Term Life Insurance Costs: Key Factors and How to Save
So you’ve decided to buy term life insurance for the financial protection and peace of mind. Great, let’s go shopping!
When it comes to term life insurance costs, there’s a lot to think about. Not to worry, we’re here to help! Whether you’re working with a broker or exploring options independently, we can help you ask the right questions, compare the value of policies, and tailor coverage to meet your needs.
Below are a few great reads if you’re still investigating the role of term life insurance for yourself or your family. These articles will help you understand the value of coverage, how it works, and what types might be best for you.
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What is term insurance and how does it work? |
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How to buy term life insurance for the first time |
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Term Life vs. Whole Life: Which one is right for me? |
What factors influence the cost of term life insurance?
When it comes to determining the cost of term life insurance, it’s important to keep things fair and accessible for everyone. Life insurance providers use unbiased statistics to predict the likelihood of someone dying while they are insured by a term life policy. The two most significant factors are:
Sex
Women tend to live longer than men so insurance providers take a greater risk when they insure males. That makes it more expensive.
Age
Young, healthy Canadians can expect to live a long life, so there is less risk in insuring young people. This makes coverage less expensive.
Here’s an example of how sex and age affect insurance rates for a non-smoker looking for $250,000 in term coverage.
| Sex and Age | Male, age 20 | Female, age 20 | Male, age 40 | Female, age 40 |
|---|---|---|---|---|
| Term 10 | $14.18 | $10.58 | $17.33 | $14.40 |
| Term 20 | $17.78 | $13.50 | $27.45 | $20.70 |
| Term 30 | $21.38 | $16.20 | $50.40 | $38.03 |
Illustration only, as of June 2024. Based on life insurance rates for non-smoking males and females for Term 10, Term 20, and Term 30 life insurance for $250,000 in coverage. All numbers in CDN $ and includes policy fee. No additional benefits added.
What else matters?
Sex and age play a big role in setting rates but other factors come into play, like whether or not you smoke, the amount of coverage you want, the length of coverage, how many additional features you add to personalize your plan, as well as medical and lifestyle risks.
1. How smoking status affects life insurance premiums
Smoking is singled out as the most significant high-risk factor because it’s linked to so many life-threatening conditions, like lung cancer, heart disease, and stroke, to name a few of the big ones.
Here’s a cost comparison for $250,000 in term life coverage for a smoker vs. a non-smoker in their 20s or 30s.
| Sex & Age | Male, age 20 | Male, age 20 | Female, age 30 | Female, age 30 |
|---|---|---|---|---|
| Smoking Status | Non-smoker | Smoker | Non-smoker | Smoker |
| Term 10 | $14.18 | $26.33 | $10.80 | $17.78 |
| Term 20 | $18.00 | $38.35 | $13.95 | $27.23 |
| Term 30 | $26.55 | $59.85 | $20.03 | $42.53 |
Illustration only, as of June 2024. Based on life insurance rates for males and females age 20 and 30, smokers and non-smokers for Term 10, Term 20, and Term 30 life insurance for $250,000 in coverage. All numbers in CDN $ and includes policy fee. No additional benefits added.
As the chart indicates, smokers can expect to pay more than double the cost of term life insurance. The good news is that quitting can help you qualify for lower rates in the future. If you quit, let your provider know and ask about the best time to reapply for cheaper coverage. (Spoiler alert: It’s usually after about one year of being smoke-free.)
2. How the coverage amount affects life insurance premiums
The cost is based on the amount of coverage you want. This is fair because the higher the death benefit (i.e., a payment made to designated family members, other loved ones, or the charity of your choice after you die), the higher the premium.
The chart below compares the cost of buying a term life policy with coverage of $250,000 versus $750,000. A Serenia Life advisor can help you determine how much you need based on your financial situation. If you want a rough estimate, here’s how to determine how much life insurance you need.
Here’s a cost comparison for a non-smoking 30-year-old with coverage of $250,000 versus $750,000.
| Sex | Male | Female | Male | Female |
|---|---|---|---|---|
| Amount of Coverage | $250,000 | $250,000 | $750,000 | $750,000 |
| Term 10 | $14.18 | $10.80 | $31.50 | $21.38 |
| Term 20 | $18.00 | $13.95 | $42.30 | $30.15 |
| Term 30 | $26.55 | $20.03 | $65.25 | $47.70 |
Illustration only, as of June 2024. Based on life insurance rates for non-smoking males and females age 30, for Term 10, Term 20, and Term 30 life insurance for $250,000 and $750,000 in coverage. All numbers in CDN $ and includes policy fee. No additional benefits added.
