenses, such as your funeral, cremation or burial

• Want to leave an inheritance to your family and loved ones

What is the right amount of life insurance coverage?

Life insurance is not one-size-fits all and it’s important to consider both your financial needs (including your total debt) and your budget.

Financial needs

• Debt: How much debt do you have and how long will it take to pay off?

• Your current income: How much replacement income do you need to help your spouse or partner with day-to-day expenses?

• Your end-of-life expenses: The cost of a funeral, cremation or burial costs can vary significantly, starting at $800 for a simple cremation up to $15,000 (or more) for a burial, according to Canadian Funerals.

• Future education expenses: A four-year degree can cost over $100,000, including tuition, living expenses and food.

• Inheritance: How much do you want to leave your family as extra, above these basic needs?

You may also have employer-provided life insurance. While this is a great benefit, especially if you don’t have other coverage, it’s important to understand its limitations, namely:

• Coverage is usually two to three times your salary, which may not be enough

• Your policy is only in effect while you are employed by that company, so if you get laid off or switch jobs, you will lose that coverage
  

Employer-provided life insurance can provide excellent supplemental coverage, but if you have the budget, purchasing more that is not tied to your employer can add another layer of security for your dependents.

Budget

The amount of your life insurance premium, which is typically paid monthly or annually, depends on several factors, such as your:

• Age: Generally, the younger you are, the cheaper the insurance policy

• Gender: Women statistically live longer than men, so their premiums may be cheaper

• Tobacco use: Smokers pay a higher premium than non-smokers

• Health: Healthier people (for example, no chronic high blood pressure) pay a lower premium

• Lifestyle: Your premiums will be higher if you’ve had your driver’s license revoked, if you’re facing criminal charges or if you engage in risky activities, such as sky diving or flying

Keep in mind that some life insurance coverage is better than none if you can’t currently afford to purchase the amount of coverage that meets all your future financial needs. You can always add more coverage as your budget allows, though you will need to qualify based on your age and health at that time.

What health information will you need to provide?

Depending on the insurance that you are applying for, you will need to answer questions about your health and lifestyle, such as:

• Age

• Gender

• If you’re a smoker (includes any form of tobacco, betel nut leaves, vaping or smoking cessation products, among other products)

• Your occupation

• Any diagnosis or chronic conditions, such as high cholesterol or cancer

• If you engage in high-risk or hazardous activities, such as racing, mountain climbing or flying aircrafts.

• If you’ve been charged with impaired driving or alcohol or drug-related offenses or activity.

Who will be your life insurance beneficiary?

A life insurance beneficiary is the person (or entity) who you designate to receive the proceeds from your policy after you pass away. The death benefit is paid directly to your beneficiary or beneficiaries and does not become part of your estate, meaning it bypasses probate.

You can choose anyone to be your beneficiary, such as your spouse, children (if they are under the age of majority, you would name a trust), siblings or other family members, a friend, business partner or charity. You can choose one beneficiary or multiple ones, and you can tailor how much each beneficiary receives.

When choosing a beneficiary, it’s important to consider who is most dependent on your income now, and in the future. If you have young children, for example, a life insurance policy can help your surviving spouse with future post-secondary education costs.

It’s also important to ensure you keep your beneficiaries up-to-date, especially after a significant life change, such as marriage, divorce, or having children.

Types of life insurance available online

RBC offers two types of life insurance you can buy entirely online:

Term life insurance

Term life insurance provides affordable coverage for a set time, or term, such as 10, 15, or 20 years. Your premium will stay the same for the entire term but it’s important to note it will increase when you renew.

Here are some of the key features of simplified term life insurance with RBC:

• Terms between 10 and 40 years

• $50,000 to $1 million in coverage for ages 18 to 55

• $50,000 to $499,999 in coverage for ages 56+

• No medical exam

• Premium will not increase for the length of the term

• Option to renew (at higher premium) at end of the term

• Accidental death benefit that pays an additional $10,000 available

• No cash value to your policy beyond the death benefit

• 30-day money-back review period

• Must be a Canadian citizen or permanent resident

Curious to know how much term life insurance might cost you? Get a term life quote online in a few minutes to find out.

If you are applying for more than $1 million in coverage, or if you are between the ages of 56 and 70 applying for more than $500,000 in coverage, you’ll need to speak to an accredited insurance advisor.

No medical exam life insurance

This is a kind of permanent life insurance that covers you for the rest of your life. Your premiums will never go up and your policy does not expire, if your premiums are maintained. With this guaranteed issue insurance, there is no medical exam, but coverage is lower than other insurance options available.

Here are some key features of RBC’s guaranteed acceptance life insurance:

• Available for Canadians or permanent residents aged 40 to 75

• Between $5,000 to $40,000 in lifetime coverage

• Premiums remain the same

• No medical exams or health questions

• Accidental death benefit (before age 85) of five times the basic coverage

• No cash value to your policy beyond the death benefit

• 30-day money-back review period

Curious to know more? Easily get a quote for guaranteed life acceptance insurance with no medical exam.

Pros and cons of buying life insurance online

If you’ve been considering life insurance, buying a policy online has several advantages. To know if it’s the right choice for you, it’s important to also be aware of the downsides.

Pros of buying life insurance online

• Convenience: You can purchase insurance anytime and anywhere that is convenient for you without having to book an appointment with an advisor.

• Speed: Buying life insurance is typically a quick process, where you provide basic information about yourself, your health and your lifestyle. You can then pay for your policy online.

• No need for medical exam: With life insurance products such as RBC Simplified Term Life Insurance and RBC Guaranteed Life Insurance, there is typically no need for a medical exam.

