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Family Life Insurance

If you are a parent, it is highly probable that you will need to obtain life insurance in order to guarantee the financial well-being of your loved ones in the unfortunate circumstance of your demise.

Upon your passing, your designated beneficiary will receive a lump sum death benefit, which can be used to cover any financial obligations that your partner may be unable to manage on their own.

Furthermore, this benefit can also be used to cover the education and living expenses of your children, if desired.

Typically, you will purchase a life insurance policy for yourself, while your partner will obtain their own policy.

However, in certain situations, additional coverage may be necessary to protect against events beyond your passing, such as a disability or critical illness. In some cases, coverage may also be required for your children.

Thankfully, there exists a comprehensive insurance package known as family life insurance, specifically designed to meet the requirements of yourself, your partner, and, if desired, your dependents.

What is family life insurance in Canada? 

Family life insurance packages may encompass a term insurance plan that provides coverage until retirement, accompanied by additional child riders. 

These packages also offer riders critical illness and disability insurance.

Disability insurance

Disability insurance ensures that you or your spouse receive regular payments in the event of a disability. 

These payments typically cover living expenses, medical costs, and recovery expenditures.

Depending on your specific disability insurance policy, these payments will cater to your day-to-day needs, medical bills, and expenses related to your recuperation.

Critical illness insurance

Likewise, critical illness insurance offers coverage in case you or your spouse encounter a critical illness.

 It covers living expenses and medical costs and can even supplement your earnings if you’re not able to work.

Life insurance

Furthermore, life insurance plans are frequently known as “term life insurance,” providing an assured payout to your loved ones in the event of your untimely demise during the specified duration.

Both you and your partner are eligible to possess life insurance policies.

Optional: Children’s term insurance riders

Furthermore, there are optional Children’s Term Insurance Riders available, which essentially provide a life insurance policy for your child.

For any reason they passed before the age of 17, this policy pays out a benefit.

The coverage typically ranges between $5,000 and $30,000. While primarily intended to cover funeral expenses.

It may also assist in fulfilling financial obligations during a bereavement period.

Optional

Moreover, OPCF 44R is optional auto insurance coverage specifically for drivers in Ontario.

It offers protection when the insurance of the at-fault driver is not enough to compensate the wounded or injured driver.

If you opt for comprehensive family insurance, it generally includes life insurance, disability coverage, and critical illness coverage for both spouses.

You also have the option to add Children’s Term Insurance Riders for your children, as well as potentially including OPCF 44R insurance if you reside in Ontario.

In other provinces, a similar auto coverage endorsement known as SEF 44 exists.

There may be circumstances where modifying your life insurance coverage to a “first-to-die” policy is beneficial.

This type of coverage insures the lives of two individuals together and pays out a death benefit when the first person passes away.

It tends to be more cost-effective, and if there is a breakdown in the family unit, individual policies can be obtained by converting this joint coverage.

family life insurance comparewise 1

Tips for choosing the right life insurance plan for your family

If you’re considering purchasing a life insurance policy to protect your family’s future, there are several things you need to know before making a decision.

Here’s a guide to help you understand the basics:

Term life insurance

Term life insurance provides coverage for a specific period, which can range from as little as five years to up to 100 years.

A 30-year-old male who doesn’t smoke and lives in Ontario could pay as little as $10 per month in premiums for a term life insurance policy.

Individuals often opt for term life insurance due to its typically lower cost compared to whole life insurance.

Additionally, it’s a great option for those who need coverage for a temporary period, such as business owners, those with dependent children, or those paying off a mortgage.

Who is it best for?

Term life insurance is an excellent option for those who want to ensure their family is protected in the event of their death but are on a tight budget.

Consider this

Think of term life insurance like renting a home. As long as you keep making payments, you have coverage. If you stop paying premiums, however, you lose your policy.

Average cost

In Ontario, premiums for a 30-year-old male nonsmoker with $100,000 in insurance over ten years may start from as little as $9 each month or $100 per calendar year.

If you opt for a 20-year term, premiums may start at $11 per month or $125 per year.

 Keep in mind that men typically have shorter lifespans than women, so their premiums may be higher.

Benefits of family term life insurance

Family term life insurance offers numerous advantages, such as:

  1. Providing financial security for your family in the unfortunate event of your death or disability
  2. offers more affordable premiums compared to whole-life insurance policies.
  3. allowing adaptable policy terms that can be customized to suit your specific needs.
  4. ensuring locked-in rates that remain unchanged once you secure your policy.
  5. guaranteeing death benefits for your family, offering them a safety net during challenging times.
  6. Providing peace of mind, knowing that your family is protected throughout the policy term, with the option to renew for a longer duration if needed,

Children’s life insurance

The decision to purchase life insurance for your child depends on their individual circumstances and any existing health conditions they may have. Here are some considerations:

  1. Parents of children with illnesses may opt for critical illness insurance or add a child life insurance rider to their own policy.
  2. Having life insurance for your child can assist in covering funeral expenses and allow you time to grieve.
  3. Obtaining insurance for your child is often a straightforward process that does not typically require an extensive medical examination. Some companies even offer guaranteed insurability for children.

Determining the length of family life insurance coverage

Term life insurance remains valid for a specific duration and expires thereafter. Here’s what you need to know:

  1. You have two choices: You can either switch to a whole-life insurance policy or buy a fresh term policy when your existing term expires. Nevertheless, the second option will probably cost you more because of the higher age factor.
  2. Term insurance does not provide a cash payout at the end of the policy term, making it a cost-effective choice.
  3. When applying for family life insurance, you will need to select the length of the policy’s term. Common options include 10, 15, 20, and 25 years.
  4. The most prevalent approach is to choose a term that aligns with the point when your family is no longer financially dependent on you. This could be when your children are independent, your mortgage is paid off or nearly paid off, and you and your partner have adequate retirement savings.