3. How the term length affects term life insurance costs
Term life insurance is typically sold in terms of 10, 20, or 30 years. Premiums are higher for longer terms because the possibility of something happening within the insured period goes up over time.
However, the additional cost of buying longer term coverage while you are young and in relatively good health may feel like a bargain compared to the cost of applying for the same amount of coverage when you’re older. If you are applying later in life and there are significant changes to your health, or you are diagnosed with a serious illness, you could be denied coverage.
This chart compares the monthly premiums on Serenia Life’s most popular policies, Term 10, Term 20, and Term 30 life insurance. To learn more about why people choose various life insurance terms, check out our guide to term life insurance in Canada.
Here’s a cost comparison for both 30- and 40-year-old non-smokers with coverage of $250,000.
| Sex & Age | Male, age 30 | Male, age 40 | Female, age 30 | Female, age 40 |
|---|---|---|---|---|
| Term 10 | $14.18 | $17.33 | $10.80 | $14.40 |
| Term 20 | $18.00 | $27.45 | $13.95 | $20.70 |
| Term 30 | $26.55 | $50.40 | $20.03 | $38.03 |
Illustration only, as of June 2024. Based on life insurance rates for non-smoking males and females age 30 and 40, for Term 10, Term 20, and Term 30 life insurance for $250,000 and $750,000 in coverage. All numbers in CDN $ and includes policy fee. No additional benefits added.
4. How adding additional optional benefits affects life insurance premiums
Insurance providers typically offer additional optional benefits called riders (i.e., coverage that gets added on to an insurance policy to provide additional payouts under specific circumstances). These additional elements allow you to customize your term life insurance policy to cover circumstances that may apply to your situation. For example, here are four popular riders available to Serenia Life members.
Total Disability Waiver
If you become totally disabled for a period of at least 6 months and cannot earn any income, Serenia Life will take over your monthly life insurance premiums and pay them for you.
Accidental Death Benefit
If your death is accidental, the amount of your death benefit (i.e., a payment made to designated family members or other loved ones after you die) will automatically increase to a predetermined amount.
Guaranteed Insurability Option
This rider ensures the opportunity to purchase additional life insurance without undergoing a medical evaluation.
Child Term Benefit
You can purchase a small amount of life insurance coverage for your children, which they can convert to any life insurance product available when they are between the ages of 18 and 25.
Below are examples that capture the additional annual cost if you are looking to add all four of the riders described above to both a $250,000 and $750,000 term life insurance policy, comparing a 10, 20, or 30-year term.
Choose the option that best describes you:
- I’m a female non-smoker, looking for 250,000 in coverage.
- I’m a female non-smoker looking for 750,000 in coverage.
- I’m a male non-smoker, looking for 250,000 in coverage.
- I’m a male non-smoker, looking for 750,000 in coverage.
