Purchasing life insurance is essential to financial planning, but finding an affordable policy can be challenging. With premiums varying widely among insurers, it pays to be a savvy shopper.

This article provides tips, strategies, and insider knowledge to help Canadians secure quality life insurance coverage at the lowest possible cost.

Why Life Insurance Matters

Life insurance provides essential financial protection for your loved ones in the event of your premature death. The lump-sum payout from a policy helps your family maintain their standard of living by:

• Paying off debts like mortgages, loans, and credit cards
• Covering daily living expenses and bills
• Funding your children’s education
• Replacing lost income from your salary
• Ensuring your spouse can retire comfortably
• Paying estate taxes and funeral costs

Without adequate life insurance in Canada, your family could suffer severe financial hardship. But you don’t have to overpay for peace of mind. With intelligent planning, you can find affordable rates on the right amount of coverage to save money on life insurance.

9 Way to Save Money on Life Insurance in Canada

Calculate Your Needs

The first step in saving money on life insurance is determining your required coverage. Buying more insurance than needed leads to unnecessarily high premiums.

Consider the following factors to assess your family’s needs:

Debts

Tally up any debts that would still be outstanding if you passed away prematurely. These may include:

• Mortgage
• Personal and student loans
• Vehicle Financing
• Credit card balances
• Home equity line of credit (HELOC)

The payout from your life insurance policy should fully cover your debts, so your family does not inherit those burdens.

Income Replacement

Your salary contributes to paying for housing, transportation, food, utilities, and other household expenses. Your payout needs to replace enough income to maintain your family’s standard of living.

As a rule of thumb, multiply your gross annual income by 10. For example, if you earn $100,000 per year, your coverage would need to be $1,000,000.

College Savings

If you have children, factor in college savings goals. The life insurance payout should cover 4+ years of tuition, room and board, books, and other expenses at your planned institution.

Retirement Needs

Consider your spouse’s anticipated retirement income shortfall if you pass away. The payout should provide enough of a boost to maintain their desired retirement lifestyle.

Final Expenses

The policy should cover approximately $15,000 – $20,000 for your funeral and other final expenses.

Existing Assets

Account for any existing assets and insurance your family could utilize if you passed away. These may allow you to decrease your life insurance coverage.

Financial Obligations

Think ahead to future expenses like weddings, elder care for parents, or planned home renovations. The payout can help fund these upcoming financial obligations.

Using an online life insurance calculator simplifies the needs estimate process. Be truthful about your financial situation to get an accurate recommendation.

Shop Around for the Best Rates

Once you have determined the appropriate amount of coverage, it’s time to identify your most affordable policy options. Life insurance rates can vary dramatically between providers, so shopping around and comparing quotes can lead to actual savings.

Work with an Independent Broker

Connecting with a broker gives you access to rate comparisons from multiple top insurers. Brokers have established relationships with dozens of providers and can quickly determine your most cost-effective options.

Ratehub found that consumers save an average of 40% on life insurance premiums when using a broker compared to buying directly from life insurance companies. ( Source )

Get Quotes from Multiple Providers

In addition to brokers, you can also get quotes directly from life insurers through their websites or over the phone. Spending time gathering multiple quotes improves your chances of finding budget-friendly coverage.

When comparing, make sure the policy details, such as coverage amount, terms, and benefits, are identical for an apples-to-apples price comparison.

Some life insurance Providers in Canada you must get quotes :

• Sun life insurance
• Canada life insurance
• BMO life insurance
• TD life insurance
• CPP life insurance
• IA life insurance

Prioritize Term Life Insurance

For most Canadians, term life insurance represents the best value. It provides pure protection for a set number of years at affordable rates. You choose a term length to suit your temporary coverage needs, such as covering a mortgage or putting kids through college.

Term life insurance costs a fraction compared to permanent life insurance for the same amount of protection. Whole and universal life insurance includes investment components that increase premiums.

Choose the Right Policy Type

While term life insurance offers the best rates for temporary needs, there are some scenarios where permanent insurance may be the better solution.

Term Life Insurance

It is best for covering needs for a set period of time, such as 10 year term life insurance, 20 year term life insurance, or 30 year term life insurance. It is ideal for family protection when you have a mortgage, young children, and other temporary needs.

Whole Life Insurance

Suppose you have lifelong insurance needs and want to leave a legacy or make a sizeable charitable donation at death. In that case, this type provides lifelong protection if you keep paying premiums. It also functions as a tax-sheltered investment. However, it is more expensive than term insurance.

More: Whole Life Insurance in Canada

Universal Life Insurance

Combines permanent coverage with investment elements that build cash value. More flexible for adjusting coverage and premiums over time. Higher upfront costs than term but also accumulates savings.

A licensed broker can guide you on the right policy type for your unique situation and budget.

More: Universal Life Insurance in Canada

Adjust Coverage Details to Reduce Premiums

After choosing a policy type, you can refine details to reduce your monthly or annual costs while getting sufficient coverage.

Reduce Unnecessary Coverage

If the initial coverage amount you are quoted exceeds your family’s needs, ask the broker to generate new quotes in $50,000 or $100,000 increments until you find the “sweet spot” to cover needs but not go beyond.

Lengthen the Policy Term

Extending your coverage duration lowers the annual premiums for term insurance. For example, a 20-year term policy costs significantly less per year than a 10-year policy with the same death benefit.

