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Most Canadians understand the role insurance plays in financial planning — yet many still have gaps in their coverage. A recent RBC Insurance poll highlights that disconnect: while 58 per cent of Canadians say life insurance is important, only 39 per cent actually have a policy. The shortfall is even bigger with critical illness coverage — 29 per cent say it matters, but just 9 per cent are covered.

That mismatch can have real consequences. Nearly one in three Canadians says their savings would run out within six months if they faced a major health setback. At the same time, not everyone is familiar with critical illness insurance, with 40 per cent of Canadians reporting little to no understanding of the product.

The reality is that life and critical illness insurance are designed to provide different solutions. No single policy is designed to handle every situation — and the whole “life vs. critical illness” confusion can start when those distinctions aren’t clearly understood. This article breaks down the key differences between life and critical illness insurance, explains what life and critical illness cover, and shows how they can work together to support a more complete protection plan for you and your family.

Key takeaways

  • Life and critical illness insurance are different types of insurance that can help protect your finances. Life insurance helps financially support your loved ones if you die, while critical illness insurance helps protect you if you’re diagnosed with a covered condition.

  • Life insurance pays a one-time, tax-free death benefit to your chosen beneficiaries, helping replace income, cover debts, and keep long-term financial plans intact.

  • Critical illness insurance pays a one-time, tax-free lump sum directly to you while you’re alive, giving you flexibility to manage everyday expenses, lost income, or medical costs.

  • Both types of insurance come in a range of options and prices, and in some cases can be purchased without a medical exam.

  • Depending on your insurance company, critical illness insurance can be purchased on its own or added to a life insurance policy as a rider.

  • Holding both forms of coverage can be especially valuable for people whose finances are tightly linked to their ability to work — like primary earners, business owners, and caregivers.

What is life insurance?

Life insurance is a type of insurance that pays a tax-free lump sum (called a death benefit) to your chosen beneficiaries when you die, as long as your policy is in good standing. Its primary purpose is to help protect the people who depend on you financially.

How life insurance works

In a nutshell, you make regular payments (called premiums) to an insurer in exchange for coverage up to a certain amount. If you die while the policy is active, your beneficiaries will receive a one-time, tax-free payment.

Learn more: What Does Life Insurance Cover?

Types of life insurance

There are several types of life insurance, including term, guaranteed acceptance, and permanent (such as whole life and universal life). Policies vary in duration and structure, but the core idea stays the same: providing financial protection for the people you leave behind.

Learn more: Term vs Permanent Life Insurance

How can the death benefit be used?

A life insurance payout, called the death benefit, can help your family regain their financial footing after you’ve passed away. Common uses include:

  • Replacing lost income

  • Paying off debts, such as a mortgage or loans

  • Covering funeral and final expenses

  • Providing financial stability for a spouse and/or dependents (e.g., paying for a child’s education)

  • Leaving a charitable donation

What is critical illness insurance?

Critical illness insurance pays you a one-time, tax-free lump sum if you’re diagnosed with a serious illness, helping you protect your lifestyle while you focus on recovering. Unlike life insurance, the benefit is paid directly to you.

How does critical illness insurance work?

You make regular payments (premiums) to an insurer in exchange for coverage. If you’re diagnosed with a covered illness and meet the policy requirements, you receive a one-time, tax-free benefit payment.

What does critical illness insurance cover?

Most policies cover serious conditions that can significantly disrupt your health and finances. That typically includes the big three — cancer, heart attack, and stroke — but some go further, covering conditions such as multiple sclerosis, dementia (including Alzheimer’s disease), major organ failure or transplant, blindness, deafness, and severe burns.

However, what’s covered always depends on the type of critical illness insurance you choose. Most plans typically don’t pay out for illnesses diagnosed before coverage started, and other limits or exclusions could apply.

Read more: What is critical illness?

How can the benefit be used?

In general, critical illness insurance is designed to help cover expenses if your life is put on pause. Because the payout is made directly to you, you have the flexibility to decide how to use it. Common uses may include:

  • Covering daily living expenses

  • Paying for out-of-pocket medical costs

  • Replacing lost income while you aren’t working

  • Covering costs to keep your small business afloat

  • Updating your home to meet medical needs

  • Taking time off to rest and recover.

Key differences between life and critical illness insurance

Life insurance and critical illness insurance are often talked about together — and for good reason. Each is designed to protect you financially but do so in very different ways and stages of life. Here’s a snapshot of the differences:

Feature

Life insurance

Critical illness insurance

Purpose

Helps support your loved ones financially if you die.

Helps support you financially if you’re diagnosed with a serious illness covered under the policy.

What triggers a payout

The policyholder’s death.

Diagnosis of a covered critical illness and survival of the waiting period (e.g., 30 days+).

Scope of coverage (i.e. what sorts of things are covered)

Death (subject to policy terms).

Critical illnesses listed in the policy (e.g., heart attack, stroke, cancer, etc.).

Beneficiary

Your chosen beneficiaries (e.g., spouse, children, charitable organizations, etc.).

You (the policyholder).

Coverage period

For a set term (e.g., 10 to 40 years) or for a lifetime, depending on the policy.

Usually for a set term (e.g., 10 years) or until a certain age (e.g., age 65), depending on the policy.

Flexibility

Benefit can be used for any purpose chosen by your beneficiaries.

Benefit can be used for any purpose chosen by you.

Benefit amount

$25,000 to $25 million, depending on the type of life insurance policy you choose.

$10,000 to $2 million or more, depending on type of critical illness policy you choose.

Cost of coverage

Depends on factors including age, health, plan, and coverage amount selected.

Depends on factors including age, health, plan, and coverage amount selected.

Who can be covered

Typically, available for Canadians aged 18 to 85, depending on the policy.

Typically, available for Canadians ages 18 to 65, depending on the policy.

Why both life and critical illness insurance are important

While life and critical illness insurance address distinct risks tied to changes in health —one policy can’t fully replace the other. Life insurance helps provide long-term protection for your loved ones after you’re gone. Critical illness insurance focuses on short-term financial support if illness affects your ability to work or manage everyday responsibilities while you’re alive.

Having both types of coverage can be especially helpful for Canadians whose financial security could be affected by injury, illness, or death. This may include:

  • Primary income earners who rely on their pay to cover major household expenses, such as a mortgage, car payments, or credit card debt

  • Business owners and self-employed individuals who may still need to cover operating expenses or arrange temporary help during recovery

  • Caregivers supporting children, aging family members, or loved ones with disabilities

  • Canadians without group health benefits, who may face out-of-pocket medical or recovery-related costs not fully covered by provincial or territorial health care.

Together, life and critical illness insurance can help create a powerful financial safety net if your health takes an unexpected turn.

Can you have both life and critical illness insurance?

Yes, many Canadians choose to have both life and critical illness insurance. Because each type of coverage protects against different risks, they can work together as a team to fortify your financial interests and protect your loved ones.

You can purchase a stand-alone critical illness insurance policy, or you can purchase life insurance with critical illness as a rider (optional coverage that can be added for an extra cost).

Additional peace of mind for you and your loved ones

Choosing between life insurance and critical illness insurance isn’t really about picking one over the other. It’s about understanding the different roles each type of policy plays and how they can work together to support you and your family if your health changes.

Life insurance looks ahead, helping protect the people you care about financially after you’re gone. Critical illness insurance focuses on the present, helping you manage expenses and income disruptions if a serious illness affects your ability to work. In either case, everyday responsibilities don’t stop. The mortgage still needs to be paid, bills still arrive, and the people who rely on you still need support.

Thinking about life vs. critical illness insurance coverage this way can help you make more confident choices about protecting yourself and the loved ones who matter most. If you have questions about which type of insurance policy is right for you, an accredited insurance advisor can help provide guidance and answer questions for your unique situation.

*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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Many Canadians aspire to start their own business and pursue their passion. With half of all Canadians considering starting their own business, it’s common for small business owners to make sacrifices in the pursuit of creating something meaningful.

Building a successful business takes persistence and comes with juggling many responsibilities, including manufacturing, operations, customer service, and payroll. But as a small business owner, you take on financial risks that employees don’t necessarily have to worry about.

