Best Life Insurance for Seniors in Canada

Many people are looking for the best Canadian life insurance for seniors, which will help them and their loved ones as they grow older. The good news is that there are a number of options available, and you may be surprised at how cost effective seniors life insurance can be.

In this comprehensive guide, we’ll explore the best life insurance options for seniors in Canada, compare different types of policies, discuss costs, and provide tips on choosing the right coverage for your needs.

Key highlights of the best life insurance for seniors in Canada:

• Choose term life insurance for affordable, flexible coverage for a specific number of years
• Whole life insurance offers lifelong protection. It is ideal for final expense and estate planning needs.
• Simplified issue or guaranteed acceptance policies are suited for seniors with health concerns or those seeking non-medical options.

What is life insurance for seniors?

The best insurance for seniors Canada (often referred to as final expense insurance or burial insurance) is a solution designed specifically for people typically over age 50. Compared to a life insurance policy for younger people, these offer more flexible medical underwriting options as well as consideration for specific insurance plan requirements (with some limitations). Guaranteed acceptance life insurance is another option for seniors, offering coverage without the need for medical exams or health questions. When you’re over 50, a senior life insurance policy can help you:

• Take care of any unpaid debt that you have
• Cover funeral arrangements or end-of-life medical expenses / final expenses
• Leave an inheritance for your loved ones

Types of life insurance for seniors

Broadly speaking, there are two main types of best life insurance for seniors in Canada — whole life (which includes simplified and guaranteed insurance), and term life insurance. Both options are available to seniors in Canada, although your age and overall health will impact which type of plan you are eligible for.

Term life insurance

Term life insurance offers seniors affordable coverage for a specific period, typically 10, 15, or 20 years. It's a great choice if you're looking for temporary coverage for financial obligations or leaving a legacy.

Term life has lower life insurance premiums compared to whole insurance. You also have the option to convert to permanent coverage (with some term policies).

Remember, premiums increase significantly when renewing or purchasing a new policy at an older age, so it makes sense lock in your coverage sooner than later.

Whole life insurance

Whole life insurance provides lifelong coverage for seniors, combining a death benefit with a cash value component. While more expensive than term life, it provides guaranteed coverage that doesn't expire and is often used to cover final expenses.

Whole insurance policies build cash value over time, which you can borrow against. This makes it ideal for estate planning and if you're looking to leave a tax-free inheritance.

Consider your whole life if you:

• Want coverage that lasts your entire lifetime
• Wish to leave a guaranteed inheritance to beneficiaries
• Need a policy that builds cash value for potential future use

Whole insurance can be particularly valuable for seniors with complex estate planning needs or those who want to ensure funds are available for final expenses regardless of when they pass away.

When deciding among various options, take into account your financial goals. Next, decide how much money you’ll require to fulfill these goals.

If you are still unsure of how much life insurance you need, check out our Free Life Insurance Calculator here!

What is the best life insurance for seniors?

As for which type of life insurance is the best for you, that depends on your situation. Let's look at a few examples of when each type of life insurance is the best choice.

If you have outstanding debts:

• ‍‍If you have a debt, like a mortgage, that your spouse or children will inherit, consider buying term insurance. Your beneficiary can use the term insurance payout to pay down the debt after your death.‍

If you want to allocate funds for your funeral:

• In this case, whole life, such as term to 100, may a better option. It will help ease the burden on your family in funeral planning by getting burial insurance for seniors.‍

If you have a child with special needs:

• ‍Life insurance is a way to ensure that a dependent doesn't suffer financially after you're gone. If you have someone who relies on you financially, go for whole insurance.‍

If you want life insurance for estate planning:

• ‍Last-to-die life insurance is mainly used for estate planning purposes. With a joint policy like this, you and your spouse can ensure that you are able to financially support any dependents or pay off any debts in the case that both of you pass. Since joint last-to-die insurance only pays out if both partners die, this type of a policy is typically cheaper than traditional whole insurance policy would be for both individuals.‍

If you want to create an extra source of savings:

• ‍With whole insurance, a portion of your premiums get put into a savings account. You can borrow against or withdraw from this account and use the money as you see fit. Do keep in mind that this type of life insurance, unlike term life insurance, has no deadline. As such, they cost more, especially if they build cash value.

How much does life insurance cost for seniors?

Factors that impact the cost of seniors life insurance

1. Age: The older you are, the greater the life insurance cost. Life insurance rates increase as you age because of a decrease in your total life expectancy.
2. Coverage amount: The more coverage you want, the higher the insurance rates. ‍
3. Health: A pre-existing health condition, like heart disease, can increase insurance rates. The same is true for unhealthy lifestyles, such as regular alcohol consumption or obesity.
4. Policy type: term insurance is generally more affordable than other types, such as permanent or guaranteed insurance

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Life insurance premiums and term insurance cost is often unique to the person applying for coverage. Your premium depends on your age, gender, coverage amount, and physical condition. The last factor is one that can vary a lot from one person to another and widely affects insurance rates.