Remove Unneeded Riders & Features

Eliminate any riders or supplemental features that provide non-essential benefits. For example, a children’s life insurance rider, accidental death benefits, and a disability premium waiver are often unnecessary for essential family protection.

Accept a Waiting Period

On disability insurance or other health policies, you agree to a waiting period before benefits activate leads to discounted premiums. Waiting 30 to 90 days can make sense if you have sufficient emergency savings.

Take Steps to Qualify for Lower Rates

Insurers determine your risk profile and set rates based on age, health, and lifestyle. Making prudent moves can help lock in lower premium costs.

Purchase Coverage When Young and Healthy

Your age is one of the most significant determinants of life insurance rates. Purchasing a policy in your 20s or 30s when you are healthier allows you to secure lower premium costs that remain fixed throughout the policy term.

Get Medically Underwritten

Simplified issue life insurance without full underwriting carries higher premiums. Going through underwriting provides insurers with more details and confidence to qualify you for lower rates.

The investment of time upfront saves significantly in reduced annual or monthly premiums. Having a nurse come to your home makes underwriting even more convenient.

Improve Your Health

Specific controllable health and lifestyle factors impact your mortality risk and rates. Shedding excess weight, lowering blood pressure, controlling cholesterol, regulating diabetes, and quitting smoking and excessive alcohol consumption can all potentially lower your premium costs over time.

Optimize Your Finances

In addition to physical health, insurers also consider your financial well-being. Maintaining excellent credit, avoiding high debt, and demonstrating responsible money management help position you as lower risk and more likely to pay premiums on time.

Choose the Right Payment Schedule

Your premium payment schedule options and flexibility also affect overall costs.

Pay Premiums Annually

Breaking up premiums into monthly installments may seem more convenient, but most insurers charge installment fees and additional interest costs. Paying annually avoids extra installments costs and saves you about 10% compared to monthly payments.

Prepay Multi-Year Premiums

Some insurers offer discounts if you prepay premiums for longer durations upfront, such as ten years or even your entire term length. This covers you fully while locking in low rates. Just ensure the insurer is financially stable before prepaying 20+ years of premiums.

Set Up Auto-Pay

Having premium payments automatically deducted from your bank account avoids late fees from missed payments. Some insurers deduct a few dollars extra for paper bills, so setting up e-billing helps too.

Maintain Your Policy Strategically

The initial purchase is just the beginning. Careful ongoing maintenance and monitoring help sustain savings on life insurance over the long run.

Review Needs Annually

As your financial situation evolves, reevaluate your coverage needs at least once per year. Reducing coverage to align with decreasing debts and obligations avoids over-insuring as you get older.

Communicate Life Milestones

Significant milestones like marriage, new children, home purchases, or a spouse’s retirement warrant a discussion with your broker to reconfirm appropriate coverage. New quotes may offer savings based on your changed profile.

Reapply at Renewal

If you chose term life insurance, you typically can renew at the end of your policy term. Instead of automatically renewing, reapply to qualify for cheaper rates, significantly if your health or finances have improved.

Negotiate Discounts

Review all available discounts with your broker annually. If you’ve quit smoking, implemented a wellness program at work, or retired, you may newly qualify for premium discounts. Be sure to take advantage of every savings opportunity.

Choose a Reputable Provider

While hunting for the lowest premiums, don’t just default to the cheapest policy—the insurer you choose matters for seamless coverage and claims payment.

Consider the following when selecting a life insurance provider:

Financial strength: Choose an established insurer with strong capital reserves, solid credit ratings, and the ability to pay out claims for decades into the future.

Service reputation: Look for providers known for seamless customer service, responsive claims payment, and support when you need it most.

Policy transparency: Avoid insurers offering enticingly low rates but with unreasonable exceptions, exclusions, and coverage gaps that become evident after purchase.

Ease of process: Select a convenient and hassle-free application and underwriting process. Approval wait times also vary significantly between insurers.

Policy options: Consider the range of term lengths and “riders” to customize coverage that meets your needs.

Comparing insurers on these factors protects your peace of mind while minimizing costs.

Leverage Expert Help

The life insurance marketplace provides many opportunities for savings, but realizing those savings requires time and expertise. An independent broker positions you to get ideal coverage at affordable rates.

Simplify the Research

Top brokers have established access to the full marketplace and keep up-to-date on insurer ratings, policy changes, and new product offerings. They gather multiple quotes and present you with cost-saving options tailored to your situation.

Optimize the Application Process

Applying through a broker expedites underwriting and improves your chances of approval with top-rated insurers. Brokers assist with paperwork, ensure disclosures are positioned favourably, and guide your application through fastest approvals.

Unlock Special Discounts

Established broker relationships with life insurers open access to exclusive discounts, multi-policy bundles, and other savings opportunities you couldn’t obtain as an individual applicant.

Customize Coverage

A broker serves as your advocate to craft a personalized policy that optimally balances coverage and affordability based on your unique circumstances and stage of life.

Provide Ongoing Policy Management

Your broker regularly reviews your policy and life changes to ensure appropriate coverage. They also handle policy renewals and reapplications to sustain maximum savings year after year.

Get Life Insurance Quotes Today

Choosing the right life insurance coverage at the optimal price takes research and expertise. The money you save on premiums over your lifetime really adds up.

At Best Insurance Online, our experienced brokers partner with you to secure affordable rates from Canada’s top insurers. Get a customized quote comparison and start saving on life insurance for your family right away!

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