This is where life insurance for small business owners and sole proprietors helps protect what you’ve built. Understanding the importance of life insurance and choosing the right kind of life insurance for your needs can help support your loved ones and the succession of your small business.

Key takeaways

  • Small business owners face financial risks compared to employees. This includes taking on business debt, fluctuating income, and tax liabilities. 

  • Life insurance for small business owners can protect your business income, family, and cover business liabilities in the event you pass away.

  • Business continuity requires careful succession planning. With life insurance, your beneficiaries receive a payout that could be used to hire replacement staff or help cover payroll costs.

  • There are different types of life insurance options. Some are suitable for freelancers with short term needs, other products offer lifetime coverage through investment and savings vehicles.

  • Life insurance can be used to facilitate buy-sell agreements so that a business partners can buy out your portion of shares within the company.

  • It’s a good time to consider buying life insurance if you’re taking on debt, hiring employees, or working with business partners.

What are the financial risks for small business owners?

Without adequate safeguards in place, small business owners may put their businesses into jeopardy. The following are some of the most common financial risks for small business owners and freelancers:

  • The pressure to succeed in establishing and growing a small business rests on business owners. In Canada, about 70 per cent of small new businesses survive for at least five years. The reality is that while some businesses will thrive, others will fail.

  • Entrepreneurs don’t usually have the predictability of a regular paycheque or employee group benefits. 

  • It’s common for personal and business finances to be intertwined. Some small business owners may use personal assets to conduct their business, such as using a car or home office. As a result, the company is tied to the owner’s well-being. 

  • As a small business owner, there’s the potential for financial instability if you pass away. This would likely affect clients, any employees, or business partners.

  • Small businesses are more vulnerable without a clear succession plan. It’s important to determine the exit strategy, such as selling your business or passing it on to a family member, should you pass away.

  • If you take on business debt and you die, you could burden your spouse, business partners, or loved ones with any outstanding financial obligations.

  • If you pass away, it could trigger potential tax implications, including capital gains tax, probate fees, or taxes on the sale of business assets. 

For these reasons, small business owners should consider life insurance to help mitigate the financial risks they take on and ensure their small business carries on once they pass away. 

Why life insurance matters for small business owners 

Being an entrepreneur requires you to assume various job titles and make strategic decisions. Life insurance can fit into your overall business strategy and help protect the foundation you’ve built. The benefits of life insurance for small business owners include the following:  

Protects the family’s financial future

It’s not uncommon for entrepreneurs to take on debt or carry a business loan to get their business off the ground. However, in the event of your death, you wouldn’t want to pass along any business debts or financial obligations to your family. With life insurance, you have peace of mind that it’ll help repay debt and provide income replacement for your loved ones during this challenging time.

Ensure business continuity

Having the proper insurance coverage can help to offset any operational costs, payroll, and debts. It can also help to fund severance packages, transition plans, or the cover hiring costs of replacing you, especially if you’re critical to the success of the business. A life insurance payout can also be a cushion that prevents business partners or family to sell the business under duress. Without it, it may be challenging to keep the business you helped grow run smoothly. 

Wealth management 

As you build your business, ideally your income grows along with it. One thing for small business owners to consider is how they’ll preserve their wealth for years to come. Depending on the type of insurance policy you choose, it can be a vehicle to diversifying assets and grow wealth tax deferred. These life insurance policies typically include a cash value component or investment options to help you grow your nest egg. 

Tax advantages

Life insurance offers plenty of tax management benefits. For instance, the death payout is tax-free, which is helpful with succession planning. Permanent life insurance, such as whole life or universal life, can act as a tax-efficient savings vehicle and estate planning tool. If you have a corporate-owned life insurance policy, you could deploy strategies to minimize your tax liability. One way is by utilizing retained earnings to grow on a tax-deferred basis within the life insurance policy. 

Facilitate succession planning

When owning a business with others, life insurance plays a key role in funding buy-sell agreements to ensure a smooth ownership transition. Plus, having a policy can prevent disputes among heirs or business partners ensuring that all involved receive fair compensation. The process involves determining a business valuation that’s updated annually. So, if you pass away, the policy will provide sufficient payout to your business partners allowing them to buy your shares at fair market value. Most importantly, life insurance is a means for any remaining business partners to maintain control of the business. 

Types of life insurance for small business owners

There are a variety of life insurance solutions available for business owners. Some life insurance products protects the individual, while others are tailored to provide coverage for the business. Here’s an overview of the different types of life insurance available:

Term life insurance

If you’re looking for insurance for a specific duration, such as from 10 to 40 years, then consider term life insurance. It’s ideal for owner of startups who haven’t yet established stable revenue. As an example, term life insurance may be a good option for an independent café owner looking for shorter-term coverage during the early years as their business grows. It’s also a more affordable option for entrepreneurs and small business owners.

Whole life insurance

Whole life insurance provides lifetime coverage and could be a viable option for some small business owners who wish to prioritize estate planning and find tax-efficient ways to accumulate wealth. In addition to the death benefit, there’s also a cash value component that grows over time, predictable premiums, and coverage is permanent. 

Universal life insurance

Another type of permanent life insurance that provides lifetime coverage with flexibility and investment options is universal life insurance. It’s likely best suited for well-established entrepreneurs with a higher income, incorporated business owners, or savvy investors looking to diversify their investments. The advantages to universal life insurance are that you can adjust your premiums, protect your assets, access living benefits, and help with estate planning strategies. 

Buy sell insurance

If your company has one or more business partners involved, a multi-generational family businesses, or incorporated companies you may benefit from taking out a buy sell agreement. If your business partners or shareholders survive you, buy-sell insurance will provide a payout that the business partners can use to buy out your shares at fair value. 

Having this coverage will allow surviving business owners to continue running the company and avoid feeling forced to sell the business or leaving family members with business debt.

When should small business owners get life insurance?

Even if you’ve been a small business owner for many years, it’s not too late to take out a policy. These are some everyday situations where small business owners should consider life insurance: 

Starting out: When you start a business, you may need to hire staff or take out a loan to buy equipment. Life insurance can provide protection when you launch your new business so that your family or business partners are protected should you die. 

Growing your business: As you scale, your financial obligations may increase. You may sign new contracts, expand your product line, or attract new customers. In this instance, life insurance can help ensure your business is protected now and in the future. 

You’re young and healthy: Life insurance is easier to qualify for and premiums are typically lower when you’re younger and are in good health. If you wait until your business is well-established to take out a policy, your premiums will likely be higher, and it may be harder to qualify for all types of life insurance once you’ve had health issues.

Adding a business partner: Introducing a business partner into your venture is an exciting milestone. Buy sell insurance can fund a buy-sell agreement between business partners to ensure proper succession planning and protect the company’s longevity.

You have dependents: If you have family members, including a spouse, children, or parents who are reliant on your income, then it’s important to have life insurance. It’s common for freelancers or sole proprietors to have an inconsistent income, especially in the first few years. Having life insurance means financial stability for your loved ones in the event you’re no longer there.

Approaching retirement: If you’re close to retirement, you want to think about having an exit strategy. It may mean finding a way to sell your business debt-free once you’re gone or pass it on to the family to continue your business legacy.

How to choose the right life insurance as a business owner

One of the most important steps is selecting the appropriate life insurance coverage for business owners. These are some tips to help you navigate this process: 

Assess your needs: Calculate your personal and business financial obligations. Be sure to factor in the needs of your family and any dependents, as well as business partners or employees. For instance, you’ll want to consider business loans, mortgage obligations, and potential taxes.

Determine the coverage amount: Consider business debts, income replacement, future growth plans, dependents’ needs, and personal debt. You should also determine which policy fits within your budget, given your projected cash flow. You can always start with a simple term life policy and add additional coverage as your personal and business needs evolve.

Work with a licensed advisor: If you need guidance or have questions, speak with a licensed insurance advisor. They can provide tailored advice that suits your unique business and personal circumstances and help you compare policies. 

Buy more than one policy: It may be wise to choose to buy multiple life insurance policies. For example, have one life insurance policy for personal and another for business. One benefit to having separate policies is it helps keep your personal and business affairs and finances separate once you’re gone. 

Review your policy regularly: Be sure to read the fine print. It’s beneficial to review and understand the terms and conditions of your policy. It’s also a good idea to review your existing coverage annually and update coverage as your business needs change.

