The Average Cost of Life Insurance in Canada Per Month: Save Thousands

You can keep the average Cost of Life Insurance in Canada Per Month down if you use an independent agent. 

Sorry tied agents. While I do love you and appreciate your job, you can’t possibly deliver the best life insurance policies in Canada each and every time. 

So why would I make such an inflammatory statement?

Because it’s true. To get the best life insurance in Canada you should contact an independent life insurance agent every single time. 

So what is a Tied or Captive agent? A Tied or captive agent is associated with one company and as a result, only sell the products offered by the company that employs them. 

For example, if you talk with an insurance broker from Primerica,they will give you the best possible quotes for Primerica ONLY. Sadly, those rates are not the best you can get. In fact, their life insurance products are more costly generally…

…and if you’re a woman and happen to call a Primerica agent it will be even worse for you than your male counterpart.

They are gender neutral when it comes to underwriting, which means you will not see the benefit of being a woman in your final premiums. FYI: Women live longer thus most insurance companies pass those savings on to you. 

The Average Cost of Life Insurance in Canada Per Month Is Less if you are prepare for your physical exam. 

One of the biggest obstacles to getting people insured is delay tactics. I see it all the time.

Sure none of us wants to pay insurance premiums monthly and if you’re healthy, it seems like you have all the time in the world to purchase that policy. 

Unfortunately, years go by while you “get ready” for your life insurance exam. So that small uptick you get from preparing for your life insurance exam is nullified by your procrastination.

Hey, you’ve hit two more birthdays and your premiums are more expensive whether you lost that 5 pounds or not. 

So what’s the answer? 

Take a couple of weeks before your life insurance exam to follow a couple of rules. First of all knock out the transfats, sugary snacks and fried goodies. Opting instead for lots of fruit, vegetables, fish and lean meat. This is good for your health overall no matter how you look at it. 

One thing that I can say with 100% certainty is the Average Cost of Life Insurance in Canada Per Month Is Less if you DON’T SMOKE! You absolutely will pay higher premiums if you indulge. 

So this section is a little more complicated. The statement above makes it sound like I’m discouraging smokers from getting life insurance…

…I’m not, but know that if you smoke you pay 2 to 3 times the amount a nonsmoker does. Sad but true. 

The good news is when you quit for 12 months or more you’re no longer considered to be a smoker and you may even qualify for standard rates. 

So what should smokers do who intend to quit…but still need life insurance today?

The answer is simple, start a smoking cessation program and document it with your family doctor as soon as possible.

Once we get you covered we can go back to the life insurance company one year later for improved rates.  If you’re a smoker check out my latest article to find out more. 

Whatever you decide to do, don’t put off getting covered because you smoke. This can be a damaging cycle that leaves your family unprotected. 

Every year you age you’re a little closer to death as morbid as that sounds.

Life insurance is a business and it’s all about assessing risk. This is why older people pay more money than younger people for life insurance. 

As a general rule, once you’re in your 50’s, you can expect your life insurance rates to increase approximately 9% each year.

Honestly, this is less important for you young millennials out there than it is for the boomers who have to pay quite a bit more after every birthday.

There are also very significant life insurance birthdays where longer-term coverage becomes unavailable. For example, once you’re over the age of 55, you are no longer eligible to apply for a 30 year term as it caps out at 85.

So if you’re in your early 50’s like I am and are looking for longer-term protection because you have a young family, make sure you apply for Term 30 before you turn 56.

You should also be aware that life insurance birthdays are different from yours.

For the purposes of life insurance coverage, whichever birthday you’re 6 months closer to is the age life insurance companies will underwrite you as. For example, if you are 59 and were born on October 12th, 1959 –  after June 12th, 2019 you are considered to be 60 in life insurance years. 

I guarantee, the Average Cost of Life Insurance in Canada Per Month Is Less if you plan ahead. 

Did you know the amount of coverage you need changes over time?  

This is why a financial needs analysis is so important. It’s easy to overlook how things may unfold over the years.

To be perfectly frank, I would say this is one of the biggest reasons people are underinsured. They do their planning with no vision for the future.

So let’s say a client is looking for coverage at age 30 because they’re thinking ahead. They know premiums are going to way less expensive early in life. 

The rub? They select a life insurance agent who is really green. Sadly this agent relies solely on the client’s financial guestimate to pick out the amount of coverage.

This particular client opts for $500K for 30 years – which is awesome. They have a very young family and no mortgage so, in fact, they are currently over insured. But this is not the end of the story…

So what if you have an increased need for life insurance in the first 10 years of your policy and those needs drop off as you pass through the decades?

This is a typical situation for most families. They take out coverage when their kids are young and their mortgage is at its highest point.

As time goes on they pay down their debt, the kids move out and their needs wind down. 

The thing is you want to get insured while you are young and healthy. Now what? Just jump into a 30 year term with a high face value and bite the bullet? 

Nope! There’s another money-saving way to approach this situation.

Take out a set of policies that drop off as you outgrow the need.

For example, our 40-year-old client needs $1 million in coverage for 20 years. His kids are already 5 and 9 so this takes him through their college years and into early adulthood.

He also has a 30 year amortized mortgage he’s been paying down and with the kids gone, he wants to make sure he has money to cover the remaining mortgage and help out his wife.

The solution? He buys a $500,000 20 year term policy and a $500,000 30 year term policy.  So in effect, he has $1 million of coverage for 20 years and then $500,000 of coverage for the next ten years.

Layering two policies in this way will save him at least 30% on his life insurance.

YES the Average Cost of Life Insurance in Canada Per Month Is Less if you stay away from no exam coverage when you’re healthy. 

No matter how you slice and dice it, a no medical exam life insurance policy is always going to cost you way more than a traditionally underwritten policy if you’re in good shape. 

This is because the life insurance company has limited information about your situation – which means you’re riskier to insure. The result? Premiums increase the less information you offer. 

Don’t get me wrong, no medical exam life insurance is a terrific product and it certainly has its place. For example, I think small final expense plans are great in the right situation.

It also works a charm if you have serious medical issues. You can buy no exam coverage to make sure you’re protected and then try to obtain underwritten coverage to see if you can do better.

If you do, you can drop the no exam protection in favour of the better deal.  It also may be less expensive than getting rated. 

This is why you absolutely have to speak to the independent life insurance agents at Policy Architects. We can help walk you through this process. 

Did you know there are two basic types of life insurance? Yes indeed Pemanent life insurance and term life insurance.

Term life insurance is VERY affordable and protects your family through the most vulnerable periods. Honestly, term works for most people most of the time.

There is a caveat however, it does not provide protection until the day you die and there is no cash value accumulation feature. That’s left for permanent insurance such as whole life and universal life insurance. 

So why do I recommend buying term for savings?

Permanent insurance is far more expensive. This is because you definitely receive a payout as long as you pay your premiums throughout your lifetime. 

The thing is for me – life insurance isn’t an “investment” per se. For the most part, there are other places to park your money if you’re looking for a return.

Don’t get me wrong there are exceptions to this rule. If you’re in a very narrow class of people that includes those who have: 

• Estates 
• A need for tax shelters because you’ve exhausted all other options 
• A child or children with special needs 
• Business interests that require permanent coverage 

…then permanent life insurance may be a good fit for you.  If not, I would highly suggest buying term coverage and investing the money you save.

Also as an aside most term policies contain a conversion feature that allows you to roll the policy over to permanent coverage without an exam if you still need protection. 

Be sure to check with your agent to make sure this feature is available to you.