• Money-back guarantee: With RBC Insurance, you’ll have a specified period, typically 30 days, to review your policy. If it’s not the right fit, you have the option to cancel your policy and get a full refund.

Cons of buying life insurance online

• Limited to basic insurance types: If you’re looking for more sophisticated life insurance coverage, such as Term 100 Life Insurance that offers higher coverage amounts and special riders like disability, you cannot purchase those products online.

• No personalized advice: Shopping online means you don’t have the experience or guidance of a licensed advisor who can offer personalized advice to your circumstances and needs.

• You may overlook the fine print: While you can buy your policy quickly and easily, your insurance coverage will include a list of terms and conditions. For example, if you die within the first two years of purchasing Guaranteed Life Insurance coverage, the death benefit is limited to a refund of your premiums paid (without interest).

While purchasing a life insurance policy online is easy, if you have questions about your options or are unsure what kind of insurance is the best fit for you and your family, it may be helpful to contact an accredited insurance advisor for a more comprehensive life insurance quote.

How to apply for life insurance online

Once you’ve decided you want to purchase life insurance, it’s time to figure out how much coverage you need. To recap, start by reviewing your current financial situation and your goals.

Know what coverage you’ll need

Here are some questions to ask yourself before you begin:

How much debt do I have? This includes your mortgage and any loans.

What expenses do I expect? When you think of “saving for the future,” what does this include? It could be post-secondary education for kids, 

What expenses do I anticipate when I die? Get specific about your final wishes when you die and understand the costs associated with a funeral.

What financial legacy do I want to leave? Are there charities or organizations you want to donate to after you’ve passed away?

Our life insurance calculator can help you figure out how much coverage you might need.

This online tool asks questions about your:

• Age

• Marital status

• If you have kids and their ages (if under the age of majority)

• Your gross annual income

• If you have debt and if so, how much you’d need to pay it off

Once you have the total coverage amount in mind, you can easily compare life insurance plans to find the one that meets your eligibility and coverage needs.

Tips for getting approved for life insurance online quickly

• Best honest in your application, especially if you’re a smoker (for the purposes of an application, smoking includes any form of tobacco, betel leaves, vaping, and smoking cessation products)

• Have a clear understanding of your coverage needs

• Choose a policy that best suits your age and health profile

• If you have preexisting medical conditions, or are afraid of needles or medical appointments, consider a policy that does not ask health questions or require a medical exam

• Have your payment method (such as a credit card) ready

Get a life insurance quote online in minutes

If you’re looking for simplified life term life insurance or guaranteed acceptance life insurance that provides immediate coverage, you can save time and stress by getting a quote online.

To start, you’ll need to answer questions about your province of residence, your date of birth, your gender and your tobacco use over the past 12 months. You can then customize the term that’s right for you and the coverage amount. From there, you can start your application entirely online. Alternatively, arrange to speak to an accredited insurance advisor to guide you through the insurance-buying process.

Purchasing life insurance online does not need to be overwhelming or difficult. In fact, RBC Insurances makes it easy to assess your needs, get an insurance quote online, and purchase your coverage in just minutes – giving you peace of mind knowing your family is protected.

FAQs about buying life insurance online

Can I get life insurance completely online?

Yes, you can get an RBC Simplified Term Life Insurance policy or RBC Guaranteed Acceptance Life Insurance policy completely online. You simply need to answer questions about your personal profile, health and lifestyle. Some insurance products, however, such as RBC’s Term 100 Life Insurance, are not available to purchase completely online.

How do you get life insurance quickly?

Purchasing life insurance online is quick and easy and will likely not require a medical exam. You can be covered in the time it takes to get a quote, complete an application online, and submit your payment details.

How much does life insurance cost per month?

The cost of life insurance depends on your age, gender, health, risk factors and coverage amount. For example, a policy of $100,000 for a 10-year term would cost a 31-year-old woman $9.22 per month, and a 51-year-old woman $20.95, per month. Increase the coverage to $250,000 and it would cost $11.70 and $34.29 per month.

Is buying life insurance online safe?

Yes, buying life insurance online is safe. Purchase life insurance online from a reputable insurance company and check the policy comes with a a money-back cancellation period (such as 30 days), if you change your mind.

For many Canadian seniors, life insurance may seem unnecessary once financial freedom is in sight. Maybe the house is mostly paid off, the kids are grown, and your pension is steady — so what’s the point?

Here’s the truth: life insurance isn’t just about replacing income. It’s about peace of mind, protecting the estate you’ve built, and easing the financial load on loved ones. The right policy can cover final expenses, safeguard assets, and even create a meaningful gift for children, grandchildren, or charities.

Moreover, while some seniors already have a policy, they may not review it often. Fewer than 40 per cent of Canadians revisit their coverage each year, leaving many with outdated policies that no longer fit their current lives.

This guide breaks down the best life insurance options for seniors in Canada — from simple plans for final expenses to policies that help pass wealth to the next generation.

Key takeaways

• Life insurance can help seniors cover end-of-life costs, protect retirement income, preserve estates, and leave a legacy.

• Seniors have several options, including term, permanent, and guaranteed acceptance policies, each with pros and cons.

• The right policy depends on your needs, health, and goals, so compare carefully and work with a trusted advisor.

• Read the policy’s fine print to avoid surprises and ensure it truly fits your long-term goals.

Why life insurance matters for seniors

Life insurance isn’t just a “young person’s product.” Whatever your age and stage, the right policy can be a smart financial tool for protecting your family, assets, and peace of mind.

Estate planning

Settling an estate isn’t free. Taxes, fees, debts, and other costs must be paid before assets are passed on to beneficiaries. Without life insurance, your loved ones may need to dip into the very assets you hoped to preserve — like the family home, cottage, investments, or savings — long before anyone is ready.