Protect and grow your small business with life insurance

No doubt, you’ve spent countless hours building a valuable business. As a small business owner, you take on various responsibilities and financial risks. This is where life insurance helps provide a safety net for unexpected events. It allows you to continue to grow your business and ensures that your employees, business partners, customers, and your family are protected. 

Whether you’re just starting out or have an established venture with business partners, you can find a life insurance solution that will suit your journey. Life insurance isn’t only a personal decision, it’s also a business decision that can safeguard your legacy and provide security for those who depend on you.

FAQs about life insurance for small business owners

Do you need life insurance if you own a business?

Yes, you should have life insurance if you own a business. Life insurance provides protection from business-related debt, helps replace your income, and can assist with succession planning. It’s a supportive measure to ensure you don’t leave business partners with debt or loved ones with financial support if you pass away.

What insurance do I need as a small business owner?

When you run your own business, there are different types of insurance you can obtain. The type of insurance depends on your needs. Some common types of insurance include term life, permanent life, and buy sell insurance. You can obtain additional coverage by adding riders to your insurance policy, such as for a child. Unlike employee benefits, you’re responsible for setting up financial safety nets to preserve your business and your loved ones. 

What insurance do I need if I’m self-employed? 

Some of the types of insurance you may need if you’re self-employed include life, disability and critical illness. Each product helps protect you and your loved ones should you develop a serious illness, need to go on short- or long-term disability, or in the event of your death. They offer peace of mind for you and your loved ones.

*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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You never think it’s going to happen to you or someone you love, but every day, hundreds of Canadians are diagnosed with a critical illness.

The Canadian Cancer Society estimates that 254,800 Canadians will receive a cancer diagnosis this year, and over 3.5 million Canadians are living with heart disease or stroke, according to the Heart and Stroke Foundation. Thanks to research and medical advancements, many Canadians can survive a critical illness, but the recovery often requires significant time and financial resources. 

That’s where critical illness insurance comes in. It can help provide financial support and peace of mind during a major health challenge, giving you and your family more financial stability while you recover.

Here we explain what critical illness insurance is, why it’s important, and provide tips to help you determine why you should consider buying critical illness insurance to protect yourself and your loved ones.

Key messages

  • Critical illness insurance in Canada provides a one-time lump-sum benefit if you’re diagnosed with a serious illness or condition. 

  • The lump-sum benefit, anywhere from $25,000 to $2 million, is paid directly to you, and you choose how to use it.

  • Critical illness coverage can complement other forms of insurance, like life insurance or disability coverage.

  • Factors like your family medical history, dependents, and financial circumstances can help you decide when to buy critical illness insurance.

Understanding critical illness insurance in Canada

Critical illness insurance is a one-time lump sum payment that you can use to cover lost income or other expenses if you’re diagnosed with a serious illness or condition covered by your insurance provider.

The amount of money you receive from critical illness insurance depends on how much coverage you choose. With RBC’s critical illness insurance, overage can range from $25,000 to up to $2 million. In most cases, the lump-sum benefit is paid once you’ve been diagnosed. Typically, the payout is not subject to income tax and you can use the money to cover extra healthcare expenses, make your home more accessible, or whatever you choose. 

The list of critical illness covered can vary between insurers, so it’s important to read your policy carefully to understand which diseases or conditions are covered under your policy. A qualified insurance advisor can also answer any you have questions.  

Common examples of critical illnesses covered include:

  • Alzheimer’s disease

  • Cancer

  • Heart attack

  • Multiple Sclerosis

  • Stroke

Critical illness insurance in Canada is different than the health insurance coverage you might receive through your workplace group benefits. Your workplace benefits can help to cover medical services and treatment options that aren’t paid by your provincial or territorial health care plan. For example, prescription drugs, vision care, or dental care. The payout for these services goes to the health-care provider. With critical illness coverage, the payout goes directly to you, and you decide how you want to use it.  

Why critical illness insurance is important

In Canada, we’re fortunate to have universal health care, which may lead some to question whether critical illness insurance is also necessary. While it may not be the right fit for everyone, there are many situations where critical illness insurance can provide meaningful support:

  • Prevents paying out-of-pocket: Provincial and territorial healthcare plans don’t cover everything. Critical illness insurance can help cover treatments and services that require out-of-pocket payment. For example, physiotherapy, medical equipment, or private nursing. 

  • Offers income protection: If you’re unable to work due to your condition, critical illness insurance helps provide income protection and financial security for you and your family. It gives you the ability to focus on your recovery without worrying about day-to-day finances.

  • Provides flexibility: With critical illness insurance, the lump sum payment goes directly to you, and you can choose how you want to use it. Whether it’s paying for extra childcare while you recover, covering the mortgage, or hiring home help, the choice is yours.

  • Fills in insurance coverage gaps: Critical illness coverage acts as a complement to other forms of insurance, like life or disability coverage. Life insurance only pays out if you die, and while disability insurance is designed to replace a portion of your earnings, it doesn’t provide a lump-sum payout. Adding critical illness insurance provides more robust protection.

7 factors to consider when buying critical illness insurance 

If you’re questioning whether critical illness insurance is right for you and your family, here are some important factors to consider.

1. Family medical history

Some critical illnesses have a genetic component that may increase your risk. So, if you have an immediate family member who was diagnosed with conditions such as cancer or heart disease, you might feel protected taking out critical illness coverage earlier.

Having extra coverage in place can provide peace of mind knowing you’ll have the financial resources you need to focus on your recovery if you became ill.  

2. Age and health 

When you’re young and healthy, critical illness insurance is probably not top of mind. However, this time of your life is when you can benefit the most from lower premiums and more coverage options.

As you age, or if you have a pre-existing condition, you’re more likely to pay higher premiums or even be excluded from taking out critical illness insurance.

3. Lifestyle and occupation

If you’re inactive, smoke, drink alcohol excessively, and have poor nutrition, it could increase your chances of developing a critical illness. Working in certain occupations may also expose you to greater health risks. For instance, jobs that expose employees to solar radiation, asbestos, diesel engine exhaust, and crystalline silica may lead to a higher risk of developing cancer, according to the Canadian Cancer Society. 

Small business owners and entrepreneurs should also consider additional financial protection if you’re diagnosed with a critical illness and can’t bring in an income.

4. Major life event 

Milestones such as getting married or buying your first home can prompt the need for additional financial protection. If you fall ill and your partner takes time off work to care for you, critical illness insurance can help support your shared expenses.

Critical illness insurance can also help cover your mortgage payments if you or your partner is unable to work.

5. Dependents 

If you’re the primary earner and have children, a partner, or other dependents who rely on your income, critical illness insurance can help financially support your loved ones, should you become critically ill. 

6. Financial situation 

Evaluating your current financial situation can help you determine if you have enough of a financial safety net to cover essential expenses, debts, and the added costs associated with recovering from a critical illness.

If you don’t have a robust emergency fund or enough savings to cover your mortgage and other expenses for at least six months, then critical illness coverage can help cover the shortfall.

7. Existing coverage 

Review your current health and life insurance policies. For instance, if you have a group policy through work, review whether it covers you for critical illness and how much coverage you’d receive. This can help you identify any gaps.

This critical illness insurance calculator can help you estimate how much coverage you’ll need. You can also speak to a licensed insurance advisor for more tailored advice.

How to choose the right policy

Critical illness insurance policies vary in terms of eligibility requirements, which conditions are covered, benefit amounts, and premiums. To help you choose the right plan, keep the following points in mind:

Assess your needs

Take time to evaluate if critical illness insurance is necessary based on your unique needs. Consider any health risks: Do you have a family history of cancer, heart disease, Alzheimer’s, or other critical illnesses?

Look at your current financial situation: Do you have enough savings to fall back on if you are unable to work for an extended period due to illness?

Review other types of coverage to see where you have gaps in critical illness insurance, and to determine how much coverage you might need.

Read the fine print

Make sure you read and understand your critical illness policy. You should review the list of conditions covered and how they are defined. Look for exclusions and limitations.

Also, check to see if there are waiting periods or survival periods where you won’t be eligible for coverage.

Get professional advice

Trying to purchase the right insurance policy can seem complicated. If you have questions about a specific policy or critical illness coverage in general, reach out to an accredited insurance advisor for personalized guidance.

