Comparing Life Insurance in Canada: Workbook and Checklist

Why life insurance comparison in Canada is essential

Most life insurers in Canada have a tool on their website that lets you get a free quote – but keep in mind it’s just a first step in a process that usually needs a human touch.

Sure, a quote can give you an idea of what you might expect when it comes to cost, but you won’t know for sure until you speak with the experts. They know which questions to ask to get you a quote that is personalized for you.

But doing your own homework is a great place to start. And this guide makes it really easy.

What to expect in this article

Doing this type of research is a bit of a process, but luckily, we’ll guide you through the steps of what you need to do to get the information you need. In this article, you can find:

• a step-by-step breakdown for the different types of life insurance available in Canada
• a fillable worksheet, Life Insurance Comparison in Canada, to use when comparing different providers
• a downloadable checklist of all the steps we will cover in this article

Step 1: Determine your coverage needs

First things first, it’s important to understand what sort of financial protection you are looking for and how much coverage you need.

Are you looking for income replacement? Mortgage coverage? A strategy to help pay for your children’s education down the road? Coverage for final expenses?

Once you’re clear on your needs, you can determine which type of policy suits those needs. Here’s an easy-to-understand cheat sheet.

If you determine that you need a term policy, the next step is to consider what term length best suits your needs. If you just bought a home and your mortgage won’t be paid off for 25 years, Term 30 may be best for you. If you’re looking to replace your income until your newborn is all grown up, you may want to consider Term 20.

As you can see, there’s a lot to consider – and that’s only the first step! Let’s see what’s next.

Step 2: Shop around and collect multiple quotes

Let’s say you’ve determined you need a Term 30 policy to cover your mortgage, the next step would be to choose three to five life insurers and start comparing prices.

Start by downloading our free workbook, “Life Insurance Comparison in Canada,” and add their names to a tab. Then head on over to each of their websites to request a quote online, if available, and see which of the insurers fit into your budget.

Step 3: Ask questions to refine the quote

Now remember, the initial quotes you received are not going to be the final numbers – they’ll be able to give you an idea of price range, but when it comes to the actual cost, you’ll need to provide more detail. This is where a licensed advisor comes in.

When you receive your quote, many insurers will recommend that you book a meeting with an advisor as a next step. Before you do, be ready with questions like these:

General

• Is the product you quoted the same as the one I’m comparing it to? (It’s important that you’re doing an ‘apples to apples’ comparison or the pricing won’t be accurate.)
• Are there product add-ons (a.k.a., riders) or additional benefits available? (Member-based organizations, like Serenia Life, offer a whole collection of Member Benefits at no extra cost.)
• What are my payment options?
• How long will my application take?
• What health information is required?
• What if I change my mind and want a refund?

Term Life

• How long is the term? Can I renew it?
• If I change my mind and want longer coverage, what are my options?
• Will I need a medical exam?

Whole Life

• Can you explain what part of the policy acts like an investment? How will it grow over time?
• How can I access my money later on?
• What is the life insurer’s current rate of return?

Term to 100

• How does a Term to 100 policy compare to funeral insurance?
• As a permanent life insurance product, why is Term to 100 so much more affordable than whole life?
• How does this option fit into my budget and/or meet my financial goals?

Step 4: Understand optional add-ons and any free benefits

Adding riders (i.e., coverage that gets added on to an insurance policy to provide additional payouts under specific circumstances) to your plan is a way to further customize it to your needs. Below are some common optional riders that you can add on at the time of purchase.

Riders

• Accidental Death Benefit
  The Accidental Death Benefit provides an extra benefit for accidental death.
• Total Disability Waiver
  The Total Disability Waiver ensures that your life insurance payments continue to be made on your behalf should you become totally disabled for a period of at least six months and therefore cannot earn any income.
• Child Term Benefit
  The Child Term Benefit allows you to purchase a small amount of life insurance coverage for your children and future children. You can convert the policy to any product available when your kids are between the ages of 18 and 25. They can request five times the benefit amount without having to provide any medical evidence of insurability.

