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How to Find the Best Term Life Insurance in Canada

The best term life insurance policy in Canada is the one that’s “best for you.” That may sound obvious, but it’s typically not how people shop for coverage.

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The best term life insurance policy in Canada is the one that’s “best for you.” That may sound obvious, but it’s typically not how people shop for coverage.

As Kathleen Bauer, a Serenia Life advisor explains, “Insurance is like most things. To make a cheaper version of anything, you have to reduce the quality somehow. And, unless you really know how to compare two or three policies, you might not spot the best overall value. This is why shopping on price alone is not the best place to start.”

Rather than looking for the cheapest term life insurance policy, veteran advisors like Kathleen recommend a step-by-step approach that will reveal the best term life insurance policy for you, based on your budget today and your needs and goals for tomorrow.

Step 1. Assess your life insurance needs

Most people buy term life insurance as a way of replacing their income in the event of their death. How much each person needs varies widely, based on how much they earn after tax every year, if they have anyone who depends on their salary, and how long they plan to keep working.

Another consideration for many people is how much money their loved ones are going to need throughout their lifetimes to cover expenses such as:

• Paying the mortgage
• Investing for life’s big projects
• Covering tuition for the kids
• Financing retirement

If you’d like to do some napkin math to estimate how much term life insurance you’d need, here are two simplified methods.

Option 1. The ‘ten times salary’ rule

Right now, your income is paying all or a portion of your household bills. If something happens to you, your family may have to make radical lifestyle changes that could include having to sell assets, downsize, or put off plans for post-secondary education.

Ideally, you would purchase the equivalent of at least 10 times your annual salary to give your family every advantage to carry on with confidence. If you can’t afford that much life insurance coverage right away, start with at least six times your annual income and adjust the coverage when you can.

Doing the math

If you earn $80,000 a year after tax, you would need: $80,000 X 10 = $800,000.
The minimum coverage you should consider is six times your annual salary: $80,000 X 6 = $480,000

Try calculator

Option 2. The ‘years to retirement’ rule

What if you have less than ten years between now and retirement? In this case, estimate the number of working years between now and retirement. That’s the income you need to replace with a life insurance policy.

This should be considered the minimum amount of coverage you need. There’s nothing stopping you from purchasing additional life insurance coverage, especially if you want to give your kids or grandchildren a financial leg up.

Doing the math

If you earn $80,000 after tax, multiply that amount by the number of years between now and retirement.

5 years to retirement: $80,000 x 5 = $400,000
8 years to retirement: $80,000 x 8 = $640,000

Try calculator

Step 2. Research multiple life insurance providers

If the day comes when you or your loved ones need to make a life insurance claim, you want to know that the people answering the call will have your best interests at heart. That means looking for providers who have:

• Strong financial stability and a reputation for paying claims in full, and promptly
• A variety of options, so you can tailor your policy to your needs
• Benefits that give you more ways to protect yourself and your family
• A reputation for being compassionate during one of life’s most challenging times

Serenia Life has a unique collection of benefits for members, including free online wills, a post-secondary scholarship, funding for volunteer work, and more. These bonus features are a no-cost way to support your family, your community, and the causes you care about.

Step 3. Understand policy features and options

While researching the insurance provider is a good first, it’s not enough. You also need to understand what type of features a term life insurance policy includes.

When it comes to term life insurance, you should have the option to choose from multiple term lengths and coverage amounts. Extra features can be added on at the time of purchase – additional optional benefits like Accidental Death Benefit, Total Disability Waiver, or Child Term Benefit riders. Also consider if you can easily get more coverage if your needs change. For example, if your salary goes up, and you’re using the “10 times rule,” you might want more coverage. If you have children, you may want to leave more money for education.

Step 4: Consider conversion options

As your needs change over your lifetime, you may wish to convert from your current term to a longer one, or to a permanent life insurance policy, a form of permanent life insurance that never expires. And if you purchase a term insurance product when you are young and healthy, you’ll be able to convert to permanent without the need for a medical exam, even if you are diagnosed with a health condition later in life. Some life insurance providers even offer a term conversion incentive. For example, Serenia Life members who convert from term to whole life within the first five years receive a credit towards the cost of their whole life policy.

Step 5: Evaluate customer service and bereavement support

It’s never a bad idea to check out an insurance provider’s online reviews before moving forward. Reading what existing customers have to say will give you a good sense of the pros and cons of selecting a specific provider.

Some life insurance providers take an interest in your overall financial health and well-being more so than others. For example, Serenia Life Financial provides unique benefits on top of insurance planning and coverage, such as monthly payments for bereaved children, reimbursements for first aid training, a free online will, and seed money for fundraising events. We even provide up to $1,000 in bereavement counselling for our members’ grieving loved ones. Not to mention, our Coping With Loss series provides tips to grieving loved ones, written by a mental health professional.

Step 6. Compare life insurance quotes

More and more insurance providers offer online quotes for term life insurance products. Now that you have a better understanding of what to look for in a provider and a product, you may want to shop around online to see what types of prices are out there. You can start by getting a quote for term life insurance on our website.

Get a Quote

Just remember: The risk of buying the cheapest term life insurance policy is that you may not have the flexibility you need years down the road. And that’s why the best policy is the one that anticipates your needs and gives you room to grow.

Step 7: Seek professional advice

It’s not always easy to assess your needs without the help of an experienced advisor who knows what questions to ask based on years of helping other Canadians find the right combination of value and price.

If you’re working with an insurance broker, (i.e., an independent advisor who can recommend the best term life insurance for you) and you’ve completed the steps above, it will be easier to compare the pros and cons of each policy. Your broker understands your needs, and they will restrict their search to providers who meet your standards.

Step 8. Review the application process

Meeting with an advisor is also your opportunity to ask questions. Be sure to find out what’s involved in the application process and how much time it will take from application to underwriting to approval. Will you be required to undergo a medical exam? What sort of personal information will be gathered to assess your health? Is there anything else you should know at this point?

Step 9: Make a decision

Now that your advisor has answered all of your questions and presented you with term life insurance options that are best for you, it’s time to make a decision. If you’re still not sure, take a few days to review what you’ve learned about the different providers and products. List out the pros and cons with your family members. Just make sure to never rush an important decision like purchasing life insurance.

Let us help you find the best term life insurance policy for you

Ready to take the next step? A Serenia Life advisor can help you assess your needs and determine the right combination of term life insurance benefits and features for you and your family.

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