Life Insurance Needs Calculator

Life Insurance in Canada: Term vs. Whole Life

Life insurance provides a tax-free death benefit to your beneficiaries, replacing lost income and covering debts. In Canada, life insurance proceeds are not subject to income tax, making them one of the most efficient wealth-transfer tools available. The two primary types are term and permanent (whole life or universal life) insurance, each serving different financial planning needs.

Term insurance covers a specific period — typically 10, 20, or 30 years — and is the most cost-effective option for income replacement during your working years. A healthy 35-year-old non-smoker can obtain $500,000 of 20-year term coverage for approximately $25–$40 per month. Whole life insurance, by contrast, covers you for life and includes a cash value component, but costs 5–15 times more. Most financial advisors recommend term insurance for the majority of Canadian families.

Term vs. Whole Life Insurance Comparison

A common strategy is to calculate your coverage need based on income replacement (typically 10–15 years of salary), outstanding mortgage balance, other debts, and future education costs for children, then subtract existing group coverage and savings. Review your coverage every three to five years or after major life events such as marriage, the birth of a child, or a home purchase.