Life insurance provides cash to cover those costs, keeping your estate intact. Since death benefits are tax-free in Canada, your beneficiaries receive the full payout.

Read more: What Is Estate Planning?

Cover end-of-life expenses

Think the cost of living is high? The cost of dying isn’t cheap. Funerals in Canada can cost between $5,000 and $10,000+, cremations up to $5,000, and in some city cemeteries, a single burial plot can exceed $25,000. Without insurance, families may have to find the money to cover the costs. A policy ensures loved ones can focus on saying goodbye, not the bills.

Protect retirement income

Losing a spouse brings more than grief — it can also mean a sudden drop in income. Pensions and survivor benefits often shrink, leaving the surviving partner to cover expenses or maintain the lifestyle you built together.

The impact can be especially tough before age 65. In 2021, widows under 55 saw an average after-tax family income drop by more than $15,000 in a year, and the share living in low-income households nearly tripled, from 7.7 per cent to 21.9 per cent. Life insurance can help buffer that financial blow, giving the surviving partner a tax-free payout to ease their money worries.

Leave a legacy

What’s the best gift you can leave your family? Financial security. Life insurance provides a tax-free benefit that goes directly to children, grandchildren, or loved ones, which can help fund tuition, contribute to a first home, or simply provide a cash cushion for the future.

Covering taxes on assets

Cottages, investment properties, and non-registered investments can trigger hefty capital gains taxes. Insurance creates funds to pay those taxes, helping keep assets in the family.

Opens the door to charitable giving

Your generosity doesn’t have to stop when you do. By naming a charity as a beneficiary, you can create a tax-free gift that bypasses probate and delivers immediate impact.  Depending on the policy’s structure, you may also benefit from tax credits.

Types of life insurance for seniors

From short-term protection to lifelong plans that double as financial tools, there are a range of options designed to fit different needs. Let’s break them down.

Read more: The Types of Life Insurance Explained

Term life insurance

Straightforward and affordable, term life covers you for a fixed period (like 10, 20, or 30 years) or until a certain age (such as 65).  If you pass away during that term, your beneficiaries receive a lump-sum, tax-free death benefit. Coverage ends when the term expires, unless you renew or convert it to permanent insurance.

It’s a good fit for healthy older Canadians who need temporary protection, like paying off a mortgage or supporting a spouse until retirement. Premiums stay the same for the entire term, but they can increase upon renewal. RBC’s Term Life Insurance offers flexible terms that range from 10 to 40 years, and you can convert it to permanent coverage later — protection that can grow with you.

Best for: Healthy seniors with temporary needs who want flexibility to convert later.

Permanent life insurance

Think of this as the “locked-in-for-life” plan. Permanent life insurance never expires, as long as premiums are maintained, and often builds cash value that you can tap into while you’re alive. There are two main types:

• Whole life insurance is steady and reliable. Your premiums stay the same for life, coverage never ends, and the policy often builds a guaranteed minimum cash value over time. Some plans also invest part of your premiums and may pay out dividends. With RBC’s Participating Whole Life Insurance, you can access your policy’s funds while you’re alive, and coverage is available up to age 80.

• Universal life insurance does double duty: it combines lifetime coverage with an investment component. Part of your premium pays for insurance, while the rest goes into funds you choose. That money grows inside the policy, often with tax advantages. RBC’s Universal Life Insurance lets you adjust payments, pick investments, and access the cash value if needed. Coverage is available up to age 85.

Best for: Seniors who want lifelong coverage plus the potential to grow wealth and preserve their estate.

Guaranteed acceptance life insurance

Not in perfect health? No problem. Guaranteed acceptance life insurance makes it easy to get coverage with no medical exam or health questions. With RBC’s Guaranteed Acceptance Life Insurance, Canadians aged 40 to 75 are automatically approved for up to $40,000 in coverage.  Premiums never go up, and coverage lasts a lifetime.

Best for: Seniors in poor health who want hassle-free, lifetime protection for final expenses.

Funeral insurance

Funeral insurance (also called burial or final expense insurance) provides a smaller payout specifically for end-of-life costs. A medical exam isn’t typically required, coverage lasts a lifetime, and claims are often paid quickly.

Read more: Are Your Parents’ Final Expenses Covered?

How much does life insurance for seniors cost?

It depends! Premiums tend to rise with age, but the exact cost depends on factors like age, lifestyle, coverage amount, policy type, and overall health. Pre-existing conditions (like high blood pressure, diabetes, or cancer history) can increase the cost, and smoking is a surefire way to push rates even higher.  There’s no “one-size-fits-all” policy.

Get a term life insurance quote online to see what a policy might cost you.

Read more: Applying For Life Insurance: Why You Should Be An Open Book

How to choose the best life insurance policy for seniors

Life insurance is a major financial decision, and with so many options out there, it can feel overwhelming. Here’s how to focus on what matters and find the right fit:

1. Assess your needs

Calculate what you’d like the policy to cover. Funeral costs? Outstanding debts? Charitable gifts? This gives you a realistic idea of how much coverage you need. Our life insurance calculator can help you estimate in minutes.

2. Evaluate your health

If you’re in good health, you may qualify for term or permanent life insurance. If not, consider guaranteed acceptance policies that don’t require a medical exam.

3. Work with a professional

The right advisor can make all the difference. Look for someone who understands your needs, priorities, and budget, and can explain options clearly. RBC’s licensed insurance advisors can help you find the right policy and guide you every step of the way.

4. Compare policies

Compare quotes carefully, looking at the type of coverage, long-term costs, and included features. Don’t just chase the lowest price — cheaper isn’t always better if it leaves gaps in coverage! Make sure the policy will serve you years from now, not just today. RBC’s life insurance comparison tool makes it easy to review plans side by side.

