Skip to main content

Article Types: Discover & Share

Home > Discover & Share > Page 2

What is Probate and How Does it Work?

16 Min Read
Fiorella Grossi
What is Probate and How Does it Work?

Share this article

On this page

You’re probably like most people; you want your loved ones to receive their inheritance quickly and with minimal tax implications should you pass away. Problem is, few Canadians are set up to make that happen. In fact, according to a recent survey by RBC Insurance, only 15 per cent of Canadians have a plan for how their assets will be transferred after they’re gone.

It’s understandable; estate planning can feel intimidating. One key element of estate planning is understanding what probate is and how it works. Otherwise, your family could face delays, surprise expenses, and additional stress at an already tough time.

In other words, you might not achieve what matters most – protecting the people you care about. The good news? Probate doesn’t have to be overly complicated. This guide breaks down what probate is, when it’s legally required (Good news: not always), and what you can expect in terms of costs and timelines. Whether you’re ready to begin planning your estate or settling someone else’s, you’ll get the clarity you need to move forward with confidence.

Key takeaways

  • Probate is a court process that validates a will and authorizes an executor to manage and distribute a deceased person’s estate.

  • The purpose of probate is to verifies the will, give an executor the legal power to act, ensure debts are paid first, and distribute assets in accordance with the will.

  • Probate is not always required in Canada. It is typically required for assets solely in the deceased’s name. Jointly owned assets and registered accounts with named beneficiaries usually bypass probate and don’t count toward estate value.

  • If you die without a will, the courts appoint an administrator and distribute assets according to provincial rules.

  • Probate can take six weeks to six months for simple wills. Complex estates could extend to 12–18+ months.

  • Probate fees vary from province to province.

What is probate?

Probate or “probate of will” is a legal court process that officially confirms the validity of a will, and officially appoints an executor (or administrator) to manage a deceased person’s estate. Once probate is granted by a provincial court, an executor can distribute assets as outlined in the will and in accordance with the law.

It’s important to note that probate isn’t always necessary in Canada, and that it’s the responsibility of the executor to determine whether probate is required.

What is the purpose of probate?

The purpose of probate is to protect everyone involved and ensure your wishes are fulfilled after you’ve passed away. Here’s what probate does:

  • Verifies the will: Probate essentially gives the will a stamp of approval by a court. Probate assures all interested parties that a will is authentic and the final version – not an outdated draft or a forgery.

  • Gives the executor legal power to act: Probate prevents unauthorized people from accessing assets once a person dies. Without probate, financial institutions and insurance companies typically won’t release funds or transfer assets.

  • Ensures debts get paid first: Once a person dies, debts like income taxes, credit card bills, outstanding loans, and probate taxes and related costs must be paid using funds from the estate before any inheritances are distributed. This protects not just creditors but also beneficiaries.

  • Establishes the estate’s value: This is necessary for calculating probate fees and taxes.

  • Distributes assets to beneficiaries: Probate ensures your assets are transferred to the people you intended them to go to. It also creates a legal paper trail that accounts for every asset and expense, ensuring the executor follows the rules, and nothing is mishandled.

When is probate required in Canada?

Probate is almost always required if someone hasn’t left a will. If a will exists, there isn’t a universal dollar amount that automatically triggers probate in Canada. If you leave a relatively small estate or assets are to be passed on to a surviving spouse, then probate may not be required. However, each province makes its own rules, and financial institutions set their own policies too.

Generally, probate comes down to the type and ownership of assets. If the deceased person held accounts, investments, or property solely in their name, probate is typically required.

Conversely, assets owned jointly with a spouse typically don’t require probate. For example, if you and your spouse own your home as joint tenants with right of survivorship, the property should go directly to your spouse when you pass away.

Similarly, if beneficiaries are named in a life insurance policy, or for registered accounts like a Registered Retirement Savings Plan (RRSP), Registered Retirement Income Funds (RRIFs), or Tax-free Savings Accounts (TFSAs), probate isn’t required. These assets don’t count toward the estate’s total value – which helps lower probate fees.

