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7 Best Life Insurance Companies in Canada 2021: Buy Peace of Mind

Last updated Jun 10, 2021

Looking for the best life insurance company in Canada? You might be overwhelmed with all the different options.

Did you know that only two out of every five Canadians have a group or employer-sponsored life insurance?

About half (49%) of this number have costly, whole life insurance that they might don’t need, while about one-third of the Canadian population doesn’t have any kind of life insurance.

All of these point to the fact that a lot of Canadians are not well-informed about life insurance or don’t want to deal with it.

It’s a complex financial product, so in this article, I will try to simplify what it is and shed some light on what I believe to be some of the best life insurance companies in Canada.

Choosing The Right Life Insurance Company

Choosing the right life insurance company is just as important as choosing the right insurance policy. However, different considerations go into these two different choices. Therefore, when you are going through the lists of some of the best life insurance companies in Canada, and you are trying to figure out the best one for you, there are a few things you need to look into:

1.Financial Stability

It can be a relatively difficult element to look into, especially if the insurance company is not publicly listed and is not forthcoming about the state of its finances. However, you can look into parent companies and reinsurance information if it’s available.

The reason you might want to look into it, especially if you are going for an expensive life insurance policy, is that the company should have enough liquidity at any given time that it can pay your survivors their due promptly.

2.Right Insurance Policy (And Riders)

If you are simply looking for term life insurance, almost all reputable life insurance companies will have a clear policy in place. The “right policy” then would simply depend upon the cost-benefit analysis and the reputation of the life insurance company.

But if you are going for whole life insurance, you need to make sure the company has an ideal policy. You should look for one with a decent cash value element, a softer loaning policy, and numerous policy riders. The right company should also tailor your whole life insurance policy to your needs.

3.Cost

The cost would differ significantly between two different policy types, but some companies would have more expensive policies for either type, while others would have more affordable ones. So, you have to determine whether the cost is justified. If there is virtually no difference between the payouts and the policy structure, simply going for the most affordable life insurance company is the pragmatic choice.

4.Reputation

As always, I recommend extensively researching the life insurance company you are about to choose. Look into their reviews and read through the experiences of previous clients. Do the companies pay out the survivors immediately and smoothly? Do they try to cheat the survivors out of the death benefits on technicalities? How flexible are they about missing payments?

Remember that the purpose of life insurance is to make your survivors’ lives easier. If you choose a policy that delays payment till your family is kicked out of a partially paid home, you will inadvertently be making their life difficult after you are gone.

There are several other factors as well, but the ones above should give you a good starting point.

Best Life Insurance Companies In Canada

I have curated a few of the best life insurance companies in Canada based on the factors stated above (and a few more). The companies are ranked from the best to “least best”. The rates are calculated using the online calculator of the life insurance companies based on a hypothetical candidate with the following characteristics:

  • 40 years old
  • Male
  • Non-smoker
  • An Ontario resident
  • 20-year term policy or Whole life insurance policy
  • Policy value: $1,000,000

Smokers tend to land relatively higher rates than non-smokers. Still, we chose a non-smoker because only about 12% of Canadians smoke, so more people would find the non-smoker policy costs more relatable. Males also tend to land at a higher rate than females. Furthermore, the higher your age, the costlier your policy is likely to be.

On the other hand, the reason for choosing a relatively high $1,000,000 policy amount (death benefit) is inflation. In twenty years or so, the purchasing power of one million dollars will be significantly less than what it is now.

Let’s look at some of the best life insurance companies in Canada.

1. PolicyAdvisor

Insurance Types: Term life insurance, whole life insurance, disability insurance, and children’s insurance
Term Life Insurance Cost: $80.55/month for $1 Million (see assumptions above)
Whole Life Insurance Cost: $768.4/month for $1 Million (see assumptions above)
Ratings: Reviews.io: 5.00/5.00 (297 reviews) | Trustpilot: 4.7/5.00 (34 reviews) 
Get a Free Quote: PolicyAdvisor website

If you are looking for the best life insurance companies in Canada, resources like this article can help. But what might be even more helpful is getting a side-by-side comparison of several different insurance policies that Canadian life insurance companies are offering, and that’s where PolicyAdvisor comes into play.