How critical illness insurance can make a difference

A critical illness diagnosis can bring major changes to your life and your health. It can affect your ability to work, your daily routine, and even family dynamics.

If you’re asking, “Do I need critical illness insurance?” take time to reflect on your current situation. Consider your medical history, life stage, and financial circumstances.

Critical illness insurance is designed to provide financial support during a challenging period. With RBC’s critical illness insurance, you’ll also have access to Teladoc Medical Experts, who can review your medical records and confirm your diagnosis. You can also find help dealing with difficult emotions through our “The Health Journey” program.

Choosing the right critical illness coverage at the right time can help protect both your finances and your family’s well-being, giving you added stability and peace of mind when you need it most. 

FAQs about when to buy critical illness insurance

Is critical illness insurance worth it in Canada?

Whether critical illness insurance is worth it will depend on individual and financial factors, including your age, health, family medical history, lifestyle, and occupational risks, existing insurance coverage, and your financial situation. However, the benefit of having critical illness insurance in Canada is you’ll receive a lump sum pay out, usually tax-free, to cover lost income.

What is the best age to buy critical illness insurance?

The best time to buy critical illness insurance is when you’re young and healthy, as you can benefit the most from lower premiums and more coverage options. Once you have a pre-existing condition, it could lead to higher premiums or even exclusion from critical illness plans.

What is the rule of thumb for critical illness coverage?

While there are no one-size-fits-all rule for how much critical illness coverage you need, a good starting point is to have enough to cover at least six months of salary, essential expenses, and extra costs associated with a critical illness.

Having this financial safety net can help you focus on your recovery instead of worrying about your financial obligations. A critical illness insurance calculator can help determining how much critical illness coverage you’ll need.

*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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One in five Canadians was aged 65 or over in 2023. Population aging is inevitably accompanied by an increase in the mortality rate in Canada. In the event of a death, it is the family that is responsible for arranging the deceased’s funeral. Too often, financial difficulties are added to the emotional distress of loved ones.

Yet more than half (53%) of Canadians do not want to be a burden on their family after their passing, according to a survey conducted by RBC Insurance in July 2024. What’s more, nearly all respondents (82%) believe it is important that their loved ones receive money quickly, to avoid having to pay funeral costs or other end-of-life expenses out of pocket.

Even though many say they want to financially protect their family after their death, most also admit that they are not actively planning to achieve this objective.

Underinsured retirees

The RBC Insurance survey shows that only 15% of Canadians have planned how their money and assets will be transferred to their loved ones after death. While this proportion increases with age, it reaches only 24% among retirees. In addition, fewer than four in ten retirees (38%) have set aside money or taken out life insurance to cover their funeral expenses.

This segment of the population is less well informed than others about the different types of insurance policies, thereby overlooking solutions that could help them achieve their objectives, the RBC Insurance survey highlights. Moreover, with increasing life expectancy—which averaged nearly 83 years in 2023—seniors do not always have sufficient life insurance coverage.

“Planning one’s funeral remains a taboo subject: not everyone wants to talk about it or deal with it,” notes Mathieu Houle, Executive Director of the Fédération des coopératives funéraires du Québec (FCFQ), the third-largest family support network in Canada.

Mathieu Houle

Funerals are becoming increasingly expensive

Dignity Memorial, the largest provider of funeral, cremation and cemetery services in North America, indicates that in 2025 the average cost of a funeral in Canada amounts to $9,150. However, this average masks significant disparities. Cremation is generally less expensive than a traditional burial. Three-quarters of those who die are cremated in Canada. For equivalent services, costs are higher in major urban centres such as Toronto, Vancouver or Montreal. In all cases, taxes must be added to determine the total amount.

Limited death benefits

The benefit amount is set at $2,500 and is taxable. To be eligible, the deceased must have contributed for 10 years to the Quebec Pension Plan (QPP) and/or the Canada Pension Plan (CPP), or meet other eligibility conditions.

In Quebec, this benefit has remained unchanged since 1998. Elsewhere in Canada, new provisions came into effect in January 2025. The CPP can now pay an additional amount of $2,500 to the estate executor or to the person who paid the funeral expenses. Two conditions must be met: the deceased must not have been entitled to CPP or QPP benefits based on their contributions (that is, they died before receiving a retirement or disability pension), and there must be no surviving spouse or common-law partner eligible for a survivor’s pension.

End-of-life expenses that add up

“Setting aside money to cover funeral expenses is an important way to financially protect one’s family, but it is not the only cost to consider,” notes Farzana Damji, Senior Director, Product Development, at RBC Insurance.

Farzana Damji

Loved ones or the estate executor may face additional expenses, such as mortgage or rent payments, credit card balances and medical expenses, or year-end taxes. These unforeseen expenses may require prompt payment. Yet most Canadian estates take between 6 and 18 months to be settled, and some can take years, according to estate-planning software company EstateExec.

*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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No one likes to think about the unexpected, but preparing for it with the right life insurance can help you protect the people who matter most. And you’re in good company as a growing number of Canadians are realizing that life insurance isn’t only necessary later in life, rather it gives you peace of mind today. In fact, a record 23 million Canadians now have life insurance, according to the Canadian Life & Health Insurance Association (CLHIA).

Whether you are just starting to consider life insurance or if you’re wondering if the coverage you already have is sufficient, this article can help you along your journey. We outline the different types of life insurance, what a life insurance benefit can help cover and key considerations for choosing the right policy for you. Thinking about what happens after you die can be stressful, but finding the right life insurance policy shouldn’t have to be.

Key takeaways

  • Life insurance provides a one-time, tax-free benefit to your beneficiaries in the event you pass away.

  • The benefit can be used however your beneficiaries need it most.

  • Life insurance policies provide different levels of coverage: either for a set period (term life insurance) or for the rest of your life (permanent life insurance).

  • Life insurance can benefit anyone of any age, but especially if you have a family, dependents, debt or sizeable assets.

  • Factors such as your age, health and lifestyle will affect the cost of your life insurance premiums.

  • It’s important to review your life insurance periodically as your needs may change throughout your lifetime.

  • If you’re on a tight budget, you can increase your life insurance protection as your income grows.

What is life insurance?

Life insurance is a contract between you and an insurance company: in exchange for paying your premiums, your insurer will pay out a death benefit to your chosen beneficiary (or beneficiaries).

The death benefit is a one-time, tax-free payment that helps provide financial support to the people who rely on you after your death. The payment can be used however your beneficiaries need; for example, to pay off debt or replace your lost income.

Life insurance policies provide different levels of coverage, either for a set term (typically between 10 and 40 years) or for the rest of your life. Some insurance policies provide only a death benefit, while others may also include a cash value component that can grow over time and help build wealth.

Who needs life insurance?

If you think, “I’m single and young, I don’t need life insurance,” think again. Life insurance isn’t only for older people. In fact, it’s often cheaper to purchase life insurance when you’re young and healthy. While life insurance isn’t mandatory (like car insurance), it plays a useful role in your financial and estate plan. If any of these scenarios apply to you, it may be time to consider life insurance:

You have a spouse or partner

If you share the financial burden of a mortgage, saving for the future or even day-to-day living expenses with a spouse or partner, life insurance can provide vital financial support in the event either one of you dies.

You have children or other dependents

Life insurance can help you provide financially for your children or other dependents, such as grandchildren, while they are still young or used to fund their post-secondary education later. You can even purchase a life insurance policy for your child when they are young and then transfer policy ownership to them when they reach the age of majority.

You have outstanding debt or financial obligations

If you own property that property carries a mortgage, life insurance ensures that there’s money to help pay the debt off after your passing. For other debt, such as credit card debt, life insurance can help pay that down, helping to leave your estate intact.

You’re a business owner

The death benefit from buy sell life insurance provides funds for co-owners or partners to buy your share of the business after your death. This helps ensure a smooth succession for the business and eases the burden of your remaining partners or owners from having to use personal or business assets to fund the agreement.

You’re a high-net-worth individual

If you have an estate that may be subject to expensive probate fees (also known as the estate administration tax) or other taxes, such as capital gains, life insurance can be used to help cover those costs. It can also be used for estate equalization; for instance, if want to bequeath a cottage worth $900,000 to one heir, and $600,000 in investments to another, a life insurance policy can be used to make up the difference, ensuring a more equal inheritance.

