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Why is life insurance important for seniors in Canada?

Life insurance can play an important role in financial security and planning for Canadian seniors. In Canada, depending on age, seniors have several different types of life insurance options available to them. By better understanding your options and the benefits of life insurance, you can make a more informed decision when it comes to coverage.

In this article, we'll explore:

What is life insurance?

Life insurance is a contract between you (the policy owner) and a life insurance company. As the policy owner, you agree to make regular premium payments (payments that are made to an insurance provider in exchange for coverage), and in return, your designated beneficiaries receive a tax-free lump-sum payment if you pass away. 

How can life insurance be valuable for Canadian seniors?

In Canada, seniors often have different financial priorities compared to other age groups. As you get older, your financial responsibilities can shift. Having life insurance could address some of your needs by helping to provide financial safety. As coverage can be used to help:

  • Cover end-of-life expenses
  • Protect your family financially
  • Assist in estate planning and even
  • Provide a legacy

What are some of the benefits of life insurance for Canadian seniors?

Let's take a closer look at some of the main reasons why you should consider life insurance coverage. 

Financial security and a legacy

Life insurance could provide a death benefit that could help your family maintain their standard of living should you pass away due to a covered event. Your beneficiaries can use this financial support to help cover daily expenses, education costs, and other essential needs. It can also allow you to leave a legacy for your children or grandchildren.

Help cover end-of-life expenses

Funeral and burial costs can be substantial. The death benefit can help cover these end-of-life expenses.

Estate planning

Life insurance can be an effective part of your estate plan. It could help with wealth preservation, end-of-life expenses, estate equalization, and charitable donations. 

Tax-free life insurance death benefit

In Canada, life insurance death benefits are tax-free. This means that your designated beneficiaries receive the lump-sum payout without tax deductions. 

Flexible premium payment options

Certain life insurance plans offer flexible premium payment options (like term life insurance and universal life insurance). This means, you can choose the frequency in which you pay your premiums (weekly, bi-weekly, semimonthly, monthly). This can help you maintain your coverage and lessen the financial strain.  

Help pay off your mortgage or loans

In the event you pass away, your life insurance death benefit can be used to pay off or reduce any outstanding debts (mortgages or loans). 

Types of life insurance products for seniors in Canada to consider

As a Canadian senior, there are several different life insurance products for you to consider. Let's learn more about the different policies.

 

Term life insurance
Provides coverage for a fixed period, which is known as a term, or until you reach a certain age. This coverage does not build cash value and is typically more affordable than other types of coverage.

 

Guaranteed acceptance life insurance
For Canadian residents between a certain age range (between the ages of 50 and 75 for TD Guaranteed Acceptance Life Insurance), these plans provide approval regardless of any pre-existing health conditions or medical history. Coverage is designed for final expenses, such as funeral or burial costs

 

Permanent life insurance plans 

Whole life insurance
Offers lifetime coverage with a guaranteed cash value component (that grows over time) and a death benefit. Premiums are typically higher than other types of life insurance plans, but they remain fixed for the policy's duration.

Universal life insurance
Often described as a hybrid plan as it combines benefits of term and whole life insurance. This type of insurance provides lifetime coverage that offers flexibility in premiums, the death benefit, and investment options. 

Overview of types of life insurance policies

Here are some policy types you can consider as a Canadian senior. However, it's important to be aware that you must meet certain age and other eligibility requirements to apply for these policy types. These eligibility requirements will vary by insurance company. In addition, a medical exam may be required depending on your age, health, and coverage amount you apply for.

 

Policy Type Coverage Duration Cash Value Medical Exam Required Suitable For Someone Seeking
Term life insurance For the length of your selected policy No Possibly required depending on specific factors   Coverage for the selected duration of the policy
Guaranteed acceptance life insurance Lifetime No No Coverage for end-of life expenses or for those who don't qualify for other coverage types 
Whole life insurance Lifetime Yes Required depending on specific factors  Lifetime coverage with a guaranteed cash value and death benefit
Universal life insurance Lifetime Optional Required depending on specific factors Lifetime coverage with an investment component

Tips for comparing different life insurance plans

You can consider these tips when researching different life insurance plans.