It’s a life insurance policy search engine and comparison tool that allows you to compare quotes from Canada’s 17 largest life insurance companies. You can also consider it an online broker. The advice is commission-free and unbiased and is augmented by PolicyAdvisor’s online support.

The platform allows you to find the best rates for both term and whole life insurance. It also provides several other insurance products, including disability insurance, but life insurance is still the platform’s primary offering.

The introductory price you get from the initial survey tends to be accurate since it’s based on the life insurance company’s calculators, so applicants need not worry about a different treatment once they pass the PolicyAdvisor’s layer and get to the insurance company directly.

The comparison tool is potent for whole life insurance policies, where you can compare different policies with riders and features and find the right fit for yourself.

Pros

  • A comprehensive range of insurance products
  • a free and detailed comparison tool
  • Unbiased advice
  • Instant quotes from up to 20+ insurance companies
  • Instant quotes from up to 17 life insurance companies
  • Easy, online approval process

Cons

  • Only licensed in Ontario, Alberta, and Manitoba for life insurance policies
  • Not ideal for applicants who prefer the old-fashioned way of buying life insurance policies

2. PolicyMe

Insurance Types: Term life insurance only
Term Life Insurance Cost: $81.84/month for $1 Million (see assumptions above)
Whole Life Insurance Cost: N/A
Ratings: Website/Reviews.io: 4.84/5.00 (346 reviews) 
Get a Free Quote: PolicyMe website

PolicyMe is on a mission to make the process of buying term life insurance significantly easier. It started as an online platform that allowed Canadians to compare different insurance policies side-by-side, but it has now partnered up with Canadian Premier Life Insurance Company, a wholly-owned subsidiary of Securian Financial Company.

Canadian Premier Life Insurance underwrites all the life insurance policies sold by PolicyMe. It has been operating in the country since 1955, has about $300 million in assets, and has a financial strength rating of A from A.M. Best. The company also offers insurance policies issued by four other prominent names, including Canada Protection Plan and BMO Life Assurance.

PolicyMe is now Canada’s first completely online life insurance policy provider, which carries the same cost-benefit that digital banking does. Since it doesn’t rely on a brick-and-mortar setup and a costly physical presence, it offers significantly cheaper life insurance policies compared to others. It also makes the process easier by cutting out brokers, medical professionals, and separate underwriters.

The term life insurance it provides offers fairly typical coverage. Your survivors get the death benefit in case of your early demise, regardless of the circumstances of your death (except suicide in the first two years of buying the policy).

Pros

  • Easy online process
  • One of the lowest term life insurance prices in the country
  • The decision is instant and takes less than 10 minutes at most
  • Helpful customer service

Cons

  • Not licensed in Quebec, Newfoundland, and Labrador
  • No whole life insurance
  • No discount or special pricing for joint life insurance
  • Pre-existing medical conditions influence the approval process, cost, and underwriting time
  • The underwriter is neither BBB-accredited nor highly rated

3. Manulife

manulife logo

Insurance Types: Term life insurance, whole life insurance, health insurance, etc.
Term Life Insurance Cost (for ten years): $98/month for $1 Million (see assumptions above)
Whole Life Insurance Cost: (No online calculator)
Ratings: Trustpilot: 2.3/5.00 (6 reviews)

Manulife is an insurance giant. It’s the largest life insurance company in the country based on assets and has been serving the country for 130 years. It has a financial strength rating of A+ and has over $768.5 billion worth of assets under management, including its whole financial range, not just life insurance.

Manulife offers a wide range of life insurance policies. In the term life insurance segment, it has the basic CoverMe® insurance that offers individual coverage, family-focused term life insurance, and term life insurance that offers coverage for your business. You can get up to $20 million in coverage for the business term insurance.

One unique term of life insurance by Manulife offers to reduce your premiums if you participate in certain health-related activities. Another term life insurance combines disability and critical illness coverage in the mix.

The permanent life insurance policies by Manulife are even more comprehensive and extensive in their nature and coverage. There are two basic policies, and the coverage starts from $25,000 and $100,000.