Remember, your life insurance needs change over time, so it’s important to revisit your insurance when you experience a life event, such as having a baby, getting married or starting a business.

Types of life insurance

Life insurance isn’t a one-size-fits-all solution. While there are several types of life insurance products available, coverage essentially falls into two main categories: term life insurance and permanent life insurance. Let’s take a closer look at each.

Term life insurance

Term life insurance provides coverage for a set period or term, such as 10 or 20 years. It’s the most popular life insurance in Canada, likely because it’s more affordable than permanent life insurance and easier to purchase. The proceeds from a term life insurance policy can be used for anything, but typically are earmarked for replacing lost income, paying off debts or funding a child’s education.

Term insurance is intended for short-term needs, so you can align the term length with how long you want coverage. For example, if you have 20-years left on your mortgage, a term life insurance policy with a 20-year term (or a 10-year term that you renew at maturity for a subsequent 10 years) can provide a financial safety net if something happens during that time.

A term life insurance policy has guaranteed renewal at maturity, regardless of health; however, the premium will be higher as it is based on your current age. Your policy may give you the option to convert to permanent coverage. You may also be able to add additional benefits, such as an accidental death rider or joint-first-to-die option. You may or may not require a medical exam.

There is no cash or investment value for your term life insurance policy. The premium you pay goes entirely toward your coverage.

RBC term life insurance may be the right choice for you if:

  • You’re between ages 18 to 70

  • You want between $50,000 and $25 million in coverage

  • You want a term length between 10 to 40 years

  • You want affordable premiums

Permanent life insurance

Unlike term life insurance, permanent life insurance provides coverage from the time you take out a policy until your eventual death, provided you maintain your premiums. As well as lifelong coverage, your premiums will remain the same, even if your health changes. 

Permanent life insurance falls into three categories: whole life insurance, universal life insurance, and term 100.

Whole life insurance

Whole life insurance provides the opportunity to build wealth in the form of a savings component (called cash value or accumulation value) within your policy. Part of your premium goes towards paying for the cost of your insurance, while the balance goes into a investment account (managed by your insurer) and grows tax-deferred.

With a participating whole life insurance policy, the earnings in this cash account may be paid out to you as dividends. You can access this cash for any use you want, but you will pay tax on the growth, and the funds will need to be paid back or the death benefit paid out will be reduced. You can also borrow against the built-up cash value in the policy, but you will need to pay interest on the loan.

If you choose a joint whole life insurance policy, you can select joint first-to-die coverage, which pays the death benefit on the first death, providing financial support to those you leave behind.

Alternatively, you can select joint-last-to-die coverage, that pays out after the second death, that can help with any capital gains taxes or other estate expenses.

Whole life insurance provides a death benefit to your beneficiaries, and the cash value component offers financial support while you’re still alive–for example, if you need funds to start a business or if you want to supplement your retirement income.

RBC whole life insurance may be right for you if:

  • You’re between ages 0 to 80

  • You want between $25,000 and $25 million in coverage

  • You want lifelong coverage

  • Building a cash value is important to you, with the opportunity for dividends

Universal life insurance

Similar to a whole life insurance policy, universal life insurance provides lifetime coverage and the ability to build wealth and save for the future in a tax-advantaged policy. However, universal life is a more flexible type of permanent life insurance as it allows you to customize the investment portfolio portion of your policy to meet your financial goals. You can select from several interest options, each offering different potential returns to match varying levels of risk tolerance.

RBC universal life insurance may be right for you if:

  • You’re between ages 0 to 85

  • You want between $25,000 and $25 million in coverage

  • You want lifelong coverage

  • You want more flexibility in building the investment portion of your policy

Guaranteed life insurance

Guaranteed life insurance is just as it sounds–this policy offers guaranteed acceptance (if you meet the basic criteria) without the need for a medical exam or health questionnaire. It provides lifelong coverage, and your premiums will not increase over time. However, the coverage maximum cap is typically lower, and the premiums are usually higher than comparable term life insurance.

RBC guaranteed acceptance life insurance may be worth considering if:

  • You’re between ages 40 to 75

  • You want between $5,000 and $40,000 in coverage

  • You want lifetime coverage with premiums that will never increase

  • You don’t want to take a medical exam or answer any health questionnaire

 Group life insurance

Group life insurance is offered by some employers as part of an employee benefits package. While 83 per cent of life insurance is purchased individually, 17 per cent is provided through a group plan, according to CLHIA.

Group plans are often paid for (and owned) by the employer and the coverage (or death benefit) may be capped at one to two times your annual salary. Most employers offer group term insurance, as opposed to permanent life insurance. This means there’s no cash value outside the death benefit.

Group insurance is not portable; if you leave the company, retire or get laid off, your coverage typically ends. Group insurance can provide an extra layer of protection for your family, but it’s usually not enough coverage on its own.

What life insurance covers

While the specifics of what life insurance covers varies depending on the type of policy you choose, life insurance provides your beneficiaries with a tax-free lump sum of money called a death benefit. That amount can vary greatly; depend on the policy and terms you choose.

There’s no restriction on how the death benefit can be used, but here are some of the things it can help cover:

Income replacement

When creating a family budget, you typically include the income sources of both you and your spouse or partner. If you were to pass away unexpectedly, that income would disappear. Life insurance can help replace lost income. Not sure protection you need? It’s a good rule of thumb to have at least five to 10 times your yearly income in life insurance coverage.

Debt and mortgage protection

When you die, your estate is responsible for paying off any outstanding debt, such as your mortgage, or consumer loans – like credit cards. If a loan is co-signed, such as a joint mortgage with a spouse, the surviving cosigner assumes full responsibility for the debt. A life insurance payout can ensure your family or estate is not burdened with debt obligations.

Funeral expenses

Life insurance can help cover end-of-life expenses, which can run into thousands of dollars. While funeral insurance is one option, guaranteed acceptance life insurance can be used other expenses in addition to funeral costs.

Estate planning

As long as you designate a beneficiary (or beneficiaries) on your life insurance policy, the death benefit is paid out tax-free, ensuring more of your inheritance goes to your loved ones. If your estate has a large tax bill, such as capital gains tax on a secondary residence, a life insurance payout can help cover that cost.

Business continuity

If you co-own a business with another partner (or partners), life insurance through a buy-sell agreement helps provide funds for the remaining partners to purchase your share, thereby ensuring business continuity and a seamless succession after your death.

Charitable giving

Life insurance can be an effective way to leave a charitable gift as part of your estate plan. You can either name the charity as both the beneficiary and owner or name the charity as beneficiary but retain ownership of the policy. If you choose to retain ownership, it provides your estate with a charitable donation receipt upon your death, which could help with reduce taxes owed by your estate.

What life insurance does not cover

As we’ve explained life insurance provides coverage in the form of a death benefit once you pass away. On the most part, life insurance companies do pay out a death benefit, however there are reasons why it could be declined.

That’s why it’s important to understand what life insurance does not cover, so you have peace of mind knowing you and your family are protected.

Fraud or misrepresentation

It is essential to answer truthfully and completely when applying for life insurance, even if it results in a higher premium. Failing to do so could result in your policy not being paid out upon your death, depending on the circumstances. Examples of insurance misrepresentation include:

  • Not disclosing that you’re a smoker – keep in mind, smoking also includes tobacco, e-cigarettes, and nicotine products.

  • Failing to mention a pre-existing health condition, such as heart disease or diabetes

  • Falsifying personal details, such as lying about your age or lifestyle

  • Providing an incomplete medical history, such as omitting a consultation with a specialist or a stroke from 10 years ago

Every cause of death

Life insurance policies typically will not pay out if the policy holder dies by suicide within two years of the coverage date. Accidental death benefits may not be paid out if you die while committing a crime or provoked assault, or if your death is related to chronic alcohol or drug use, such as driving while impaired.

Risky activities or hobbies

Extreme activities or hobbies, such as skydiving or scuba, or high-risk occupations, are often excluded. You may be able to secure life insurance, but pay a higher premium or have a lower coverage amount. A payout may also be denied if death is related to these types of risks.