What happens if someone dies without a will?

When someone in Canada dies without a valid will, it’s called dying “intestate.” This means they’ve left no instructions about who inherits their assets or who manages their estate. In this case, the courts step in.

Without a will, the courts will appoint an estate trustee (also called an administrator). This is usually the closest next-of-kin.

From there, assets get distributed in a strict legal order set by each province or territory. Typically, assets go to a spouse, then children, parents and siblings. Depending on where you live, common-law partners may not inherit anything – as is the case in Ontario and Quebec. Stepchildren also generally have no legal right to inherit. That close friend or charity you cared about? They’ll receive nothing.

The process of dying without a will may spark family conflict over who gets what or who is in charge, creating rifts that could last for years. Bottom line: dying without a legal will may not produce the results you would have wanted.

What steps are involved in the probate process?

The probate process varies from province to province, but it generally follows the same step-by-step process, regardless of where you live in Canada. Here’s what happens after you pass with a valid will:

    1. Prepare court documents and file the will

The executor’s first job is to submit a valid will and proof of death to the court, along with whatever documentation the court requires to prove the will is the most recent Last Will and Testament. The executor must also apply for probate by filling in the appropriate court documents for that province or territory.  Once the courts approve the will, the executor has the legal go-ahead to begin dealing with estate.

  • 2. Notify interested parties

The executor is now legally required to inform everyone who has a stake in the estate that probate is underway – beneficiaries, potential heirs, and known creditors. Some provinces, like Nova Scotia even require a public notice to be published in a local newspaper or online to alert creditors who might not be on anyone’s radar.

  • 3. Take inventory of the estate

A detailed inventory of the estate’s assets is required to determine what’s owed in taxes, including probate fees or taxes. That means the executor must track down and value everything the deceased owned – real estate, bank accounts, investments, pensions, vehicles, jewelry, art, collectibles, even valuable household items.

This is often the most time-consuming step – and shouldn’t be rushed. Certain assets may require professional appraisers, such as a cottage or valuable jewellery. While this adds time and expense, it helps avoid fights over whether something was valued fairly.

  • 4. Pay taxes and debts

The executor must first settle what the estate owes using funds from the estate itself,  before any beneficiaries receive  their inheritances. Debts include mortgages, income tax, and outstanding bills like credit card balances and medical debts. The executor is also responsible for filing a final tax return and pay any taxes owing on the estate itself, including probate fees and taxes and other probate-related costs like legal and accounting fees.

Family members may be surprised at this point – these costs can add up. On the plus side, money received from an inheritance is not considered taxable income by the Canada Revenue Agency (CRA).

  • 5. Resolve disputes (if they arise)

Not every estate goes smoothly, and disputes may occur. A family member could challenge the validity of a will, claiming it was signed under duress, for example. Other times, beneficiaries may disagree over how assets should be divided. In the event of a dispute, mediation will likely be the first step.  If that doesn’t work, it could go to the court to decide, a process that stretches probate by months or possibly years.

  • 6. Distribute assets

Once the debts are paid, taxes are settled, and any disputes are resolved, the executor can finally distribute the remaining assets to the beneficiaries according to the will. After all obligations have been met, the executor can now close the estate by submitting a detailed report listing what expenses came in, what went out, and what was distributed to whom. Finally, any necessary documents are filed with the probate court to officially close the estate.

How long does probate take in Canada?

The short answer? It depends. In straightforward cases where the will is relatively simple, probate in Canada can take as little as six weeks to six months. But complex estates with multiple properties, business interests, or foreign assets, it can take much longer – from 12 to 18 months.

Where you live in Canada matters too. Some provincial courts process probate applications faster than others, and backlogs can cause frustrating delays. An executor’s efficiency also plays a role.

When choosing an executor, consider someone who’s organized, can handle tax, legal, and administrative tasks, and has the time to dedicate to the process. The bottom line: probate isn’t a quick process. Executors and beneficiaries should be prepared for probate to take time, patience, and often more paperwork than anyone expects.

