Life Insurance Calculator | Is Your Coverage High Enough For All Your Needs?

How Much Does Life Insurance Cost in Canada?

It’s impossible to say exactly how much life insurance costs in Canada because the amount will be different for every person. This is because insurance companies take a number of factors into consideration before providing a premium. For example, the older you are, the more your life insurance will cost. In addition, before you proceed, take a look at the best health insurance and home insurance (see home budget calculator), which are all closely related.

Let’s look at the average cost of a ten-year life insurance plan for a non-smoking male in Ontario.

• At age 30: $13 monthly or $148 a year.
• At age 40: $16 monthly or $183 a year.
• At age 50: $28 monthly or $329 a year.
• At age 60: $65 monthly or $771 a year.
• At age 69: $172 monthly or $2060 a year

If you wanted a 20-year insurance plan, the premiums would be higher. This is because the rate will not change throughout the 20 years, even as you get older and potentially develop medical issues.

Most insurance companies provide a free, personalized quote once you input some personal information. This is the best way to find out how much your life insurance will cost in Canada.

How Much Life Insurance Do I Need in Canada?

The best way to determine how much life insurance you need is to use our life insurance calculator. The calculator takes into consideration your family’s needs and expenses to tell you the amount you will need to leave behind to help them.

On average, however, the Canadian government recommends you obtain life insurance coverage that is worth seven to ten times your annual income. This means if your income is $100,000 a year, your insurance coverage should provide $700,000 to $1,000,000. This ensures that your family will be taken care of for years after your death. On that note, mortgage insurance can also be an option in case of such eventuality (see mortgage calculator)

This number is, of course, an average. For example, if your family has more expenses because you have a lot of children, you will require more life insurance coverage. Similarly, if you have a lot of debt that your family will need to pay off, you will require more life insurance coverage.

Using our calculator will help provide you with a more accurate amount of coverage you will need to help provide for your family when you’re gone. It is always better to have too much coverage than not enough.

Factors That Impact The Price of Life Insurance?

As we mentioned before, life insurance companies take into consideration a number of factors before providing a premium. Here are the main factors that impact the price of life insurance.

• Age: how old you are when you buy life insurance coverage tends to be the biggest factor in determining the price. The older you are, the more your life insurance will cost.
• Health: some insurance companies require you to complete a medical exam or, at the very least, fill out a health questionnaire. They will then use the results to provide you with a premium. If you have pre-existing conditions or a family history of illness, your premium will be higher.
• Smoking status: if you smoke, your insurance premium will be higher as you are seen as more of a risk.
• Gender: women tend to have a longer life expectancy, so their premiums tend to be 10% to 25% lower compared to men.
• Occupation or hobbies: if you have a high-risk job or hobby, your life insurance premium will be higher. These could be occupations, such as manual labourers, or hobbies such as extreme sports.

When Should I Buy Life Insurance?

With all this talk about life insurance, you may be wondering when a good time to buy it is. If you don’t have a family or have anyone depending on your income, you likely don’t need insurance. That being said, buying life insurance earlier on tends to be more beneficial. As we already discussed, the older you get, the more life insurance will cost. If you buy it earlier on and get a long-term plan, you and your future family will be set.

Unfortunately, younger people tend to have more debt on top of their daily expenses. This is because they are likely working entry-level jobs, so their income is not enough to pay for their expenses and their debt. Having debt often puts younger people off from buying life insurance because they believe they can’t afford the amount. It is important to remember that your debt will be your family’s responsibility if you pass away.

Thus, buying life insurance when you’re young, even if you have debt, is a good idea. Alternatively, consider critical illness insurance. Don’t burden your family with your expenses. Buying life insurance ensures your debts will be paid off, and your family will be provided for.

How do I Calculate Life Insurance Needs for My Spouse or Partner?

One of the biggest parts of our life insurance calculator is the total future expenses section. You may be wondering how to calculate life insurance needs for your spouse or partner. You likely won’t be able to come up with an exact amount, but you can still use the calculator with an estimate of your partner’s insurance needs.

First, think about your current expenses. Things such as child care, living expenses, bills, etc. Perhaps for your children/s education. This amount will likely stay the same once you pass away. Your income is likely enough to cover your current expenses, so ensure that your life insurance at least equates to your income for the year.

You then need to think about future expenses. Do you have children? How much will tuition cost for all of them? How will expenses change for them as they get older? Coming up with this amount will be harder, as you will have to create an estimate. So, the best way to go about this is to research.

For example, look at the average price of tuition and ensure your life insurance policy will cover that amount for each child. An undergraduate degree in Canada is, on average, $25 852. If you have four kids, you will need $100,000 for tuition alone.

What Types of Life Insurance Are There?

In Canada, there are two main types of life insurance: term life insurance and permanent life insurance. Term life insurance is a policy that is set for a specific term, such as ten years. As it is a set plan, your premiums will be set for that amount of time as well. Term life insurance either ends at the end of your term or at a maximum age. The age depends on the insurance provider, but it is usually 85 years old.

Permanent life insurance is sometimes also known as whole life insurance. It is aptly named because it will last your entire lifetime. There is no maximum age for permanent life insurance, and they are guaranteed to payout. You simply need to regularly pay your premiums. Permanent life insurance tends to be more expensive but comes with benefits such as tax-advantaged benefits.

Within term and permanent life insurance policies, there are also different types of insurance plans. For example, renewable or convertible term life insurance, joint life insurance, and level, increasing, or decreasing benefits insurance.

The Bottom Line

Thinking about passing away is a scary thought, but it is inevitable that we all will pass away one day. It is best to be as prepared as you can. If you have a family, this means making sure they are taken care of, financially, physically, and emotionally. You may not be able to guarantee all of that, but you can guarantee financial security if you get life insurance.

Life insurance will help your family if they rely on your income to run the household. Your life insurance coverage will provide them with an agreed-upon amount when you pass away. You will need to pay the insurance premiums throughout your life to receive this coverage.

Knowing how much coverage you should purchase can be complicated, but using our life insurance calculator will help. You can input estimates of income and expenses if you don’t know the exact numbers. This will help give you an idea of whether or not your coverage will be enough to provide for your family once they lose you and your income.

A good rule of thumb, however, is to ensure your life insurance provides at least seven to ten times what your yearly income is. This should help provide for your family for a few years after your death, even helping your children’s education to attend college or university.

No one knows when it’s their time to go, so it’s always better to purchase life insurance as early as you can. Try out our calculator first to see how much you will need!