In one plan, you get an annual dividend as well, and you don’t need to pay premiums for life and can even opt for a 10-year or 20-year payment plan. If you opt for the other plan, you can either keep paying till you are 100 or wrap it up in 15 years. There are also a wide variety of riders to choose from.

Despite being a relatively “conventional” insurance company, Manulife has made the process of obtaining life insurance online substantially easier, especially for term life insurance. In addition, there are calculators that can help you determine the amount of coverage you need.

Pros

  • Wide range of life insurance policies
  • Higher ceilings for death benefits
  • A wide variety of riders
  • Easy process with reduced medical exam needs for term life insurance)
  • Comprehensive and customizable permanent life insurance policies
  • Amazing financial stability
  • A discounted combined policy with two death benefits
  • Fast approvals

Cons

  • Finding the right policy can be difficult on your own
  • Term life insurance slightly costlier compared to pure online companies
  • Weak online ratings

4. Canada Protection Plan

canada protection plan logo

Insurance Types: Term life insurance, whole life insurance
Term Life Insurance Cost: $104.4/month for $1 Million (see assumptions above)
Whole Life Insurance Cost: $817.2/month (Life Pay) | $764.1/month (Term 100) for $1 Million (see assumptions above)
Ratings: BBB: 3/5 (2 reviews). It’s a BBB-accredited Company

Few life insurance companies in the country are as open-minded about insuring people with pre-existing medical conditions as Canada Protection Plan is. The only trade-off is the cap on coverage at $750,000, which is still quite a decent amount. It’s a relatively younger company and was founded in 1992.

The simple ideology behind CPP’s life insurance policies is providing coverage for people with medical issues without probing or testing them further.

The company offers critical life health insurance coverage as well. You can get both term and permanent life insurance even if you work in a hazardous environment or there are other factors that make you a less than ideal candidate for other life insurance companies in Canada.

The company offers six permanent life insurance plans. The plans vary based on the applicant’s health condition and range from people with serious medical conditions to people in excellent health. For applicants with serious medical conditions, there is a cap on how much insurance they can buy, and it’s divided into two categories based on age.

There are five term life insurance policies, and they are spread out on the spectrum of the applicant’s health. The maximum coverage you can get varies based on age, and it’s capped at $350,000 for applicants with severe health problems.

Pros

  • Ideal for people with pre-existing medical conditions
  • Straightforward and honest life insurance policies
  • No medical checkup required
  • A wide variety of term and permanent policies available
  • Term plans can easily be converted to permanent plans until you turn 70
  • Monthly or annual premium frequencies
  • Decreasing term option

Cons

  • Coverage is capped at $1,000,000, even for healthy applicants
  • Coverage for applicants with a pre-existing health condition is limited
  • Term life insurance can be slightly more expensive

5. Sun Life

sun life logo

Insurance Types: term life insurance, whole life insurance
Term Life Insurance Cost: $139.84/month for $1 Million (see assumptions above)
Whole Life Insurance Cost: (No online quote)
Ratings: Trustpilot: 2.9/5.00 (8 reviews) | BBB: 1.17/5.00 (6 reviews)

Sun Life is another giant in the Canadian life insurance sphere. The company has a market capitalization of $38.18 billion and a financial strength rating of A+. The company also underwrites annual premiums of about $20.9 billion.

Apart from being one of the largest and most extensive life insurance companies in the country, with over a trillion dollars of assets under its management if we combine all of its businesses and domains, Sun Life is also one of the most expensive term insurance providers in the country.

The main benefit of opting for a company like Sun Life is the range of options it offers. for example, in term life insurance alone, Sun Life offers four different policy types. The most basic option gets you maximum coverage of $100,000, while the premium term life insurance offers maximum coverage of about $15 million, with up to 30 years of coverage.

Some term life insurance policies also include living benefits in case of a terminal illness and business protection, among others. Not many insurance companies offer such options with term life insurance.

Moreover, the company offers three types of permanent life insurance policies. The simplest one offers you a maximum of $25,000 coverage, which is enough for funeral arrangements. Meanwhile, the best option offers up to $10 million of coverage and comes with many of the same riders as Sun Life’s term life insurance does.