What are the costs of probate?

Probate comes with real costs that can quickly add up. It matters since the executor uses funds from the estate – cash or the proceeds from selling assets – to pay expenses before beneficiaries receive anything. So, every dollar spent on probate is a dollar that doesn’t go to your loved ones.

The biggest expense is usually government probate fees or taxes – often called estate administration taxes. Most provinces charge a fee based on the estate’s value, but rates and how they’re calculated vary widely.

In Ontario, for example, you do not pay Estate Administration Tax if the value of the estate is $50,000 or less.

Alberta caps probate fees at $525 for estates valued at $250,000 or more, and no matter how large the estate, while Quebec has no probate fee.

There are also associated expenses your estate will likely incur along the way, like professional fees for lawyer, accountants, and appraisers. You should also consider compensating an executor for their work. While there is no standard amount for how much executors are paid,  a guideline is two to five per cent of the estate’s value, while in Quebec executors usually bill an hourly rate. Family members chosen as executors often waive this fee, but it’s a demanding job that should be acknowledged in some way.

How to reduce probate costs

Here’s the thing – not all probate costs are inevitable with proper estate planning. Consider strategies that bypass probate altogether, like naming beneficiaries on registered accounts and life insurance policies, hold property with right of survivorship, or transfer funds into trusts and segregated funds.

Common challenges with probate

Probate is meant to bring order and clarity after a death but, in real life, it can be anything but simple.

Disputes over the will

One of the most common – and painful – challenges arises when beneficiaries or family members challenge the will’s validity. They might claim the deceased was pressured into signing it or didn’t grasp what they were doing. These disputes can escalate, delaying probate and increasing legal costs.

Disputes can often be resolved through mediation led by a neutral third party – a far less expensive and draining option than going to court. The best solution? Make sure your will is properly drafted, witnessed, and up to date. And consider discussing your wishes with family members ahead of time to prevent surprises later.

Delays in the probate process

Probate rarely moves as quickly as anyone hopes, especially if the court has a backlog of probate applications to process. Missing documents is a common reason for delays. When planning your estate, keep all important documents organized in one place and make sure your executor knows where to find them. Uncooperative beneficiaries who won’t sign off on required forms or challenge decisions could also stall the process. Complex assets like foreign property, privately held businesses, or hard-to-value collections may require extra time for appraisals and legal work.

Insufficient funds to cover debt

If an estate owes more than it’s worth, the executor must prioritize which creditors get paid first – and beneficiaries may end up receive nothing. Debts are paid off in order, beginning with the CRA if tax is owed and provincial or territory tax. Then secured debts such as a property are paid off, followed by unsecured debts like credit cards.

If there simply isn’t enough money, some debts go unpaid, although typically in Canada outstanding debts are not passed on to family members. That’s why it’s crucial to have a clear picture of your debts when estate planning and consider life insurance or other tools to ensure your estate can cover what’s owed.

Emotional stress

Grief and money are a tough combination. Even families that get along well could find themselves at odds during the probate process. Old resentments can resurface, and siblings may disagree about what’s fair. Executors often bear the brunt of this tension – dealing with family dynamics and resolving any disputes, all while doing their job.

Tips for navigating probate

You have the power to make the probate process easier, faster, and less stressful for everyone involved. Here are some practical steps:

Plan

A well-drafted, clear and current will is the foundation to navigating probate once you’re gone. Consider talking to a professional who can help structure your assets to minimize probate fees and maximize what goes to your beneficiaries. Review your assets to make sure there’s enough cash or liquid investments to cover debts, taxes, expenses, and even funeral costs. That way, your executor won’t feel forced to quickly sell property, or have beneficiaries pay out-of-pocket.

Stay organized

Create a centralized file to keep important documents, and let your executor (or loved one) know where to find it. Include information on all your assets and debts – your will, property deeds, insurance policies, bank account information, investment statements, debts like credit card bills – as well as passwords and contact numbers.