Pre-existing conditions

Depending on the policy you purchase, pre-existing conditions may not be covered, particularly if you die within a certain period after purchasing the insurance, such as 12 months, and if your death is related to that condition.

Policy lapsed due to a missed payment

Your policy is in effect as long as you continue paying the premiums, typically monthly or annually. If you miss a payment, your insurer may allow a grace period (say, 31 days) to make the back payment before the policy terminates. If you died after that date without any attempts to reinstate the policy or take out a new one, then the death benefit will not be paid.

Factors that influence life insurance coverage

When you purchase life insurance, it’s important to understand both the extent and limitations of coverage available.

Policy terms and conditions

While all life insurance policies pay out a lump sum upon your death, terms and conditions differ between insurers and the specific product you choose. It’s important to read the fine print (or work with a licensed insurance professional) to understand the coverage you’ll receive.

Riders and add-ons

Many life insurance policies allow you to add optional coverage, which can increase the scope of protection, for an additional cost. Common riders and add-ons include:

  • Children’s term rider: Provides term life coverage for your child

  • Accidental death benefit rider: Pays out an additional benefit if you die due to an accident

  • Total disability rider: A rider that waives your monthly premiums if you have been totally disabled for six months.

Your health and lifestyle

When assessing the risk of insuring you, insurance companies considering factors such as your age (the younger you are, the cheaper the policy), your health, and your habits and lifestyle (smoker versus non-smoker). The higher your perceived risk, the higher your premium tends to be.

How to choose the right life insurance coverage for you

A happy young couple are sitting on a bed as the mother is playing with her toddler (boy), now that they know they have Life Insurance coverage.
A happy young couple are sitting on a bed as the mother is playing with her toddler, now that they know they have Life Insurance coverage.

Making the decision to buy life insurance is sometimes the hardest part—but once you take that first step, finding the right coverage shouldn’t have to be complicated.

Here are some tips to get you started:

Assess your needs

Start by calculating how much coverage you might need. To do this, consider your current income, debt, and future expenses (such as buying a home, or paying for your children’s education). Online life insurance calculators can help you get started with an estimate. If you require more insurance than you can currently afford, you can always increase your coverage when your budget allows or layer more than one policy to protect you in the years when you need it most.

Compare policies

Compare different types of life insurance to assess coverage amounts, how the premiums work, and whether there is any cash value to the policy. If you have questions or are unsure, an accredited life insurance advisor can provide additional guidance and answer your questions.

Customize your policy

Riders and optional benefits, such as accidental death, total disability waiver, or a children’s term rider, help add an extra level of financial security based on your personal situation and needs.

Be honest

Be sure to answer all questions honestly, especially if you’re a smoker. If your insurer discovers that you incorrectly stated, misrepresented or failed to disclose what’s called a “material fact,” your policy can be considered void.

Review and update your policy

Your policy typically includes a money-back cancellation period (usually 10 or 30 days), giving you time to review the fine print. It’s also important to revisit your insurance coverage after major life events, such as getting married, buying a house, having a child or retiring, to ensure your coverage is still compatible with your lifestyle and needs.

Communicate with your beneficiaries

Your death benefit isn’t automatically paid out when you die; instead, your beneficiary must file a claim. Whether it’s your spouse, business partner or family member, tell them about the policy and share key details such as the type of life insurance (term or whole life), the insurer, policy number and how to contact your insurance advisor. While this may feel like an awkward conversation, it will make it easier for your beneficiary to access a payout when needed.

Life insurance is an important tool for financial security

Taking a proactive approach to life insurance affords you the opportunity to build a plan now that will protect your loved ones in the future. While life insurance can cover a variety of needs –from paying off debt, funding everyday expenses, and saving for the future – there are some limitations for applicants with preexisting conditions or with risky hobbies or careers.

However, with many products on the market, there should be a life insurance policy to suit your needs and financial goals. A licensed life insurance advisor can walk you through your options to ensure you select a policy that aligns with your circumstances, budget, and long-term plans. By taking the time to choose the right coverage today, you can secure your family’s financial figure and enjoy greater peace of mind for years to come.

*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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Canada has a way of sweeping visitors off their feet — and not just because of icy sidewalks in winter. One minute you’re wrapped up in the buzzy energy of a big city, the next you’re stretched out beside a quiet lake, listening to loons instead of traffic.

But whether you’re here to explore, study, work, or enjoy an extended visit with family, there’s one truth worth knowing upfront: Canada’s world-class healthcare isn’t free for visitors. Without the right insurance, even a minor medical hiccup could turn into a financial headache.

This guide breaks down what health insurance for visitors to Canada covers, why it matters, and how to choose a plan that keeps both you and your wallet protected as you explore the Great White North.

Key takeaways

  • Canada’s healthcare isn’t free for visitors. Without the right insurance, even minor medical issues can lead to major bills — sometimes in the thousands per day.

  • Visitor health insurance can cover emergency medical care, transportation, and other urgent expenses, so you’re not paying out of pocket.

  • Different visitors need different coverage. Options include travel medical insurance, Super Visa insurance, and international student coverage — each with its own rules and eligibility.

  • Coverage varies by plan. Benefits often include emergency treatment, dental care from an accident, medical transportation, and follow-up visits. However, routine care, elective procedures, risky activities, and unstable pre-existing conditions are usually excluded.

  • Choosing the right plan matters. Compare coverage limits, exclusions, emergency support, and fine-print details like deductibles and claim procedures.

  • Going without visitor health insurance in Canada could be risky. You may face sky-high medical bills, delays in treatment, or complications with future visa applications.

  • Buy your policy before travelling or as soon as you land in Canada. Depending on the insurance company, there may be a waiting period of 48 hours on insurance purchased after your arrival in Canada.

  • Keep your insurance documents handy and know the steps to follow in an emergency. It’s the simplest way to protect both your health and your wallet while in Canada.

Why health insurance is essential for visitors

Canada does not pay for hospital or medical services for visitors. To access publicly funded healthcare, you need to qualify under a provincial or territorial plan and carry a valid health card — something most visitors, newcomers, and many temporary workers don’t qualify for immediately.

Without that coverage, even basic medical attention can get expensive fast. An ambulance ride, diagnostic tests, emergency dental work, or a night in the hospital could cost hundreds or thousands of dollars.

An emergency rarely wait for good timing. A slip, a sudden illness, or a questionable food choice can put you in the emergency room  — and when you’re paying out of pocket, the bill can really sting.

Visitor health insurance closes that gap. It helps cover emergency medical care, so a health scare doesn’t become a financial nightmare. It also offers peace of mind: if something goes wrong, you can focus on getting care instead of calculating the cost.

Types of health insurance for visitors to Canada

“Health insurance” isn’t one-size-fits-all. Here are the most common types used by visitors:

Travel medical insurance

This covers emergency medical expenses you may incur after you reach your destination — things like sudden illnesses, injuries, diagnostic tests, hospitalization, or even emergency dental care.

RBC Insurance offers comprehensive medical plans for visitors that include many of these standard benefits, with coverage available for stays up to one year.

Super visa insurance

This type of health insurance is for super visa visitors — parents and grandparents of Canadian citizens or permanent residents who are authorized to stay in Canada for up to five years. Before a visa is issued, applicants must show at least one year of medical insurance from a Canadian provider with a minimum of $100,000 in coverage.

While RBC Insurance doesn’t offer a dedicated super visa plan, RBC’s Visitors Plan III offers coverage up to $150,000 —and is available to travellers from the age of one month to 69 years.

International student health insurance

This coverage is designed for foreign students coming to Canada to study. Since access to provincial healthcare depends on the province, school, and program length, many students either don’t qualify for public coverage or aren’t covered immediately — leaving them exposed to high medical costs without a private plan. International students with a valid visa can qualify for RBC’s Visitors to Canada Insurance.

What health insurance for visitors to Canada typically covers

While every insurance policy is different, here’s what health insurance for visitors to Canada typically includes:

Emergency medical care

Emergency medical care covers urgent treatment for sudden illnesses or injuries — doctor visits, hospital care, diagnostic tests, prescriptions, surgery, and more. Some plans include stable pre-existing conditions, depending on the rules.

Emergency dental care

If an accident lands you to the dentist’s chair, many plans help cover repairs to damaged teeth. Some health insurance plans for visitors may also cover limited emergency treatment for dental flare-ups.