For inexpensive insurance for a 60-year-old male (healthy, non-smoking), you could expect to pay roughly $109 for a 20-year term insurance policy. The same coverage starts at approximately $74 for a non-smoking female.

Smokers may have to pay as much as two times the amount of their non-smoking peers. That's hardly surprising, though. Smokers have a significantly higher mortality rate than those who don't smoke.

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Cost of term life insurance

While smoking considerably affects your life insurance rates, your age has an even greater impact. In fact, it is the primary factor influencing your cost of insurance. For this reason, it's wise to purchase insurance as early as possible. The longer you wait, the more your premium rates will go up solely on age — and understandably so. The older you are, the fewer years you are expected to live.

Prices in the chart below are based on a 20-year term with $100,000 in coverage.

As people grow older, they generally do not require as much coverage, as their major life expenses, such as student debt or a mortgage, have already been paid off. Seniors may also not be eligible for high coverage amounts as they enter their 60s and 70s, and if they are, the insurance rates will increase significantly.

Keep in mind: You can lower insurance rates by paying premiums annually. Most life insurance providers in Canada offer a discount — generally between 2% and 5% — if you pay annually.

Prices in the chart below are based on a 10-year term with $50,000 in coverage.

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To find out how factors such as your age, gender, smoking status, and coverage amount will affect your personal life insurance rates, try our free online quote calculator!

How do pre-existing conditions affect getting life insurance?

Having a pre-existing condition doesn't necessarily mean you can't get competitive rates. If the health issue is well managed or not severe, you may automatically qualify for standard rates, even for residents with lower income.

Even a severe medical condition doesn't automatically disqualify you from getting coverage, but you may have to pay higher life insurance rates and have limited choices

A pre-existing condition is a health condition you were diagnosed with before applying for a life insurance policy. There are many types of pre-existing health conditions, such as high blood pressure, that insurance companies take into consideration, especially when providing services to Canadians.

That said, different insurance companies follow different underwriting processes, and some are more lenient than others for specific health conditions. For example, some Canadian insurers look more kindly on high blood pressure. For this reason, it's wise to shop around and find the best policy for your situation and consult insurance experts if necessary.

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No medical life insurance for seniors

Depending on your situation, no medical insurance may be a good option for you as a senior in Canada

If you:

• Have a pre-existing condition that disqualifies you from getting traditional life insurance coverage
• Hate undergoing the physical or time-consuming process of a medical review
• Don't mind paying higher premiums

Then your best option is to opt for a insurance policy that doesn't involve a medical review. However, brace yourself for high insurance quotes, as these policies are pricier than traditionally underwritten policies.

Seniors who don't want to take a medical test can buy either simplified whole insurance or guaranteed life insurance. The latter is more accommodating of the two and consequently more expensive. For this reason, apply for guaranteed life insurance only if you can't get simplified medical  insurance.

Let's look at these two types of policies in detail.

1. Simplified Whole Life Insurance

This type of senior life insurance provides lifetime protection. However, unlike the standard life insurance, it only offers bare-bone coverage and doesn't include a savings component. You won't have to take a medical exam but will have to answer questions related to your health. The premiums are higher than traditional whole-life policies, and the coverage amount is lower.

This type of insurance policy for seniors allows you to take care of end-of-life expenses. Some simplified insurance policies include a waiting period, typically two years. Your loved ones receive the death benefit payout only when you die after owning the life insurance policy for two years. If you die before two years are up, the insurance company is under no obligation to pay the benefit. But it will return the premiums paid for the policy to your beneficiary.

Who it's for: Seniors who can't get traditional insurance coverage, but who are only at moderate health risk.

2. Guaranteed Whole Life Insurance

Guaranteed whole life insurance provides coverage regardless of your medical history — hence the name. Like traditional whole life, this type of life insurance provides coverage for your entire life for residents from British Columbia, Alberta, or other parts of the country. But it has limited features, no cash value component, and variable premium rates depending on your application.

You neither need to take a medical exam nor answer questions about your health when requesting an insurance quote. Almost everybody who applies gets the coverage. However, guaranteed insurance is considerably more expensive than simplified insurance and comes with certain obligations, such as paying premiums throughout your lifetime until retirement.

In most cases, the maximum death benefit is $50,000. Some guaranteed insurance policies include a waiting period, usually two years. You need to hold on to your policy for two years before the life insurance company pays out the benefit to your beneficiary. If you pass away within the waiting period, the insurer will refund the amount you've paid into the policy to your family. An insurance agent can help guide you through these intricacies of the policy.

Who it's for: Seniors who can't get traditional or simplified whole-life policies.

Best life insurance companies for seniors in Canada

As said before, life insurance premium rates are usually unique to the insured. Someone looking for a high coverage term life plan might get the best deal with iA, while someone with pre-existing medical conditions would have better luck with CPP.