If you’re the executor, create a detailed inventory of all assets and debts. Keep meticulous records of every transaction and save all receipts. Good record-keeping protects you, speeds up the process, and gives beneficiaries confidence that everything is being handled properly.

Communicate

Consider having conversations with your family about your wishes. It might feel uncomfortable, but it can prevent disputes and hurt feelings down the road when emotions are running high.

For executors, silence could breed suspicion and misunderstandings. Keep beneficiaries in the loop, even when there’s nothing new to report. Let them know what stage you’re at, what’s taking time, and when they can expect updates.

Get professional help

Probate can involve complex legal, tax, and financial matters – and mistakes could be costly. A lawyer who specializes in estates can guide an executor through the court process and help navigate any disputes. An accountant can ensure the estate meets all its obligations to the CRA.

Estate planning and the role of probate

Probate is a necessary part of estate planning that protects your legacy and ensures your assets reach the people you care about. But without proper planning, probate could become costly, time-consuming, and stressful for your loved ones. Educating yourself on estate planning or working with an accredited advisor could help save your family money and months of stress down the road. It’s worth the effort now to give them peace of mind later.

FAQs about probate

Is probate needed if there is a will?

If you die with a will, probate is not always required in Canada. It depends on a variety of factors including the size and type of assets in the estate. If assets, such as real estate, bank accounts, or other investments, are held solely in the deceased’s name then probate is typically required. Assets with named beneficiaries (life insurance plans or RRSPs) or assets held jointly with a spouse can typically bypass probate altogether. 

How long does probate take?

The time probate takes varies from province to province. Straightforward and smaller estates can take around six weeks to a few months, but complex estates with multiple properties, businesses and foreign assets can take 12 to 18 months or more, especially if someone is disputing the validity of the will.

What is the cost of probate in Canada?

Probate fees, also called estate administration tax in some provinces, are charged by the government based on the estate’s value. The costs and how they’re calculated vary dramatically by province or territory. Some provinces, such as Ontario, British Columbia and Nova Scotia, (charge a percentage based on the value of the estate. Some provinces charge a flat fee, some have a fee-based system, such as Alberta, while Manitoba and Quebec charge no probate fees at all. In addition to probate fees, there are other estate costs to consider, such legal, accounting, and administrative costs.

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

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

Home > Discover & Share > Page 2

Disability Insurance: Are You Covered?

10 Min Read
Lisa Jackson
Disability insurance: are you covered?

Share this article

On this page

Many Canadians are good at insuring the obvious stuff: their life, their home, their car, maybe even their phone (if it’s fancy enough). But what often gets overlooked is insuring the one thing that pays for all of it — your income. This is where disability insurance comes into the picture.

Here’s an uncomfortable truth: if something serious affected your health, your finances could unravel faster than you might expect. While many people focus on solely protecting themselves with life insurance, the odds tell a different story — you’re far more likely to be sidelined by illness or injury than to die during your working years. In fact, about one in three working-age Canadians will become disabled and unable to work before age 65.

One big reason why many people aren’t prepared? Some Canadians assume their employer’s disability insurance has them covered. But group health plans usually only replace a portion of your income, may cover you for as long as you’d need, and don’t follow you if you leave your job. And the risks are real: nearly 30 per cent of Canadians say their savings would run out within six months after a major health setback, yet only about 10 per cent have disability insurance.

This article breaks down how disability insurance works in Canada, what workplace disability coverage does (and doesn’t) provide, and how to make sure your most valuable asset — your ability to earn a living — is properly protected. Because hoping your benefits are enough isn’t much of a plan.

Key takeaways

  • One in three Canadians will be unable to work at some point before age 65. Illness or injury is far more likely during working years than death, yet these risks are too often underinsured.

  • Your ability to earn an income is your biggest financial asset. It pays for everything else, but it’s easy to overlook when thinking about protection with disability insurance.

  • Disability insurance provide income support if illness or injury prevents you from working.

  • Workplace disability coverage can often be overestimated. Employer group plans usually replace only part of your income, may be taxable, may not last long enough, and typically end when you change jobs.