Free benefits

• Compassionate Assistance Program
  In the unfortunate event you are diagnosed with a terminal illness with a prognosis of one year or less, many life insurers offer a Compassionate Assistance Program. This allows that member to withdraw a certain amount of money from their base death benefit to help pay for things, like expensive medical treatments, final family trips, and more. Serenia Life’s Compassionate Assistance Program allows for a withdrawal of up to 50 per cent of the base death benefit or $50,000, whichever is lower, in the form of a tax-free payout¹.
• Bereavement Counselling
  Some life insurance providers offer free bereavement counselling for a member’s grieving loved ones At Serenia Life, we provide up to $1,000 in counselling for beneficiaries when accessing mental health support from a professionally accredited or certified counsellor. This benefit comes with a Serenia Life insurance policy – at no extra cost to members.
• Empathy
  Other life insurance providers extend premium support for a member’s grieving family. Serenia Life beneficiaries gain free access to Empathy – personalized, full-circle care to help them cope with the emotional and practical challenges that follow a loss. With real-time assistance from the Empathy Care Team, tailored Care Plans, and extensive tools and resources, Empathy is always there to support beneficiaries after a loss.

Learn more about Serenia Life’s partnership with Empathy.

Step 5: Compare each life insurer’s financial strength and customer service

The good thing about the life insurance industry in Canada is that it is highly regulated to keep Canadians like you safe. One important example of this is the Office of the Superintendent of Financial Institutions (OFSI) using a LICAT ratio to assess whether a life insurer maintains adequate capital to support risks specific to its business. Each life insurer you deal with should have these numbers readily available on their website or upon request. Serenia Life has consistently been above the recommended LICAT ratio – with a total ratio of 216% in 2023.

It is also extremely important to look into a life insurer’s reputation when it comes to its claims payouts. With an organization like Serenia Life, for example, you can rest easy knowing that 99.9% of our claims are indeed paid out – meaning almost every single beneficiary receives the money that is entitled to them. The 0.01% whose claims are denied are usually due to an applicant misrepresenting themselves on their application, or by taking part in an illegal activity.

And finally, be sure to check out a life insurer’s online reviews. In general, are customers satisfied with the service they received and the claims process? This is a quick and easy way to determine if an insurer is going to meet your customer experience needs. Of course, there will always be some negative reviews, but if the overall sentiment is positive, you are likely to have a positive experience too.

What happened to
Serenia Life’s
Google Reviews?

Step 6: Consider additional factors

Once you wrap your head around it, term life insurance is pretty simple. You choose a term length based on your needs, and voila!

When it comes to whole life insurance, on the other hand, there are many additional factors to consider, like dividends², cash value³, and more. We break these down below.

What are dividends?

Imagine you own a small piece of a big company – where the company is like a large pizza and you own a slice. When that company makes money, they will typically share some of those earnings with you, the slice owner. The money that they share is called the dividend. It’s basically a little bonus payment that some companies give to their shareholders as a way of saying, “Thanks for being part of our team!” The bigger the slice of pizza, the better the bonus.

Participating whole life policies come with dividends (a.k.a., the “bonus”) – which is why they are pricier than term policies. Over time, the money you earn from the dividends will pay for the extra cost, and will continue to earn you more money the longer you let them sit and grow.

When it comes to where dividends may fit into your larger financial plan, you have a lot of options to consider. You can…

1. 1. Re-invest them.
      Reinvesting dividends means buying more shares with the dividends you’re being paid. This can lead to a compounding effect over time, potentially increasing your overall investment.
   2. Opt for a cash payout.
      You can choose to withdraw the dividends as cash, which can be useful if you have an immediate need for cash or simply prefer cash on hand.
   3. Pay for your policy in future.
      Dividends from a life insurance policy can be used to buy more coverage or pay future premiums. Over time, this can reduce or even eliminate the need for you to pay out-of-pocket for the policy.

What’s the cash value?