  • Coverage amount: Make sure the coverage amounts meet your needs. 
  • Premiums: Compare the cost of premiums and choose a plan that fits within your budget. 
  • Policy term: Consider the duration of coverage (term or lifetime coverage) and whether it aligns with your retirement goals. 
  • Exclusions and limitations: Look for any limitations or exclusions that could impact your ability to get coverage or your designated beneficiaries' ability to receive the death benefit.
  • Company reputation: Make sure you are dealing with a reputable insurance provider. 

Three myths surrounding life insurance for Canadian seniors

Myth 1: Seniors don’t need life insurance 
For seniors, a life insurance policy can be valuable as it can provide financial support to your loved ones should you pass away. The policy's death benefit could be used to support your spouse as they age, tackle any outstanding debt, help cover funeral expenses, or provide a legacy for your family.

 

Myth 2: Life insurance is too expensive for seniors
There are coverage options available for people of all financial situations. It's worth considering term life insurance, which allows you to choose the term length and coverage amount that works for your budget.

 

Myth 3: Health issues can make it pretty much impossible to qualify for coverage
You can consider plans such as guaranteed acceptance life insurance. This coverage does not require any medical exams and all eligible applications are accepted. 

How to apply for a life insurance plan from TD Insurance

TD Insurance offers both TD Term Life Insurance and TD Guaranteed Acceptance Life Insurance (GALI). If you want to read more about life insurance and what TD Insurance offers, you can visit us here.

You can follow these steps to apply for a TD Life Insurance Plan:

  1. Determine the plan and coverage amount you want. You can assess your life insurance needs by using the TD Life Insurance Calculator.
  2. Get a quote. Use the TD Insurance Term Life Insurance or TD Insurance Guaranteed Acceptance Life Insurance quote tool. If you're pleased with your quote, you can complete the final step.
  3. Complete an application. Where you'll provide personal details, health and lifestyle information, and complete payment.

If you have any questions or need assistance throughout the process, you can connect with a TD Life Insurance licensed advisor. 

FAQs

Can seniors get life insurance without a medical exam? 
Yes, certain types of life insurance. For example, a guaranteed acceptance life insurance plan does not require a medical exam. And TD Insurance offers instant approval on TD Term Life Insurance for up to $249,999 if you are under 701.

How do life insurance payouts work? 
After the insured person passes away due to a covered event, the life insurance company pays a tax-free, lump-sum benefit to the beneficiaries. 

Can you apply for TD Term Life Insurance when you turn 60?
If you're a Canadian resident, you can choose the TD 10-Year Term Life plan until 6 months after your 60th birthday. Your payments stay the same for each term, and coverage ends at age 80. This could be a good option if you have grandchildren to financially support. And you do have the option to convert this plan to a permanent life insurance plan.

Can you apply for TD Term Life Insurance when you turn 70?
If you’re a Canadian resident and about to turn 70, you can also apply for the TD 10-Year Term Life plan until 6 months after your 70th birthday. If you still have family members that depend on you, this plan may help them financially after you pass away. Like our other term plans, premium remains unchanged throughout the term, and coverage ends at age 80.

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TD Term Life Insurance plans and TD Guaranteed Acceptance Life Insurance are individual life insurance plans underwritten by TD Life Insurance Company. Some restrictions may apply. Application subject to approval. See Insurance Policy(ies) for coverage details, including limitations and exclusions.

The content on this page is for general information purposes only and does not constitute legal, financial or insurance advice. Speak to a TD Life Insurance licensed professional advisor regarding your specific situation. The information contained herein, is subject to change without notice.

1 Instant approval is subject to the responses you provide to certain health and lifestyle questions in your application and is available for coverage up to $1,000,000 if you are under 50, up to $500,000 if you are under 60, or up to $249,999 if you are under 70-years-old.