5. Understand the policy

Once you’ve chosen, dig into the details of that specific policy. Read the fine print, check for exclusions or waiting periods, and confirm which benefits and rates are guaranteed. Ask how the policy might change over time so there are no surprises later.

Secure peace of mind in your retirement

Life insurance isn’t just about numbers — it’s about knowing your loved ones will be taken care of when you’re gone. The right policy can cover end-of-life, provide financial support for dependents, or even help you leave a legacy. For seniors, premiums may be higher, but coverage is available. By assessing your needs, considering your health, comparing policies, and working with a trusted advisor, you can find an option that fits your budget and goals.

FAQs about life insurance for seniors

Do seniors need life insurance?

Not every senior does, but many find it valuable. Life insurance can cover final expenses, pay off debts, or leave a financial legacy. If you have dependents or want to ease the financial burden on loved ones, a policy can help with that.

Can seniors get life insurance without a medical exam?

Yes. Many insurers, including RBC Insurance, offer guaranteed acceptance policies that don’t require a medical exam or health questionnaire. These are designed to make coverage more accessible for older applicants or those with health concerns. RBC Insurance offers guaranteed acceptance coverage with automatic approval for ages 40 to 75.

Can you get life insurance after 70?

Absolutely! RBC Insurance, for example, offers life insurance options for Canadians up to age 85. Premiums may be higher, but coverage is available.

If you’re thinking about purchasing a whole life insurance plan, you probably already know that it’s a type of coverage that comes with two advantages. Whole life policies offer protection and peace of mind for your lifetime and can work as a savings tool that helps you build wealth and plan for your future and the future of the people you love.

Life insurance, however, isn’t a one-size-fits-all product. How do you know if whole life insurance is the right product for you — and how do you choose the specific whole life insurance policy that’s the best fit for your financial goals? There are several important factors to consider before making your decision.

Here, we break down the typical features offered by whole life insurance plans, including how they differ from other types of insurance and how you can leverage your plan to grow your savings while looking after your family.

Key takeaways

• Whole life insurance plans provide lifetime coverage, paying out a death benefit regardless of when you die.

• Unlike term life insurance, whole life policies can feature a cash value component that offers the opportunity to build wealth that you can withdraw, borrow against, or reinvest.

• Participating whole life insurance plans also have a professionally managed investment component that may earn dividends.

• Alternatives to whole life insurance include term life insurance and universal life insurance.

What is whole life insurance?

A whole life insurance policy provides insurance coverage for your entire life, as long as premiums are maintained. When you pass away, your policy pays a fixed amount called death benefit to your beneficiaries. These policies may also include a cash value component where a percentage of each of your premiums goes towards the cash value of your policy, earning interest at a fixed rate. 

How does whole life insurance work?

There are several unique features that differentiate whole life insurance from other types of coverage. The biggest, and perhaps most important factor is that a whole life insurance policy protects you for your entire life, unlike term life insurance policies which offer coverage for a set term (usually ten, 15, or 20 years). When you die, your whole life insurance policy pays a guaranteed, tax-free death benefit to your selected beneficiaries, as long as premiums are maintained.

With a whole life insurance policy, you’ll have two options to grow your wealth: cash value or dividends, depending on the type of policy you choose.

A cash value component acts as a tax-deferred savings account. Policyholders have access to these funds and can use them to supplement their retirement income, fund home renovations, or take a dream vacation – it’s up to you.

With participating whole life insurance plans, part of your premium payments is pooled with other policy holders in a fund that is professionally managed and has the potential to produce earnings. These earnings are paid out in dividends when the fund produces growth or can be reinvested to pay off premiums or purchase additional insurance.

What are the benefits of whole life insurance?

With a whole life insurance policy, you’ll have access to additional features and benefits that other types of life insurance don’t offer. These benefits include:

• A savings component that grows over time at a guaranteed rate

• The ability to use your policy’s cash value as collateral against a loan

• Access to that cash value and the freedom to use it for whatever you choose including premium payments, supplemental retirement income, or a bucket list vacation

• The potential to earn dividends on the invested portion of your policy if you choose a participating whole life insurance plan

• Premium payments that are set from the start of your plan and remain regular and consistent, allowing for easier financial planning

• A guaranteed death benefit that isn’t subject to taxation

• Estate planning benefits that allow you to protect the wealth you’ve worked hard for and pass it on to your loved ones

Alternatives to whole life insurance

Different types of life insurance coverage are available to suit different needs and unique financial goals. If you’re considering signing up for a life insurance plan, you might also want to consider:

Term life insurance

Term life insurance offers coverage for an entire lifetime while term life insurance covers you for a specific length of time, typically between 10 and 40 years, depending on the plan you select. You may not need a medical exam to qualify, and the premiums are typically lower because there are no savings or investment components.

Read more: Term vs permanent life insurance

Universal life insurance

The differences between whole life insurance and universal life insurance are in the details. Both offer lifelong coverage, a death benefit payout, and a cash value component. However, with universal life insurance, policyholders have the potential to grow their death benefit and take a greater role in managing the investment components of their policy. 

What to consider when choosing a whole life policy

To understand whether a whole life insurance policy is the right kind of coverage for you and your family, consider these key factors:

Your coverage needs: Think carefully about the kind of coverage you need, how long you might need it for (based on your current age), and the financial goals you have for yourself and your loved ones. 

Your premium affordability: With a whole life policy your premiums are fixed which makes for simplified budgeting; however, you need to be sure that you will be able to afford the premium payments both now and in the future.