Cash value is the savings portion of a permanent life insurance policy. Over time, as you continue making your payments, part of that money grows in a tax-advantaged account within the policy. This is called the cash value. You can borrow from or withdraw this money while you’re alive, making it a useful financial resource.

Impact of dividends on cash value growth

When you earn dividends, you can choose to reinvest them by purchasing paid-up additions (PUAs). These PUAs increase the policy’s death benefit and cash value, which in turn can generate more dividends in the future. This compounding effect allows the policy’s cash value to grow steadily, providing both increased financial security and potential access to tax-advantaged cash through policy loans⁴ or withdrawals⁵.

How can cash value grow over time?

The cash value grows over time because part of your payments is saved and earns extra money – money that isn’t taxed until you withdraw it. This growth can compound over the years, steadily increasing the amount available for you to use or borrow from.

Practical uses of cash value

The great thing about the cash value portion of a life insurance policy is that you can make use of it while you’re alive. You can use it to support financial goals (e.g., post-secondary education, a mortgage, retirement), as an emergency fund (e.g., house or car repairs, unexpected illness), or towards something more fun (e.g., a new car, a dream vacation).

While the cost of a whole life policy can deter some Canadians from making this type of investment, there is a way around it – a way that also has the most potential for growth: Invest in your child’s future with a whole life policy. Read this mom’s story.

Once or your child is ready to tap into that growth, it’s as simple as taking out a loan… from yourself! The great part about taking out a policy loan is that you can pay it back at your own pace. Just make sure that your loan doesn’t exceed your total cash value, or your policy could lapse!

Step 7: Consider additional items of value or deals

When comparing costs, one very important think to consider is other items, perks, or benefits that come with the policy – at no cost to you.

Be sure to ask each advisor if the life insurer includes support for beneficiaries – like an efficient claims process, bereavement counselling, or access to a comprehensive grief resource, like Empathy. Knowing your loved ones are taken care of both financially and emotionally in the event of your death can provide true peace of mind.

But what about you, the policyholder? Do you get anything extra for choosing a particular life insurer? In the case of Serenia Life members, for example, a policy comes with more than $3,500 in value – thanks to our unique Member Benefits program. We provide members with access to a growing collection of member benefits that make a positive impact on their lives and the lives of others. Benefits, such as:

• $1,000 post-secondary scholarships
• $250 seed funding towards fundraising events
• Free digital wills (value: $189), or a $150 reimbursement when you hire a lawyer to draft or update your will
• And much more!

That’s right, as a member-based organization whose roots go back nearly 100 years, we share a portion of our profits through community outreach, fundraising, and member benefits that help Canadians support their family, their community, and the causes they care about.

View a full list of our Member Benefits.

Step 8: Use the ‘Life Insurance Comparison in Canada’ workbook to compare information

It’s smooth sailing from here! Use our handy workbook to keep all of the information you collected in one place. This is a convenient way to review your notes and make quick comparisons. Not to mention, we’ve done some of the work for you! Wherever possible, we’ve pre-populated the Serenia Life details.

Here’s what you need to do.

1. Download the workbook and save it to your computer so that you can edit it with your own information.
2. In the navigation menu at the bottom of the screen, go to the “Term Life Insurance” tab to compare Term 10, Term 20, or Term 30 products, or select the “Permanent Life Insurance” tab to compare Whole Life, 20-Pay Whole Life, or Term to 100 products.
3. Begin entering quotes and other information you’ve collected.
4. When you’re all done, consider meeting with your Serenia Life advisor to have them review any competitive prices, and ensure that you’ve done an ‘apples to apples’ product comparison.

We recommend using this workbook (and accompanying checklist) to guide you while you compare life insurance providers.

Step 9: Make a decision, apply for the policy, then sit tight

Once you’ve had time to compare all of the information, it will be a lot easier to make a decision. Remember, that your final decision should be about more than just the best price. Be sure to consider a life insurer’s:

• Claims approval rate
• Google rating
• Financial strength
• Current offers
• Additional benefits and their value
• How the cost fits into your budget

It’s also important to read through the fine print before signing off on anything. A good advisor will walk you through the Terms and Conditions, and will be happy to answer any questions you may have about the product information and quotes that you’ve collected.