Out-of-pocket expenses

If a doctor advises you to relocate for care or delay your return home, some plans reimburse reasonable, unexpected costs (like meals or accommodations). For example, RBC’s Visitors to Canada Insurance includes a daily benefit up to a set maximum.

Transportation

If you need to be moved for proper care or flown to your country of residence for medical reasons, many plans cover ground ambulance, air ambulance, stretcher transport, or medically required upgraded seating — all arranged through the insurer’s emergency assistance team.

Transportation for a bedside companion

If you’re hospitalized and travelling alone, plans often cover airfare and limited expenses for someone to come to your bedside.

Repatriation of remains

In the event of death due to a covered medical condition, plans may cover repatriation or arrangements for cremation or burial where the death occurred, plus reasonable costs for someone who needs to identify the remains.

Follow-up visits

If a doctor needs to check on your recovery after the initial emergency, many plans cover a limited number of follow-up appointments (for example, three visits) directly related to that event.

Return of travelling companions or vehicle

Some policies help coordinate and pay for returning dependants, pets, or even your vehicle to your country of residence if you can’t.

Optional add-ons

Depending on the provider, you can often add extras like trip interruption, accidental death and dismemberment benefits, or extended prescription drug coverage.

What health insurance for visitors to Canada does not cover

Even the best insurance plans have limits. Here are some things that aren’t typically included:

  • Unstable pre-existing conditions: If a condition, such as a heart condition or high blood pressure, wasn’t stable before your trip (based on the policy’s rules), the insurer won’t pay for related treatment.

  • Routine check-ups and preventative care: Non-emergency care, like a physical exam, vaccinations, or screening tests, are usually excluded.

  • Elective or pre-planned procedures: Cosmetic work, non-urgent surgeries, rehab, long-term care, and experimental treatments are all not usually covered.

  • Risky or extreme activities: If you go rock climbing, mountaineering, skydiving, bungee jumping, motorized racing, or compete as a professional athlete, the policy usually won’t cover injuries as a result of these activities.

  • Self-inflicted injuries or illegal activities: Claims related to self-harm, attempted suicide, criminal acts, or substance use are excluded.

  • Travelling to Canada for medical treatment: If you come to Canada specifically for treatment or diagnosis, the insurer won’t cover those costs.

  • Overseas treatments not pre-authorized: If you leave Canada for care without insurer approval, you may face denial of a claim.

  • Breaking policy rules and procedures: Skipping required pre-approvals, ignoring medical advice, or delaying reporting a claim could cancel coverage.

  • War, nuclear incidents, or contamination: Claims related to war, rebellion, nuclear events, or chemical/biological contamination are generally not covered.

    How to choose the right health insurance plan

    Choosing a plan doesn’t have to feel overwhelming. Keep these key guidelines in mind:

    1. Assess your needs

    Take a hard look at what you actually need for your trip to Canada, so you don’t end up over- or under-insured. A few questions to consider:

    • How long are you staying? Longer trips usually require higher coverage limits.

    • How old are you? Age can affect eligibility, coverage options, and sometimes price.

    • Do you have any medical conditions? Even if your health is under control, a medical condition may affect what you’re eligible for or whether you need a plan that covers stable pre-existing conditions.

    • What are your plans in Canada? A “time with the family” trip has very different risk levels than say, backcountry hiking or hitting the slopes in the Rocky Mountains.

    Thinking through these questions helps you choose a plan that matches your actual risks — not just the cheapest insurance option available.

    2. Check for specific requirements

    Some visitors — such as super visa applicants — must meet government-mandated coverage rules. Make sure your plan satisfies these conditions.

    3. Compare policies

    Look at coverage limits, exclusions, premiums, and the claims process. It’s also worth considering using a reputable insurance provider with robust customer support for when you need it most.

    4. Look at pre-existing condition coverage

    If this applies to you, check stability rules and whether any documentation (like a doctor’s letter or medical records) is required. While RBC’s Visitors to Canada Insurance asks no medical questions at application, stability requirements still apply.

    5. Confirm emergency assistance

    Look for a plan with 24/7 emergency support, help coordinating care, and medically necessary transportation. If something goes awry, you ideally want real humans ready to help in real time. For instance, RBC’s Visitors to Canada Insurance includes 24-hour emergency medical assistance.

    6. Read the fine print

    Before signing off on a policy, carefully review the insurance policy. Focus on:

    • Inclusions and exclusions: What the policy covers, and what it doesn’t.

    • Coverage limits: The maximum amounts the insurer will pay for different types of claims.

    • Deductibles: How much you’ll pay out of pocket before you’re covered by the policy.

    • Claim procedures: How to make a claim, including timelines and required documentation.

    It may not be the most riveting read — but knowing what you’re agreeing to is essential.

    What to do in the case of an emergency

    Here’s a quick checklist of what to do if the worst happens:

    • Contact your insurer right away so they can guide next steps.

    • Follow their instructions for treatment, approved facilities, and pre-authorizations.

    • Keep all receipts and paperwork — you’ll need them to file a claim.

    • Understand deadlines for filing claims.

    • Submit your claim with all required documentation.

Risks of travelling without health insurance

Skipping insurance might feel like no big deal, or you’d prefer to save on costs to have more money for travelling, but here’s the potential fallout if you don’t properly insurance yourself as a visitor to Canada:

Massive medical bills

Even minor injuries or illnesses can become major expenses. One Ontario hospital charges $1,191 for a single emergency room visit. In British Columbia, ground ambulance can amount to $848, while an air ambulance helicopter can cost over $4,000 per hour. A Montreal ICU stay can hit $12,720 per day. Without insurance, those costs would land entirely on you to pay for.

Delayed or limited access to care

Hospitals or clinics may require upfront payment for non-life-threatening treatment. That snag can slow down your care, limit your options, or push you to make medical decisions based on cost, not urgency.

Immigration or legal issues

Some visitors, including super visa applicants, must carry valid medical insurance. Leaving behind medical bills you can’t pay may be viewed as financial strain, excessive demand on health or social services, or not meeting the conditions of your stay — all of which might complicate future visa applications.

No built-in emergency support

Without a policy, you’re on your own in a crisis — no help coordinating care, arranging medical transportation, or support if you need to return home for medical treatment. If things go wrong, having no backup can make a tough situation even harder.

Peace of mind during your time in Canada

Before you zip up your suitcase and head for the airport, make sure you’ve packed one of the most important items on your list: your health insurance policy. Buy an insurance policy ahead of time, keep a copy handy, and know what to do if you ever need medical help. It’s a tiny amount of preparation that could spare you a world of stress.

Exploring a new country is a lot more fun when you’re not quietly worrying about the “what ifs.” The right coverage helps you breathe a little easier, and actually enjoy the moments you came here for — the meals, the people, the adventures, even the extremes in weather.

Once your health insurance is sorted, you can focus on the best part: making life-long memories in Canada.

FAQs about health insurance for visitors to Canda

Can I get health insurance in Canada as a visitor?

Yes, visitors to Canada can absolutely buy health insurance for their stay in Canada. In fact, it’s strongly recommended, since most provinces and territories don’t cover health care costs for non-residents. You can purchase coverage before or after arrival but buying insurance early ensures you’re protected immediately.

How much is health insurance in Canada for visitors?

The cost of health insurance for visitors to Canada generally depends on your age, length of stay, coverage amount, and whether pre-existing conditions are included. Compare a few quotes to find the right fit for your needs and budget.

If I get sick while visiting Canada, will my treatment be covered?

If you get sick as a visitor to Canada, your treatment will not be covered by Canada’s universal health care system. In general, visitors must pay their own medical costs unless they have private insurance. A visitors insurance plan can cover emergency treatment for sudden illnesses or injuries, but typically not routine care, elective procedures, or unstable pre-existing conditions.

How much health insurance does a super visa holder need?

Super visa applicants must have at least $100,000 in coverage from a Canadian insurance provider, valid for a minimum of one year — and they need to show proof of this before the visa can be approved.

*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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It wasn’t easy, but you did it. You took the time to think about life insurance. You had meaningful conversations with your partner and family members. You looked at your finances. You started thinking about your future. Now you’re ready to chat with a licensed advisor and choose your policy. But how much will your insurance premium cost? And what exactly determines how much you’ll pay? It’s time to explore what affects your life insurance premium.