Your policy as a savings and investment tool: If you’re planning to use your policy to grow your savings and act as an investment tool, evaluate it carefully to ensure that it aligns with your financial goals. It’s also important to understand the different ways in which the cash value component of your plan can be leveraged for loans or withdrawals.

The policy’s exclusions: Be sure to take careful note of what is and isn’t covered by your policy. In what kinds of situations might you encounter an exclusion?

The reputation of your policy provider: Choosing the right life insurance policy is a decision made easier with guidance from an accredited insurance broker and a trustworthy insurance provider.

Common mistakes to avoid with whole life insurance

To select the ideal whole life insurance policy, it’s important to keep in mind the common errors people often make when deciding on a plan.

• Don’t underestimate your coverage needs. People may need more coverage than they think they do. Consider the number of people who rely on you, the amount of debt you have, and your current income. Use our life insurance calculator in order to get an initial estimate.

• Don’t sign on to a plan with premiums that are beyond your current or future budget. Failing to make premium payments can put your coverage and death benefit at risk.

• Always read the fine print and consult an accredited insurance advisor if you still have questions or don’t understand something you read.

Grow your wealth and protect your family with whole life insurance

Whole life insurance is an insurance product that provides lifelong coverage for you and your loved ones. You’re protected when you die, no matter when or at what age. Your beneficiaries receive a death benefit payout that helps support them financially after you’re gone.

Additionally, whole life plans include components that serve to grow your savings and offers the ability to earn dividends that can be reinvested or used to supplement your income. Should an unexpected expense come up, your cash value component may be eligible for withdrawal or used as collateral against a loan. It’s protection with built-in flexibility and financial opportunity.

FAQs about the best whole life insurance policies in Canada

Is whole life insurance a good investment?

Whole life insurance provides lifelong coverage while also featuring tools for savings and investment. The cash value component of your policy offers guaranteed growth that does not depend on market performance. Participating whole life insurance policies also have the potential to earn dividends based on the performance of the professionally managed investment component.

Who should get whole life insurance?

Whole life insurance is ideal for people who want the peace of mind that comes with knowing their loved ones and dependents will be provided for financially in the future. It can also act to bolster estate planning, protecting the assets you’ve worked hard for and want to pass on to your family.

Can I cash out my whole life policy?

Yes. If you decide to do this, your policy provider should be able to provide the cash surrender value of your plan. When you die, however, your beneficiaries will no longer receive the death benefit payout. It’s important to know, there may also be tax penalties related to the cash surrender value.

Does whole life insurance pay dividends?

Participating whole life insurance features a professionally managed investment component that offers the potential to earn dividends based on market performance.

At some point, you may be wondering how you can protect your family’s finances after you’re gone. Many Canadians face the challenge of choosing the appropriate type of permanent life insurance that can support estate planning and the transfer of assets to their loved ones.

Understanding permanent life insurance can give you peace of mind and help you protect your loved ones financially long-term.

In this guide, we’ll walk you through and explain what permanent life insurance is, the benefits and drawbacks, the different types available, and what you need to know when considering whether it’s a good fit for the financial legacy.

Key takeaways

• Permanent life insurance provides lifelong coverage with fixed premiums.

• Permanent life insurance usually includes a death benefit and a growing cash value component.

• Whole life insurance, universal life insurance, and term 100 life insurance are the main types of permanent life insurance.

• If you have lifetime financial obligations, are involved in tax planning or estate planning, have a high net worth, and have a family with dependents, permanent life insurance may be a suitable choice.

• Although permanent life insurance has higher premiums compared to term life insurance, it does offer lifetime coverage, tax advantages, and accumulating cash value.

Understanding permanent life insurance

It’s important for individuals and families to understand what permanent life insurance is so you can make an informed decision about the best type of coverage for your circumstances.

Simply put, permanent life insurance provides you with lifelong coverage with stable premiums that don’t change from the time you purchase the policy. Permanent life insurance means your loved ones receive a tax-free death benefit when you pass away, if your premiums are maintained.

Some permanent life insurance products also include a cash value that may increase over time and allows you to withdraw or borrow funds from your cash value.

There are three types of permanent life insurance: whole life insurance, universal life insurance, and term 100 life insurance. These products differ slightly, and we’ll explain more about how each one works below.

What are the pros and cons of permanent life insurance?

Each type of insurance policy has its benefits and drawbacks. There’s no exception when it comes to permanent life insurance. That’s why it’s important to understand both sides of the equation so that you can determine whether permanent life insurance is the right fit for your circumstances.

Pros of permanent life insurance

There are a wide variety of benefits of permanent life insurance, including:

Lifetime coverage: Unlike term insurance (which ends after a defined period, typically from 10 to 40 years), permanent life insurance gives you lifelong coverage, even if you experience changes to your health.

Guaranteed payout: Because this policy doesn’t expire, your beneficiaries will receive the death benefit as long as you maintain your regular premium payments.

Accumulating cash value: With the cash value acting as your savings account, you’re automatically building long-term wealth.

Tax advantages: The tax-free death benefit and tax-deferred cash value growth can help to preserve your wealth and provide accessible funds for settling the estate.

Potential for dividends: Depending on the type of insurance you choose, you may be eligible to receive dividend payouts from your investment accounts.

Reinvesting dividends: You can reinvest these dividends to potentially increase the value of your policy’s death benefit and cash value.

Cashing out options: If you need to withdraw the cash value from the policy, you have flexible options to do so.

Customizable add-ons: Based on your unique needs, you may top up your coverage (known as riders), such as to protect you in the event of accidents or disability.

Estate planning: Permanent life insurance gives you the flexibility to leave an inheritance to your beneficiaries, which provides them with a liquid asset that they can access after you pass away.