If you decide to put your application through with a certain company, there will be a bit of a waiting period as your application is reviewed by the life insurer’s Underwriting team. This process can be as quick as two days or as long as several weeks. It depends on whether or not a medical exam is required, or if additional questions or testing is necessary. If you’re unsure what the status of your application is, reach out to your advisor anytime!

Step 10: Review the policy before signing or accepting

Once your application is approved, you’ll receive your policy documents via email or regular mail. Be sure to review the documents carefully to ensure all of the information is correct, including:

• Coverage amount
• Beneficiaries listed
• Premiums (cost)
• Policy exclusions
• Riders (if any)

And guess what – if you find something you’re not comfortable with after signing, you aren’t stuck with that particular insurer. Most policies come with a “free-look” period (typically 10-30 days), during which you can review the policy and cancel for a full refund if it doesn’t meet your needs.

Ready to get started?

Download these free resources, and start shopping! If you have questions along the way, our licensed advisors would be more than happy to help. Fill out the form below to set up a no-obligation 15-minute call.

Frequently Asked Questions

Q: At what age should I consider buying life insurance?

A: The younger you buy life insurance, the better. The reason is simple: Life insurance is more affordable the younger you are. That’s because age affects costs. So do new health diagnoses, risky hobbies, and hazardous occupations. If you’re a parent considering life insurance for a healthy baby or a child, there will never be a cheaper time to buy than now.

Q: How soon can you access the cash value after purchasing a policy?

A: The cash value of a policy generally begins to accumulate after a few years – at that time, you could access the cash value, but it wouldn’t be a wise move financially. The longer you let your cash value sit, the more opportunity it has for growth. But when you eventually are ready to access that money, you can find how to do so in this article: How to Withdraw Money from Your Life Insurance Policy

Q: What’s the impact of policy loans if I was to pass away while the loan is outstanding?

A: In this scenario, the money owing (plus any interest) would be subtracted from the death benefit you’ve left to your loved ones. The good news is that they are guaranteed the base amount of coverage you initially signed up for – so they would simply be losing out on some of your policy’s earnings if your loan wasn’t paid back. The amount depends on how much was borrowed.

Disclaimers

¹ Cannot be direct result of attempted suicide or committing a criminal offence. Term life insurance policies must have at least 2 years until expiry date. After a partial payout is issued, the policy can’t be cancelled, partially surrendered, no policy loan, change of ownership, death benefit cannot be changed. If the insured lives longer than 1 year, interest payments will be required if accumulated interest exceeds 75% of death benefit. Other rules and limitations apply. Consult with your Serenia Life advisor for complete details.

² Dividends are not guaranteed and are paid based on the overall experience of Serenia Life Financial, considering all risk factors. Dividends may be subject to taxation. Dividends will vary based on the actual investment returns in the participating account as well as mortality, expenses, taxes, lapses, withdrawals, and other experience of the participating block of policies. These factors have the potential to increase the value of your policy above the guaranteed amount, depending on the dividend option selected.

³ Cash values are accessible via a withdrawal, policy loan, or surrender. These may be subject to taxation and a tax slip may be issued. Accessing the policy’s cash value will reduce the available cash surrender value and death benefit.

⁴ Policy loan is an easy way to access the accumulated cash value of the policy. A variable interest is charged on the amount borrowed. This may result in taxable consequences. Loan can be repaid at any time. Upon death and the loan is unpaid, the outstanding balance including any accumulated interest will be deducted from the total death benefit, with the remainder paid tax free to the beneficiary(ies).

⁵ Policy withdrawal is an option to withdraw money from the accumulated cash value of the policy if Paid-up Additions or Accumulated Dividends is the selected dividend option. Withdrawals reduce the total cash value, affects future growth, and reduces the death benefit. If the withdrawal is only up to the amount that is paid in premiums (known as the adjusted cost basis), there won’t be taxes. Otherwise, there would be taxes on the portion that is more than the adjusted cost basis.