Pros

  • A decent range of life insurance policies
  • Riders and additional features for both term and permanent life insurance
  • Coverage of up to $15 million for term life and $10 million for permanent life insurance
  • Convertible up to 75 years, which is better than the industry standard

Cons

  • Minimum caps on certain policies
  • Fewer term-life duration options (10 and 20 years mostly)
  • Expensive term-life insurance
  • Slow and conventional underwriting practices

6. BMO Life Insurance

BMO

Insurance Types: Term life insurance, whole life insurance
Term Life Insurance Cost: $90.9/month for $1 Million (see assumptions above)
Whole Life Insurance Cost (60-year old male. Max Coverage $50,000): $166/month  for $1 Million (see assumptions above)
Ratings: N/A (Too many financial products)

As one of the big five banks in the country, BMO has made a mark for itself in a wide variety of financial products, and life insurance is no exception. BMO’s life insurance policies, both term and permanent, can be described in two words: simple and affordable. As for financial stability, BMO is a banking giant with a vast financial moat.

Unfortunately, this simplicity comes with a lack of product diversity. You only have one type of term life insurance, and it’s available for Canadians between the ages of 18 and 75. You also need to go through a medical exam and can get coverage of up to $5 million. The term options are in five-year increments between one and three decades, but the term life coverage expires when you turn 85.

On the other hand, permanent life insurance is even more simplified and less flexible. It’s only available for Canadians between the ages of 50 and 80, and you can get maximum coverage of $50,000. That’s a decent enough amount for end-of-life expenses, but nothing more.

BMO’s permanent life insurance is not the financial instrument to transfer wealth to the next generation. It doesn’t come with the riders common in most other permanent life insurance policies.

Pros

  • Market-competitive pricing
  • Term life insurance includes optional like critical illness and premium waiver
  • A decent maximum death benefit ceiling of up to $5 million)
  • Convertible up until you turn 70

Cons

  • Very limited permanent life insurance policies
  • Limited life insurance options
  • No online application process

7. Industrial Alliance Life Insurance

Industrial Alliance Life

Insurance Types: term life insurance, whole life insurance
Term Life Insurance Cost: $99/month for $1 Million (see assumptions above)
Whole Life Insurance Cost: Online Quote not available
Ratings: BBB: 1/5 (2 reviews)

Closing the list is Industrial Alliance Life Insurance. It’s another publically listed financial company, and while it’s not exactly a giant, it has considerable assets under management, and its financial strength rating is A+. The company offers a wide variety of insurance products, including both term and whole life insurance policies. It also offers participating and universal life insurance policies.

For term life insurance, the company gives you two options. The first one is the Access Life option, which is ideal for people who have difficulty getting insured. It comes with no medical exam, and you can choose a term as long as 25 years and have the option to convert your policy till you turn 71. Its maximum amount of coverage is also capped at half a million dollars.

The other option, Pick-A-Team, is more flexible, requires a medical exam, and offers coverage for up to $10 million.

The company offers four permanent life insurance options. You can choose an option that doesn’t require you to go through a medical exam or another option that offers up to $10 million coverage.

One permanent life insurance policy is also designed specifically for individuals that are 65 years old or older and have a medical condition that resulted in the loss of autonomy. This insurance pays out a monthly sum till the applicant turns 100, like an annuity.

Pros

  • Relatively affordable pricing
  • Permanent life insurance coverage for specific medical conditions
  • Term and permanent policy options available with no medical exam required
  • Decreasing payment options available
  • Flexible term life policies
  • Decent face value ceiling

Cons

  • Limited term life insurance options
  • Poor online reviews

Types Of Life Insurance Policies – Which One Is Best For You?

If you dig deep enough, you will uncover a wide variety of life insurance policies. Still, almost all would be variants to two core life insurance policy types: term life insurance and whole life insurance.

Term Life Insurance

The term life insurance (also called “pure” life insurance) is a policy that only stays in place for a specific term, like one or two decades. In most cases, you’ll keep paying premiums for the whole duration of the policy, and if you die within the term, your family will get the death benefit, i.e., the amount you bought the policy for.