Female Non-Smoker: 250,000 in Coverage
| Female, 30, non-smoker | Term 10 | Term 20 | Term 30 |
|---|---|---|---|
| Coverage | $250,000 | $250,000 | $250,000 |
| Monthly Premium (includes policy fee) | $10.80 | $13.95 | $20.03 |
| Additional monthly cost of riders | |||
| Total Disability Waiver | $0.63 | $2.64 | $4.60 |
| Accidental Death Benefit ($100K) | $9.00 | $9.00 | $9.00 |
| Guaranteed Insurability Option ($50K) | $10.17 | $10.17 | $10.17 |
| Child Term Benefit ($25K) | $12.38 | $12.38 | $12.38 |
| Total Monthly Premium | $44.81 | $48.14 | $54.57 |
Female Non-Smoker: 750,000 in Coverage
| Female, 30, non-smoker | Term 10 | Term 20 | Term 30 |
|---|---|---|---|
| Coverage | $750,000 | $750,000 | $750,000 |
| Monthly Premium (includes policy fee) | $21.38 | $30.15 | $47.50 |
| Additional monthly cost of riders | |||
| Total Disability Waiver | $3.07 | $3.58 | $4.60 |
| Accidental Death Benefit ($100K) | $9.00 | $9.00 | $9.00 |
| Guaranteed Insurability Option ($50K) | $10.17 | $10.17 | $10.17 |
| Child Term Benefit ($25K) | $12.38 | $12.38 | $12.38 |
| Total Monthly Premium | $56.00 | $65.28 | $83.85 |
Male Non-Smoker: 250,000 in Coverage
| Male, 30, non-smoker | Term 10 | Term 20 | Term 30 |
|---|---|---|---|
| Coverage | $250,000 | $250,000 | $250,000 |
| Monthly Premium (includes policy fee) | $14.18 | $18.00 | $26.55 |
| Additional monthly cost of riders | |||
| Total Disability Waiver | $2.42 | $2.63 | $3.08 |
| Accidental Death Benefit ($100K) | $9.00 | $9.00 | $9.00 |
| Guaranteed Insurability Option ($50K) | $10.17 | $10.17 | $10.17 |
| Child Term Benefit ($25K) | $12.38 | $12.38 | $12.38 |
| Total Monthly Premium | $48.15 | $52.18 | $61.18 |
Male Non-Smoker: 750,000 in Coverage
| Male, 30, non-smoker | Term 10 | Term 20 | Term 30 |
|---|---|---|---|
| Coverage | $750,000 | $750,000 | $750,000 |
| Monthly Premium (includes policy fee) | $31.50 | $42.30 | $65.25 |
| Additional monthly cost of riders | |||
| Total Disability Waiver | $3.34 | $3.91 | $5.13 |
| Accidental Death Benefit ($100K) | $9.00 | $9.00 | $9.00 |
| Guaranteed Insurability Option ($50K) | $10.17 | $10.17 | $10.17 |
| Child Term Benefit ($25K) | $12.38 | $12.38 | $12.38 |
| Total Monthly Premium | $66.39 | $77.76 | $101.93 |
Illustration only, as of June 2024. Based on life insurance rates for non-smoking males and females age 30, for Term 10, Term 20, and Term 20 life insurance for $250,000 and $750,000 in coverage. All numbers in CDN $. Total Disability Waiver at standard rating. Accidental death benefit $100,000 at standard rating. Guaranteed Insurability option for $50,000. Child term benefit of $25,000.
A Serenia Life advisor can help assemble the right combination of coverage and riders for now, and help you make adjustments as loved ones age and everyone’s circumstances change. Note that all riders, except Child Term Benefit, must be added to your policy at the time of purchase.
Are there ways to reduce average term life insurance costs without sacrificing coverage?
Now you know that many factors affect the cost of term life insurance, including age and gender, smoking status, medical and lifestyle risks, amount and length of coverage, as well as optional riders.
Here’s what you can do to get the best value for your money.
Shop around
A knowledgeable advisor is a great place to start. Here’s what to consider if you’re buying term life insurance for the first time.
Start young
Purchase life insurance while you are still young and healthy. Better yet, get coverage for your children while they are still babies to get the most inexpensive coverage for life.
Quit smoking
After going smoke-free for about one year, your healthier lifestyle could help you qualify for much lower rates.
Choose a good provider
We can show you how to shop for the best term life insurance in Canada.
Why choose Serenia Life for family term life insurance?
As a member-based organization with roots that go back nearly 100 years, we encourage kindness by sharing a portion of our profits through community outreach, fundraising, and unique member benefits that help Canadians support their family, their community, and the causes they care about. The more we grow, the more we can give.
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, such as:
- $1,000 post-secondary scholarships
- $250 seed funding towards fundraising events
- Free digital wills (value: $189), or $150 reimbursed when drafting/updating a will through a lawyer
- And much more
View a full list of our member benefits.
Shop with confidence
Knowing which factors affect the cost of term life insurance in Canada, what to look for when choosing a provider, and how to save money by only buying what you need will help you shop with confidence. Whether you explore options on your own or with the guidance of a knowledgeable advisor, you’ll enjoy the peace of mind that comes with protecting yourself and your loved ones.
Get a term life insurance quote
Life insurance is an important part of a financial plan — one that can protect your entire family and provide opportunities to create lifetime wealth. To get the best long-term value for your money, talk to an advisor about all the ways you can incorporate life insurance into your family’s financial plan. We’ll help you choose the best coverage now and we’ll be here to help you adjust your policy whenever your situation changes.