Cons of permanent life insurance

The disadvantages of permanent life insurance include:

Higher premiums: Compared to term life insurance, permanent life insurance typically comes with pricier premiums, which may impact how much insurance you can afford. Review your finances to ensure you can comfortably cover your recurring payments.

Intricacy: On top of insurance coverage, you’ll need to understand the savings, investing, and dividend components. These add additional layers of complexity and require periodic management.

Lack of flexibility: With this long-term commitment, you’ll be responsible for lifelong payments. If you’re looking for short-term coverage (e.g. 10 to 20 years), this may not be the right product for you.

Lower returns: Any cash value may experience lower returns compared to other types of investment products, particularly during the early years of taking out a policy.

Potential charges: If you cancel the policy before it matures, be aware of the taxes and surrender charges that may be applied.

Policy may lapse: You need to make regular payments to keep your policy active. If you’re unable to maintain premium payments, then your policy may lapse, and you’ll no longer receive coverage.

Types of permanent life insurance and how they work

There are different permanent life insurance products, including: whole life insurance, universal life insurance, and term 100 life insurance. The type you choose will depend on your specific needs. Here we’ll explain each one, how they work, the benefits, who is eligible to apply, and provide a comparison.

Whole life insurance

If you want a policy that provides lifetime protection and the ability to leave a legacy, whole life insurance may be a suitable choice. You’ll pay fixed premiums, and in return, your beneficiary receives a tax-free death benefit, along with the tax-deferred cash.

With a participating whole life insurance policy, the earnings from your investments may be distributed to you as dividends. Depending on the type of product you choose, you have different options to leverage your dividends, such as purchasing additional coverage, receiving it in cash, or reducing your premiums. Plus, you’ll enjoy the long-term tax-deferred growth.

RBC’s Participating Whole Life Insurance is available to people from birth to age 80, and you must complete a medical questionnaire. Whole life insurance ideal for those seeking predictable growth or if you wish to withdraw or borrow against the cash value. Having access to the cash value may come in handy if you believe you’ll have unexpected expenses.

Compared to universal life insurance, whole life’s premiums are fixed but offer less flexibility. Unlike Term 100, whole life insurance offers cash value and dividend payouts.

Universal life insurance

For lifelong protection that offers flexible solutions, universal life insurance is one option. It combines lifelong insurance coverage and a tax-sheltered investment account that lets you decide how your money is invested. As a result, your premiums are divided to pay for the cost of insurance and the investment portion.

Other unique features of this type of permanent life insurance include access to the funds to help supplement your retirement or to cover medical bills. You may also receive living benefits such as a compassionate advance or a disability benefit. You can also adjust your premiums to fit your needs and choose from various death benefits and interest options.

With RBC Insurance, coverage is available from birth to age 85 and will require a medical questionnaire. It’s best suited for individuals who understand the basics of investing and prefer flexibility in their payments and investments.

While whole life insurance doesn’t provide investment options, you can choose from a range of investments based on your risk profile with universal life insurance.

Term 100 life insurance (T100) 

Term 100 life insurance (also known as T100 insurance) is a more affordable option that removes the savings and investment components. It’s called T100 because you’re required to pay lifelong premiums, but if you reach age 100, you no longer need to pay them.

The main benefits of Term 100 life insurance include lifetime coverage (starting from $50,000 and up with RBC Insurance), a tax-free death benefit, and guaranteed fixed premiums.

If you’re between the ages of 18 and 85, you’re eligible to apply for coverage. In most cases, you’ll need to complete a medical exam and answer some health questions for screening purposes.

The key difference between Term 100 and universal life and whole life insurance is this product doesn’t have cash value or investment accounts.

Is permanent life insurance right for you?

Determining whether to obtain permanent life insurance is a personal choice. To help you decide, these are the key factors Canadians should consider before purchasing permanent life insurance:

Financial goals: Permanent life insurance could help you reach your long-term savings goals by building wealth through the cash value portion. This strategy also helps with estate planning, as it allows you to provide an inheritance to your beneficiaries.

Budget: Typically, permanent life insurance costs are steeper compared to term life insurance. Be sure to assess your finances to determine your ability to cover the higher premiums.

Lifetime coverage: Instead of having temporary coverage that will expire after a set time, permanent life insurance provides lifetime coverage. You don’t have to worry about the policy expiring if you maintain paying your premiums.

Wealthy individuals: If you’re a high-net-worth individual, permanent life insurance can be advantageous as it provides tax efficiencies and gives you the ability to transfer wealth to a partner or the next generation.

Families with dependents: Long-term insurance coverage offers emotional and financial assurance for those who want protection that will provide financial support after you’re gone.

Long-term protection for you and your family with permanent life insurance

There can be many uncertainties in life. With the proper life insurance, you can help guard against the unexpected.

Whether you have dependents or you’re looking to pass on your wealth, having the right life insurance helps you provide financial security, build wealth, and provide a legacy for those who matter most.

Be sure to research and compare policies to find a solution that will protect you and your family throughout different life stages. An accredited insurance advisor can help.

Even if your health or life circumstances change, permanent life insurance keeps you protected for a lifetime.

FAQs about Permanent Life Insurance

Can you cash out permanent life insurance?

Yes, it’s possible to cash out permanent life. There are typically three options available:

1. You can withdraw your cash value. However, it may lower your policy’s death benefit, so your beneficiaries may receive a reduced amount after your death. There may be tax implications if you decide to access your cash value.
2. You can borrow against your cash value as a loan. Interest is charged, and you can repay the loan at any time. If you don’t repay, the loan amount and the interest is subtracted from the death benefit.
3. You may cancel your policy and receive any applicable cash value. Your policy will end, and part or all of the money you receive may be taxed.