Term life insurance is straightforward and significantly more affordable compared to a whole life insurance policy.

For example, for a 30-year-old smoker living in Ontario, 20-year term life insurance for $1 million provided by two of the more affordable insurance providers in the country (i.e., PolicyMe and Policy Advisors) costs about $101.3 and $115.2 per month.

At most, you will only pay a fraction of the death benefit your family might receive. The policy would be significantly cheaper for younger non-smokers who are going for a relatively lower policy amount.

On the flip side, you won’t get any returns from the policy if you live through the term. All the money you’ve paid into the policy will be forfeit.

There are some return-of-premium life insurance policies that pay you back the premium you pay into the policy and outlive it, but they usually only pay the principal. Once the term ends, the policyholder will have the option to renew the policy, usually for a different premium. Or their insurance provider might allow them to roll over their term policy into whole life insurance.

Term life insurance is ideal for:

  • The breadwinner of a single-earner family
  • Newlyweds
  • A couple that recently bought a house
  • Families with dependent children
  • Families with children with special needs

Basically, anyone whose survivors and dependents will receive a significant financial blow if he or she meets an untimely demise can benefit significantly from a life insurance policy.

Whole Life or Permanent Life Insurance

Whole life insurance is payable whenever you, the insured, pass away. Whether it’s in a few years after buying the policy or decades from that point, the whole life insurance will pay. And unlike an untimely demise, the death with this type of insurance is ultimately inevitable. Therefore, whole life insurance policies tend to be significantly more expensive than a term life insurance policy.

For our hypothetical 30-year-old male smoker from Ontario, the premiums for a whole life policy for $1 million death benefits will cost about $781 per month if provided by PolicyAdvisor. That’s over 6.5 times more than the per month cost of the term plan for the same death benefit.

However, whole life insurance is more than just to provide for the family after your timely or untimely passing. It has a cash value competent. When you pay your whole life insurance premiums, part of it goes into the cash value, which typically grows at a fixed rate. The rest goes towards your death benefit.

You might not be able to use the cash value directly, but you can cash it in if you surrender the rest of the policy or borrow against it. If you choose to borrow, it will be deducted from your death benefit if you don’t pay it back.

Life Insurance: Do You Need It?

Life insurance is simply a contract between an individual, called the policyholder, and an insurance company.

The bare-bones form of the contract states that if you keep paying money to the insurance company or into your insurance policy in periodic payments (called premiums), the insurance company will give a substantial lump sum amount to your beneficiaries (survivors) upon your death.

There are other “features” and “benefits,” also called riders, that you could add to a life insurance policy at an additional cost.

The core purpose of life insurance is to provide for your survivors when you pass away, but it’s geared more towards an untimely demise. That’s because if you have a chance to live a full and financially healthy life, you can leave your survivors your assets, such as your savings, a paid-off home, and investments.

But if you pass away unexpectedly, before you’ve had the chance to build enough wealth for your family or to pay off your debts, you’ll be leaving your family stranded financially.  

Life insurance provides a safeguard against that and at a very reasonable cost, especially if you choose term insurance. Even if you don’t have any family or friends who are financially dependent upon you, life insurance can help pay for your final arrangements. This way, you won’t become a financial burden on your loved ones after your demise.

Conclusion

It’s important that you don’t confuse a good policy with a good company. Even the best policy at an ideal rate would be useless if the company is in the habit of contesting or delaying payments, thus making unnecessary complications for your survivors.

On the other hand, it’s not a smart move to pay a significantly higher monthly premium for virtually the same policy just because the contract is adorned with a famous name. Finding the best life insurance companies in Canada is more than just about the rates, and we highly recommend that you take all the essential factors into account before deciding on a life insurance company and policy.

We hope this list will help narrow down your options when you are out hunting for the best life insurance policy for yourself and your family. If you have other best life insurance companies in mind, feel free to let us know about it!

Best life insurance companies in Canada
Christopher Liew, CFA

Christopher Liew, CFA

Author Bio - Christopher Liew is a CFA Charterholder with 11 years of finance experience and the creator of Wealthawesome.com. Read about how he quit his 6-figure salary career to travel the world here.

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