Best Individual Life Insurance
When do you need individual life insurance?
In most cases, an individual life insurance policy is worth it if you have a partner and/or children who rely on you for financial stability, or if you have a mortgage that you’d like covered if you pass away.
If you’re in a partnership and/or have a family, you probably need life insurance. In the event of your death, a life insurance payout can provide income replacement and cover costs like mortgage payments, children's education, and your final expenses.
Couples can get a joint life insurance policy, but it’s usually worthwhile to purchase individual life insurance plans. Individual policies include a death benefit for each person, which ensures the surviving partner and any dependents are fully protected financially.
If you’re single and have no dependents or mortgage, you might not need life insurance coverage. If you don’t have anyone relying on you for financial support, a life insurance payout may not be necessary. You should consider setting aside enough money to cover your final expenses, which is best achieved through a high-yield savings account, and then investing to save for your own retirement.
If you plan to have children in the future, it’s a good idea to purchase life insurance for parents at that time. One exception is if you anticipate future health issues; in this case, you’d be best to secure a policy while you’re young and healthy to lock in the most affordable rates.
If you want to leave a legacy or some type of inheritance, life insurance is one way to do that. That said, other strategies—like investing in the stock market—can provide a higher payout if you’re thinking about your loved ones’ financial future.
Joint vs. individual life insurance
The biggest difference between a joint vs. individual life insurance policy is who has coverage and when the payout comes.
A joint life insurance policy:
- Covers two people (typically spouses) under one policy
- A first-to-die policy pays out when the first insured person dies
- A second-to-die policy pays out once both insured individuals have died
While a joint policy can be cheaper than holding two individual policies, there are serious drawbacks:
- With a first-to-die policy, the surviving spouse gets a payout but no longer has any insurance coverage
- With a second-to-die policy, the surviving spouse is left with no protection after their partner dies
For these reasons, we believe individual policies are best—even for couples. An individual life insurance policy:
- Covers one person under one policy
- Pays out when the insured person dies
Individual policies cost a little more, but they stick with you—even if you separate from your partner or need to adjust your coverage. That’s financial security.
Separate term life insurance policies are typically the smartest choice for couples. Each partner can select a term that best suits their financial obligations. Some insurance providers even offer discounts for couples who buy separate life insurance policies. PolicyMe gives you 10% off the first year of your term policy when you apply together.
Pros and cons of an individual life insurance policy
The best part of an individual life insurance policy is the control. Though it is slightly more expensive for two people to have their own term insurance policies than to purchase a joint policy, we believe the benefits make it worthwhile.
Types of individual life insurance policies
There are two main types of life insurance policies: term and permanent (whole or universal). Term insurance is typically the most affordable coverage option and best meets the needs of most Canadians.
Term life insurance covers a set term, like 10, 20, or 30 years:
- Pays out if you die during the term
- Usually the most affordable option
- Good if you have a mortgage or are raising children
Permanent life insurance lasts your entire life, as long as you pay the premiums:
- Pays out when you die
- Builds cash value that you can borrow against or withdraw
- Can be useful for complex estate planning
With whole life insurance, you have lifelong coverage and your premiums are fixed. Your death benefit and cash value are guaranteed with non-participating whole life policies. Participating policies mean you participate in the insurer’s investment returns, and you may receive dividends.
With universal life insurance, you have lifelong coverage and your premiums (and coverage!) can flex over time. Your cash value growth is not guaranteed since it’s tied to interest rates or market performance (depending on the type). This type of coverage is marketed as a source of retirement income, but most Canadians can get better returns through investing.
Eligibility for lifetime coverage may require medical exams or basic health questionnaires.
Use a term life insurance calculator to estimate how much life insurance you need based on your situation.
How much does individual life insurance cost?
The cost of life insurance in Canada depends on your age, gender, health status, policy choice, and insurance provider. In general, female nonsmokers tend to pay less for life insurance. Here are some typical ranges based on age and term length:
How to find the best individual life insurance
Shop around to find the best life insurance policy in Canada. Make sure you consider affordability, customer service reviews, insurance options, and industry reputation.
Check out these sample premiums for individual term policies in Canada.
10-year term life insurance
* Rates for people who smoke are higher
20-year term life insurance
* Rates for people who smoke are higher
30-year term life insurance
* Rates for people who smoke are higher.
FAQ: Individual life insurance
Bonnie Stinson is an insurance writer and researcher in Toronto with a decade of experience producing helpful, accurate content for Canadians. They have published resources for some of Canada's most innovative and consumer-trusted companies in the health, legal, and fintech sectors.
Bonnie Stinson is an insurance writer and researcher in Toronto with a decade of experience producing helpful, accurate content for Canadians. They have published resources for some of Canada's most innovative and consumer-trusted companies in the health, legal, and fintech sectors.