  • Disability coverage is often more affordable than you’d expect. Depending on the type and amount of coverage, disability insurance may cost roughly 1 per cent to 3 per cent of your annual income.

Understanding disability insurance

Disability insurance is a type of insurance product that helps replace a portion of your income if an injury, illness or mental health event stops you from working – regardless of whether the injury or illness occurred in the workplace or elsewhere. In other words, it helps protect your financial security while you focus on getting better.

In general, disability insurance replaces part of your income — not all of it — up to a maximum amount and for a set period of time. How much you receive, when payments begin, and how long benefits last all depend on your policy.

Some Canadians have disability insurance through an employer, as part of their group health benefits. Others choose to buy coverage through a licensed insurance advisor, especially if they’re self-employed or want to top up the coverage they already have.

Types of disability insurance

There are two main types of disability insurance available in Canada:

  • Short-term disability insurance covers temporary time away from work, like recovering from a hospital stay, with benefits that typically last up to six months while you recover from an illness or injury.

  • Long-term disability insurance is designed for more serious or long-lasting conditions, such as cancer. Some plans may provide coverage if you can’t return to your job for up to two years. After that, benefits may continue if you’re unable to work in any job.

In other words, these two types of disability insurance are designed for different “what if” scenarios, and they’re not the only types of disability insurance available.

What does a disability insurance policy cover?

At this point, you might be wondering, Okay, but what actually counts as a disability? What qualifies as a disability will largely depends on the policy you choose, and the details in the plan.

Some policies are narrower than others. For example, an accident-only policy covers disabilities caused by injury, but not illness. More comprehensive disability insurance policies can cover both illness and injury, though exclusions and limitations may still apply.

Depending on your coverage, disability insurance may provide income support if:

  • You’re injured in a car accident and need months of rehabilitation.

  • You fall while skiing, break an arm, and your job requires full use of both hands.

  • You experience mental health challenges that make it impossible to work.

The key thing to remember? Disability insurance policies aren’t one-size-fits-all.

What are the benefits of disability insurance?

The benefits of disability insurance go beyond replacing a paycheque. For Canadians and their families, disability insurance can provide financial stability and flexibility during an otherwise stressful time. Here’s what it can help with:

Income replacement

Disability insurance benefits are usually paid directly to you, which means you decide how to use the money — rent, groceries, medical costs, car payments, whatever’s most pressing. With private disability insurance, if you pay your premiums yourself using after-tax income, the benefits you receive are generally tax-free.

Peace of mind

The length someone is unable to work due to disability can last years — on average between 2.1 and 3.2 years. That’s a long time to rely on savings alone. Having income protection from disability insurance can ease financial stress so you can focus on recovery, not constant money worries.

Support while returning to work

Getting back to work after an illness or injury isn’t always a straight line. Some disability insurance policies may include return to work benefits, such as rehabilitation services, retraining, or workplace accommodations, to help make that transition smoother when you’re ready.

A top-up to government benefits

Government programs like Employment Insurance (EI), the Canada Pension Plan (CPP), or Quebec Pension Plan (QPP) can provide support, but eligibility rules are strict and coverage is limited. Private disability insurance can help fill the gap when government benefits don’t go far enough.

Coverage that stays with you

Disability insurance through an employer usually ends when your job does. Whereas private disability insurance isn’t tied to your employer, so it can stay with you if you change jobs, become self-employed, or retire.

More flexibility than workplace coverage

Group insurance plans don’t always go as far as expected. Many replace only about half of your net income, and benefits are often taxable if your employer pays the premiums – leaving you with less money to cover expenses.

On the other hand, individual disability insurance plans usually offer more flexibility, a broader definition of what is included as a disability, and optional features tied to how you actually work. If you pay the premiums yourself, benefits are generally tax-free.

More affordable than expected

With individual disability insurance, you can often adjust coverage to fit your needs and budget. Depending on the type of disability insurance and amount of coverage, it may cost roughly 1 per cent to 3 per cent of your annual income.

How much disability insurance do you need?