Key takeaways

  • Your age plays a significant role in the cost of life insurance premiums. For that reason, it’s better to purchase life insurance early.

  • Your sex, health, occupation, and even your hobbies all influence your premium costs.

  • Your premium costs are a combination of these factors, plus the amount of coverage and length of coverage. More coverage usually means more cost.

  • Term insurance typically has lower premiums than permanent life insurance.

  • An accredited insurance broker can be a valuable resource in guiding you through the process of purchasing life insurance.

What is a life insurance premium and how do they work?

You’re not alone if you’re asking yourself, “what is a life insurance premium?” Simply put, a life insurance premium is a payment made to an insurance company. You make this payment to keep your life insurance policy active. For most people, it’s a recurring monthly payment, but in some cases, it might be paid annually.

In exchange for these payments, your insurance company issues a payment (called the “death benefit”) to your chosen beneficiaries after you pass away. A beneficiary can be anyone you might choose. For most people, it’s their spouse, their children, or perhaps another family member.

8 factors that affect life insurance premiums

Life insurance costs don’t follow a one-price-fits-all model. There are eight key factors affecting life insurance premiums. The following circumstances all play a role in determining your insurance costs.

1. Age

Age might be nothing but a number, but for insurance providers, your age is a big deal. In fact, it’s one of the most significant factors that influences the cost of your life insurance premiums. In most cases, the younger you are, the lower your premiums will be.

Generally, younger people tend to be healthier than their older counterparts. As you get older, the likelihood that you’ll develop health issues increases, which leads to higher premiums. It might feel strange to think about aging or even dying when you’re young, but from a financial point of view, it makes a lot of sense.

If you’re reading this and wistfully thinking, “I’m not as young as I used to be….” take heart. Insurance brokers work with clients of all ages to find policies that suit their budget, lifestyle, and age.

2. Sex/gender

The Public Health Agency of Canada has a report that everyone can be happy about. They share: “Canada remains one of the healthiest countries in the world. Life expectancy at birth for Canadians is 79.9 years for men and 84 years for women, well above international benchmarks.”

While Canadians are living longer, there is a life expectancy gap between men and women. And that gap has an impact on your life insurance premium. In simple terms, individuals assigned female at birth often have lower life insurance premiums. That’s because they’re statistically likely to live longer. Their longer life expectancy reduces the likelihood of paying death benefits in term policies or delaying the death benefits for those who have permanent insurance (which we’ll cover below).

3. Health

The word “health” encompasses a multitude of elements. Everything from your weight to alcohol consumption to blood pressure all contribute to the diverse mosaic that paints a picture of your overall health. In the context of applying for life insurance, your health status helps insurers assess your risk level. In general, Canadians who are in excellent health enjoy lower premiums than those with health concerns, including people with pre-existing conditions, like cancer, diabetes, or heart disease.

Can improving your health improve your future insurance rates? Absolutely. Working with your doctor to improve controllable health conditions can pay off in many ways.

4. Smoking or vaping

One of the most significant lifestyle factors contributing to your insurance premiums is your status as a smoker, vaper, or nicotine user.

The Canadian Cancer Society reports: “Tobacco use is the leading modifiable risk factor for disease and death in Canada and more than 45,000 Canadian deaths are due to smoking tobacco each year.” If these figures weren’t staggering enough, their report also highlights that 75 per cent of lung cancer deaths in Canada are due to smoking tobacco. Since smoking and vaping carry an extremely high health risk, smokers are more likely to file an insurance claim because of illnesses.

As a result, life insurance premiums are priced accordingly.

What exactly counts as smoking for the purpose of life insurance?

Having used any of the following in the past 12 months:

  • Any form of Tobacco, other than one large cigar per month;

  • Betel nut leaves, more than once per month

  • E-cigarettes, vaping products, or water-pipe

  • Nicotine products or smoking cessation products

What about if you’re a former smoker? Will that make a difference? Absolutely. Some insurers offer lower premiums to people who have been tobacco and nicotine-free for a specific period (usually a year). If you’re looking to quit, the Canadian Cancer Society offer a range of programs and support systems to help you become smoke-free.

5. Occupation

Every job has its ups and downs. However, for some Canadians, their occupation, working environment, or proximity to hazardous conditions might affect their life insurance premium.

Individuals working in commercial fishing, aviation, logging, forestry, mining, oil and gas, or with hazardous materials and certain chemicals may face higher premiums. Additionally, first responders, farmers, truck drivers, waste management workers, and those involved in electrical work are also likely subject to higher premiums.

As these careers carry an above-average risk of injury, it means you’ll probably pay higher insurance premiums. If you work in one of these fields, you’re not alone. A licensed insurance advisor can work with you to find a life insurance policy that meets your financial and family needs.

6. Hobbies

Canadians love exploring the great outdoors. However, you should be aware that some adventurous hobbies could impact your life insurance premiums.

Participating in any of the following high-risk hobbies may result in higher premiums:

  • Skydiving

  • Scuba diving

  • Aircraft piloting

  • Motorsport racing

  • Backcountry skiing

  • Snowboarding or snowmobiling

  • Extreme height activities like skydiving, BASE jumping, bungee jumping, and rock climbing.

That’s because these hobbies are statistically more likely to lead to accidents, which increases the liability for insurance companies. Should you downplay your zest for adventure when talking with your licensed advisor? No. Failure to disclose high-risk activities may result in a future claim being denied.

Instead of giving up your adrenaline-filled hobby, work with a licensed advisor to determine which life insurance policy suits your lifestyle. Factors such as how often you engage in your hobby, your experience and training level, the equipment you use, and safety precautions could all impact your final policy cost.

7. Policy type and coverage amount

The kind of policy you choose and how much coverage you opt for directly affect your life insurance costs.

Life insurance comes in two formats: Term insurance and permanent insurance. Term insurance typically lasts for a specified term, such as 10 to 20 years. For that reason, it’s less expensive as any risk is limited to a set amount of time. Term insurance also offers greater flexibility. However, should you opt for additional coverage, you are likely to pay a higher premium for each subsequent term, as you are getting older and your health may have changed.

Permanent insurance provides lifelong coverage, and it remains in place even when you finish paying premiums. In general, permanent insurance policies are more expensive. That’s because the coverage remains in effect for the long term, regardless of changes in your health.

Whether you opt for term or permanent, the other factor that affects your life insurance premium is the amount of coverage you choose. More coverage equals higher costs. If you want $1M worth of life insurance, you’ll pay more than if you want $200,000 of coverage.

So which kind of policy should you choose? The answer isn’t necessarily about cost but considers your unique circumstances. A single person might opt for term insurance with affordable premiums. Another person with a growing family might take a different approach and opt for permanent insurance or for a term policy with a higher coverage amount to support their loved ones.

Whatever you choose, a licensed advisor can help you decide which policy type best aligns with your long-term financial goals and present-day budget.

8. Riders and add-ons

If you hear the word “rider” and immediately think of cycling, you’re not alone! In insurance terms, a rider, or add-on, is an optional addition to your existing policy. Riders allow you to customize your policy to meet your concerns and circumstances.

Popular coverage options include riders for critical illness, long-term care services, accidental and death benefits. Each rider adds an additional layer protection to your policy; however, it also adds an additional cost. Understanding what your options are and which riders may be are right for you can help you decide if it’s worth adding to your policy.

How much does life insurance cost in Canada?

Insurance is not a one-size-fits-all product. Your cost will depend in part on whether you choose term or permanent insurance, the amount of coverage you want, your age, health, and lifestyle factors. With that in mind, costs could be as low as $25 a month or as high as several hundred dollars. Talking to an insurance broker will help you find the best options for your budget and your circumstances.

Take the next step

Life insurance premiums are influenced by a wide range of factors, from statistical models related to age and sex to lifestyle factors like smoking, hobbies, and your occupation.

It’s a lot to absorb. An accredited insurance broker understands this and is there to help answer any questions you have. However, taking the time to understand your options and the factors that influence premium costs can also be empowering. You’re putting in the effort to protect your future and your family – and that provides tremendous peace of mind.

*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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