What is the best age to get permanent life insurance?

If you’re looking to get the lowest premiums, then you’ll want to secure permanent life insurance in your 20s or 30s.

However, you may wish to obtain it in your mid-30s or 40s when you may have a more stable income, have started a family, and still have sufficient time to grow your cash value.

If you wait until your 50s or 60s, the premiums may be higher. Ideally, get insurance coverage before any medical issues arise. 

Can you have both term and permanent life insurance?

Yes, you can have both term insurance and permanent life insurance. Term insurance covers you for a fixed amount of time, whereas permanent life insurance gives you life-long coverage.  

You can purchase both types of insurance as two separate policies. Alternatively, you can get a combination policy, known as blended policies, where you get benefits of both products under a single contract.

What are the disadvantages of permanent life insurance?

While there are plenty of advantages to permanent life insurance, there are a few drawbacks to consider. First, it may be more expensive compared to term life insurance. It’s also more complex as it involves an investing component, a death benefit, a cash value, and more. Remember, these premiums are a long-term obligation that could last decades. If you miss making payments, the policy may lapse. Lastly, the cash value may experience slow initial returns but could grow exponentially in the later years.

Planning for the future means recognizing that one day your loved ones will be responsible for taking care of your end-of-life arrangements. The average cost of a funeral in Canada is now between $5,000 – $10,000 or more. With funeral costs rising and the emotional stress that comes with losing a loved one, it’s important to ensure that your family isn’t left coping with the extra financial burden.

As you explore your options to prepare yourself financially, funeral insurance and life insurance are solid choices, but which one should you choose? Here, we’ll help explain how each of these products works, the similarities and differences between the two, and the considerations to help you decide which one best suit your needs, so that it will help you in your financial planning journey.

Key takeaways

• Funeral insurance is a life insurance policy that helps cover the cost of end-of-life expenses, such as funeral, burial, or cremation costs. While life insurance provides broader financial protection to loved ones, helping cover debts, medical bills, and the costs of raising a family.

• Funeral insurance offers limited coverage, with lower flexibility, but easier eligibility requirements. Life insurance provides wider coverage and higher flexibility but usually requires a medical exam.

• Your age, health, budget, and financial goals are factors to consider when selecting a suitable insurance policy.

• Guaranteed acceptance life insurance is an alternative solution to ensure that your loved ones have the means to pay for end-of-life expenses.

What is funeral insurance?

Funeral insurance is a permanent life insurance policy that covers the cost of end-of-life expenses. It also goes by other names, including final expense insurance, burial insurance, or end-of-life insurance.

The modest coverage (which generally ranges from $5,000 up to $25,000) provides your beneficiaries with a one-time lump sum payment after your death. To be eligible for the payout, you’ll need to pay fixed monthly premiums. These tax-free funds are then given out after you pass away.

When it comes to the cost of a funeral in Canada, cremation cost anywhere from $2,000 to $5,000, while burial costs can range from $5,000 to $10,000 or more in Canada.  Funeral insurance helps cover the cost of burial or cremation, casket, embalming, funeral or memorial service, funeral director fees, headstones and urns, transportation, flowers, obituary notices, and legal fees. A funeral insurance policy helps your loved ones alleviate the burden of paying for these costs out-of-pocket.  

There’s often no medical exam required with funeral insurance, regardless of your age and health. Additionally, you’ll typically receive lifelong coverage, as long as you keep paying your premiums on time. It’s important to note that many policies have a two-year waiting period after issuing the policy (unless it’s an accidental death). If a death occurs during the first two years, then the premiums are returned to you instead of you receiving a full payout.

Who should choose funeral insurance?

Funeral insurance isn’t suitable for everyone. However, it may be a beneficial solution depending on your circumstances: 

• Older adults who don’t have traditional life insurance coverage: Funeral insurance for seniors may be helpful if they cannot qualify for affordable life insurance.

• Individuals who have poor health or medical conditions: Funeral insurance has little or no medical underwriting, making it an ideal option for those looking for a more straightforward approval process.

• People who don’t have significant savings or investments: Not everyone has additional savings or investments that could be put towards the cost of funeral expenses. Funeral insurance ensures that the payout is reserved to cover the cost of end-of-life expenses, so loved ones don’t have to pay.

• Those who want to designate funds for funeral costs: Even if you have life insurance, you may be concerned that other financial needs will take priority, and the funds won’t be there to pay. Funeral insurance gives you coverage for end-of-life expenses.

Understanding life insurance

When you obtain life insurance, you form an agreement with the insurer. In exchange for paying regular premiums into a policy, when you pass away, the insurance provider pays a lump sum to your beneficiaries. Life insurance is a popular choice because it provides financial protection for your loved ones.

Life insurance encompasses a variety of unique benefits. In particular, it includes larger coverage amounts compared to funeral insurance (ranging from $25,000 to $25 million), which may help to cover an extensive range of expenses such as funeral costs, paying of a mortgage, loans, income replacement, or medical bills.

Another key feature is that depending on the type of life insurance you choose, you can use it as an investing tool to grow your wealth and pass on a legacy. There’s also flexibility in that you may use it to borrow money, acting as a loan against your policy.

Types of life insurance

Life insurance is an umbrella term for various types of coverage. Here’s an overview of what the three main types are and how they work:

Term life insurance

Term life insurance provides coverage for a specific period, typically between 10 and 40 years. Term insurance offers lower premiums, making it a more affordable option. Term insurance could be a cost-efficient solution for young families who want to have a financial safety net. It’s important to note that since the policy has an expiry date, if you outlive your policy, you and your loved ones aren’t eligible for a payout.