Most insurance companies offer tailored plans for seniors, so it’s important to compare quotes from multiple providers to find the best option for your needs.

This table lists some of our top choices for insurers for seniors in Canada and what we like about them. For more details, read our in-depth reviews on CPP, Assumption Life, Empire Life, Equitable Life of Canada, and iA.

It can be hard to say with certainty which company offers the best senior life insurance in Canada. Fortunately, we can help you easily find out who is offering the cheapest coverage for your unique needs and situation.

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Are convertible or renewable life insurance options available for seniors?

In short, the answer is yes, but there's usually a limit as to when you can convert.

Life insurance for seniors in Canada is convertible to permanent coverage. Term life policies allow conversion before the insured turns 71, but there are exceptions. Some term life insurance policies allow conversion till age 75. It's essential to compare life insurance quotes and coverage amounts to find the best option for you.

In case you are 60-year-old with a 15-year term policy, you can trade your term policy for permanent coverage before you turn 71. However, if you are of 72 years and purchase a 10-year term cheap life insurance policy, you cannot exchange it in favour of a permanent life policy.

If you are in good health and believe you will outlive the policy term, consider permanent insurance, such as whole or universal life insurance, instead.

Senior life insurance is renewable up to a certain age. You can renew most term life insurance policies without a medical test up to age 75 or 85. Some Canadian insurers also offer plans that are renewable up to age 90. However, you'll have to pay higher premium rates for these plans as the cost of insurance increases with age.

Conclusion

The best life insurance for seniors Canada is not one-size-fits-all, so the insurance solution that's best for your neighbour may not work well for you.

Consider your age, health, and financial goals while selecting a policy. The best life insurance solution for you is one that meets your financial goals without making a hole in your pocket.

• ‍Seniors in their 60s who are in good health may find term life insurance most suitable. For starters, term life insurance is significantly cheaper than whole life. Secondly, if you renew it in time, you get coverage for your later years as well. In short, cheap-term life insurance helps you take care of any unpaid debts you may still have and also leave an inheritance to your loved ones.

• Older seniors with serious underlying health conditions may like to consider non-medical insurance coverage to cover end-to-life medical expenses and funeral expenses.
• Seniors who want to leave a specific amount to their family or a charity regardless of how long they live will find their whole life to be the best option. It is also suitable for seniors whose priority is to minimize estate taxes for their heirs.

As you can see when it comes to cheap senior life insurance, have plenty of options to choose from. If you're still not sure which type of life insurance company is best for you, let us help you. Send us an email or schedule a call to have our advisor guide you through your options and help you pick a product that's right for you.

Frequently Asked Questions (FAQs)

What is the best age to get life insurance for seniors?

The best age to buy life insurance for seniors is as early as possible, ideally in your 50s or early 60s. Premiums increase with age, so purchasing earlier can lock in lower rates.

How much life insurance do seniors need?

The amount of life insurance seniors typically need varies based on individual circumstances. Generally, enough to cover final expenses, outstanding debts, and any desired inheritance is recommended.

Is there a waiting period for senior life insurance policies?

Some policies, especially guaranteed issue ones, may have waiting periods of 2-3 years. During this time, only a return of premiums is paid if the insured passes away.

How does life insurance for seniors compare to other types of insurance?

There are a few key ways in which life insurance for seniors differs from other types of insurance policies. First, seniors life insurance is typically more expensive than other types of insurance policies. This is because seniors are generally considered to be a higher risk group, and thus insurers charge higher premiums to cover them. Second, cheap life insurance for seniors typically has stricter eligibility requirements than other types of insurance policies.

What are the benefits of life insurance for seniors?

There are many benefits of life insurance. One is that it can help to cover the costs of final expenses, such as funeral costs and outstanding debts. It can also provide financial security for loved ones.
Another benefit is that it can be used as a tool for estate planning. By naming a beneficiary, seniors can ensure that their assets are distributed according to their wishes.

What are the drawbacks of life insurance for seniors?

There are several potential drawbacks to life insurance as a senior. One is that the premiums can be quite high, especially if the policyholder has health issues. Another is that the end of life expenses may not be enough to cover final expenses and leave a nest egg for loved ones. Additionally, life insurance policies have strict underwriting guidelines, so it can be difficult to qualify for permanent coverage as a senior.

What is the maximum coverage for senior life insurance?

The maximum amount that seniors can take out in Canada can vary from one insurer to another. In general, term life insurance plans offer more coverage (up to $5,000,000) and guaranteed plans offer less (up to $50,000). However, some types of government life insurance for seniors, such as guaranteed issue insurance, have a maximum limit that’s usually the same across carriers.

What is the maximum age you can get life insurance as a senior?

Term life policies expire when you turn 85. That means if you’re 60 and looking for term life insurance, you can get coverage until your 85th birthday. In other words, depending on your age, seniors in Canada can buy term life insurance with a 10-year, 20-year, or 25-year term.