The short answer is: it depends. Disability insurance is generally designed to replace between 60 per cent and 85 per cent of your income. Many Canadians rely on workplace group coverage, but employer plans typically replace only part of your income, limit how long you’ll receive disability benefits, or place restrictions on what is covered as a disability. That’s why some people choose to supplement workplace coverage with a private disability insurance plan.

When calculating how much disability insurance you need, it’s more helpful to think about what your income supports — and which expenses are will still need to be covered if your paycheque stopped. A few key considerations include:

  • Current coverage. Group benefits can help, but many replace only about half of your net income. That may work for a while, but what happens if you need long-term disability coverage?

  • Your everyday lifestyle. How much does it actually cost to run your life right now? If you had to cut back, what’s realistic? And for how long?

  • Your fixed expenses and savings. Bills don’t stop because you’re sick or injured, and savings can be wiped out faster than expected.

  • The people who depend on you. If others depend on your income, going from two paycheques to one (or none!) can be a big adjustment. Add caregiving into the mix, and it can get even harder.

  • Your work flexibility. If you couldn’t do your current job, could you reasonably pivot? Or does your income hinge on specific skills, physical demands, or credentials?

  • Your longer-term plans. Time away from work can impact things like retirement, education savings, or buying a home.

Not sure where to start? You can plug your numbers into the disability insurance calculator from RBC Insurance and see how your income, expenses, and existing coverage stack up.

Key factors to consider when applying for disability insurance

Beyond the monthly benefit amount, a few details can make a big difference when applying for disability insurance:

  • Your existing coverage. Take stock of what policies you already have in place and pinpoint any gaps in coverage.

  • How is disability defined? This could a big consideration, as definitions vary by insurer. Some policies may focus on whether you can do your job, while others look at whether you can do any job. Also, carefully review the exclusions or limitations, including pre-existing conditions.

  • The waiting period. This is how long you need to be off work before disability benefits kick in (e.g., 30, 60, 90, or 120 days).

  • How long do disability benefits last? Some policies pay benefits for a set period, while others continue until a certain age, such as 65. Make sure that timeline aligns with how long you would want support to span.

  • Cost, taxes, and flexibility. Premiums depend on factors like age, health, occupation, and coverage choices. It’s also worth checking out how benefits are taxed, whether coverage can be increased later, and whether partial work is allowed while receiving benefits.

  • Support and claims. Ask how disability insurance claims are handled and whether the policy includes additional support, like return to work services.

Cover yourself and your income with disability insurance

The odds of winning the lottery are about one in 14 million, and people still buy tickets. But the chances of becoming disabled and unable to work at some point during your career? Closer to one in three.

Disability insurance can help safeguard the life you’ve built if illness or injury prevents you from working. Group disability coverage through an employer can help protect you, but it may not be enough to sufficiently cover your expenses.

If you’re unsure how much protection you need,  RBC Insurance’s disability calculator can help you estimate how your income, expenses, and existing coverage line up. Still have questions? One of our licensed insurance advisors can help you make sense of the options. Because your financial security isn’t something to leave to luck.

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

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

Home > Discover & Share > Page 2

Difference Between Life Insurance and Critical Illness Insurance

9 Min Read
RBC Insurance
Critical illness versus life insurance

Share this article

On this page

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.

Home > Discover & Share > Page 2

Life Insurance for Small Business Owners: Why it Matters

12 Min Read
Sandy Yong
Life Insurance for small business owners

Share this article

On this page

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.

Home > Discover & Share > Page 2

When Should You Buy Critical Illness Insurance?

10 Min Read
Jessica Martel
Critical illness insurance

Share this article

On this page

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.

Home > Discover & Share > Page 2

End-of-life expenses: a high-potential market

4 Min Read
Florence Dujoux
End of life expenses: a high potential market

Share this article

On this page

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.

Home > Discover & Share > Page 2

Guide to Health Insurance for Visitors to Canada

13 Min Read
RBC Insurance
Visitor to Canada insurance.

Share this article

On this page

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.