Whole life insurance

Whole life insurance is a form of permanent life insurance that provides lifetime coverage, a death benefit, and builds cash value. By paying fixed premiums, you also receive dividends from your investments and get to benefit from the long-term tax-deferred growth. If you ever need to withdraw or borrow against the cash value, you have the flexibility to do so. 

Universal life insurance

Universal life insurance is another type of permanent life insurance that offers flexible premiums that you can adjust, as well as lifelong coverage. This product combines life insurance coverage and tax-sheltered investments. Plus, you decide how to invest your money by selecting from a range of funds. There’s flexibility in accessing the funds, which may help to pay for medical costs or supplement your retirement income.

Who should choose life insurance?

Choosing a life insurance policy that aligns with your end-of-life wishes will play an important role in your financial plan. When it comes to life insurance, it’s ideal for parents or individuals with dependents, because it can provide them with financial security.

Those who carry significant financial obligations, such as a mortgage, credit card bills, or student loan debt, should also consider life insurance, since the payout can help to cover these significant costs and reduce the financial burden on your loved ones.

Individuals seeking comprehensive financial protection for their family may also find solace in having life insurance. For example, you may wish to protect your spouse, especially if they rely on you for income. Or if you have aging parents, siblings, or grandchildren you wish to leave an inheritance to, then life insurance might be a better option compared to funeral insurance.

Key differences between funeral insurance and life insurance

Because both funeral insurance and life insurance provide a payout to the beneficiaries when the policyholder passes away, it can feel overwhelming trying to understand which type of coverage you should get.

Here are the key differences between funeral insurance and life insurance:

What to consider when choosing funeral insurance or life insurance

Deciding between funeral insurance and life insurance is a personal choice. These are the factors to consider when selecting the correct type of insurance for your unique situation.

Age

This can impact your eligibility and premiums for both options. Typically, the younger you are (age 50 or under), the more life insurance makes sense because of the lower premiums. If you’re older, you may lean towards burial insurance for seniors because it has fixed premiums. Plus, it’s easier to qualify because it doesn’t require medical exams.

Health

If you’re healthy with no medical issues, you could opt for life insurance to get better value. On the other hand, if you have health issues, then going with funeral insurance may be a wiser choice as typically there’s no medical exam required, and the cost of premiums should be lower than life insurance. Be aware that if you’re a smoker, you’ll pay higher premiums compared to non-smokers due to the increased health risk for both term life and funeral/guaranteed acceptance insurance.

Financial goals

Assess whether you need coverage for funeral expenses or broader financial protection. If you only want to cover end-of-life expenses, then funeral insurance could be ample. If you’re looking to go beyond this to take care of your family’s finances or pay off debt, then life insurance would be a better fit.

Existing coverage

Check if you already have life insurance or other savings to cover funeral costs. If you do, then determine if there’s sufficient coverage or a gap.

Loved ones

Consider the financial needs of your dependents or loved ones if you were to die. Will they be self-sufficient, or do they rely on you for financial support? If they need just the basic funeral costs to be covered, then funeral insurance might be adequate. However, if you have a mortgage, kids to raise, or educational fees, then consider life insurance.

Which insurance policy is right for me?

Selecting an insurance policy that matches your needs will provide you peace of mind in knowing that your loved ones don’t have to take on the financial burden when you’re no longer here. Funeral insurance offers modest coverage, typically up to $25,000 with limited flexibility, but it has easier eligibility requirements and affordable premiums.

Alternatively, life insurance provides broader coverage and higher flexibility, but it typically requires a medical exam and has higher premiums compared to funeral insurance.  

Ultimately, by understanding the differences between the two types of insurance, you can better assess which one will fit your personal needs, financial goals, and your family’s circumstances.

Looking to cover your funeral and burial costs? Find out how RBC guaranteed acceptance life insurance can assist your loved ones with end-of-life expenses. 

FAQs about funeral insurance vs life insurance

What are the disadvantages of funeral insurance?

Funeral insurance may appeal to you, but there are several drawbacks to consider. First, it has a limited coverage amount, ranging from $5,000 to $25,000. It could help to pay for funeral expenses, but it won’t be able to assist with other taxes, debts, or help dependents.

If you live a long life, there’s a risk of overpaying, as you could pay a higher amount than the actual payout. Unlike some types of life insurance, with funeral insurance there’s no investment component, meaning that it can’t help grow your wealth or pass on an inheritance.

Can you have both life insurance and funeral insurance?

Yes, you can have both life insurance and funeral insurance. While they serve different purposes, there may be some similarities. Life insurance grants your beneficiaries a tax-free lump sum payment to cover a variety of costs, such as your covering funeral expenses, outstanding debts, or living expenses. Funeral insurance offers a smaller amount immediately after the death, and the proceeds can only be used for end-of-life expenses and funeral costs.

Some people have both policies to quickly cover funeral costs, while life insurance, such as term life, can help meet other financial needs. Others may opt only to have life insurance, as it provides sufficient coverage for funeral expenses.

Is a funeral insurance payout tax-free?

Yes, the beneficiary who receives the funeral insurance payout doesn’t have to pay tax on it. However, the payout is taxable when there’s no named beneficiary and the payout will go to the estate. So, in this case, estate settlement and probate fees may apply.

Does RBC offer funeral insurance?

RBC does not offer funeral insurance. However, RBC guaranteed acceptance life insurance may be a suitable alternative as there’s no medical exam or questionnaire required, and it could be used to cover funeral costs. It’s a suitable option for Canadian residents and citizens between the ages of 40 and 75, seeking $5,000 to $40,000 in lifetime coverage. RBC guaranteed acceptance life insurance means that your loved ones have the means to pay for your final expenses.