How much does family life insurance cost in Canada?

The price of family life insurance depends on several factors, which insurance companies consider when determining your premium. These factors include:

  • The amount of coverage you need
  • The length of your policy
  • Your health status
  • Whether or not you smoke
  • Any additional riders, such as critical illness or disability insurance,

The coverage amount you require is the most significant factor in determining the cost of your family life insurance plan.

It should be enough to pay off your debts, like your mortgage, as well as cover other expenses, such as your child’s education.

The ideal coverage amount depends on your financial situation and life stage.

Since life insurance premiums can vary depending on an individual’s circumstances, it’s best to obtain a quick quote or speak with a licensed life insurance broker to find the best policy for you.

Whole life participating insurance

Explanation

Whole Life Participating Insurance is a permanent insurance policy that requires a fixed premium. It functions as a combination of an investment account and a life insurance plan for the entire family. The insurance company invests the premiums on behalf of the policyholder.

Ideal candidates for this policy

This insurance policy is suitable for individuals who have reached the maximum limit of their tax-free savings accounts, such as RRSPs and TFSAs. They may require a tax-free death benefit to pass on to their family, making it an excellent choice for estate planning.

Important factors to consider

To benefit from lower premiums that align with your age and good health, it is advisable to initiate this policy in your mid-to-late 30s. As suggested by Browning,

 “By the time you reach your 60s, you can enjoy a premium vacation, where your dividends cover your premiums.”

Average expenses

For a non-smoking male residing in Ontario and aged 30, the premiums can begin as low as $58 per month or $642 per year, providing coverage worth $100,000.

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Term-to-100 insurance

Definition

This type of permanent insurance, only available in Canada, has no investment component. Just liken it to term insurance for your entire life. 

Unlike term insurance, it does not expire, and there is a 100% chance of receiving a payout upon your death.

Who would benefit from this product?

Individuals in search of cost-effective long-term protection with a reliable and consistent payment structure

Factors to ponder about this policy

By obtaining any form of enduring policy, you are ensuring a tax-exempt advantage that can balance out the taxes due on your RRSP following your demise.

Typical expenses for this policy

A 30-year-old male residing in Ontario who doesn’t smoke can avail of this coverage for as little as $54 per month or $594 per year, guaranteeing $100,000 of coverage.

Tips to help you save money on family life insurance

Term insurance is frequently the most cost-effective and pragmatic life insurance choice for young families.

Obtaining this form of insurance early on allows you to secure lower premiums for both you and your family.

Nonetheless, insurance specialist Browning highlights that there are additional factors to contemplate when selecting a policy.

1. Avoid joint policies

One of the key tips Browning offers is to avoid joint policies. For healthy, young couples, it is often cheaper to get individual policies rather than a joint one.

With individual policies, you can get the same coverage for a lower price.

Plus, if one partner has a health issue, only their policy will be subject to a price hike, rather than both partners being affected.

2. Look for the best features

Another important consideration is to look for policies with the best features.

As an illustration, you might have an inquiry regarding a flexible choice that enables you to transition to a long-lasting plan down the line, all without undergoing a medical examination.

This way, you can secure lower premiums and preferred status based on your younger and healthier self.

3. Recognize the extent to which your family needs coverage

It’s also crucial to remember how much protection your family needs. According to Browning, consumers often overlook expenses like childcare or the loss of a pension plan.

You may shield your family from future financial problems by purchasing more insurance.

In general, Browning recommends a policy that is worth 10 to 12 times your annual income. This can provide your family with enough financial support to carry on without you.

Final summary for family life insurance

Ultimately, family life insurance is an essential part of protecting your family’s future.

While it may seem like an additional expense, the cost of term life insurance is relatively low and can provide significant benefits in the event of an unexpected loss.

Use a life insurance quotation provider like Ratehub.ca or any of your preferred third-party sites to get in touch with an authorized insurance broker who can assist you if you need assistance getting started.

Other types of insurance

Life Insurance in AlbertaLife Insurance in British ColumbiaLife Insurance in ManitobaLife Insurance in New Brunswick
Life Insurance in Newfoundland and LabradorLife Insurance in Nova ScotiaLife Insurance in OntarioLife Insurance in Prince Edward Island
Life Insurance in QuebecLife Insurance in Saskatchewan

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August 14, 2023
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FAQs about family life insurance

What Is family life insurance

Family insurance lacks a uniformed characterization within the insurance sector, unlike term or whole life insurance plans. Rather, it is a product created by individual providers. As a result, the contents of family insurance packages can vary significantly from one company or broker to another, making comparison between packages complex. However, in general, family insurance is a comprehensive package of various types of life insurance. 

How much does family life insurance cost

When considering purchasing life insurance for your family, there are several factors that can heavily impact the cost. Insurance companies will take into account the following factors when determining the cost of insuring you:

  • The amount of coverage you are seeking
  • The length of the insurance term
  • The health status of the policyholder
  • Whether or not the policyholder is a smoker
  • Any additional riders, such as critical illness or disability insurance
Among these variables, the extent of protection you necessitate holds paramount importance when calculating the expenses associated with your family life insurance plan. It is imperative to guarantee that you possess an ample amount of coverage to sufficiently cater to your family's needs in the unfortunate circumstance of either your own or your partner's premature demise.

Family Life Insurance made simple

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