If you're new to life insurance, start by confirming if you need it. Choose between term and permanent coverage, calculate how much you need, know what affects your premiums, and pick a trusted insurer. These tips help you buy the right policy with confidence.
Life insurance is one of those topics most people avoid—until it’s too late. While 70% of Canadians have some form of life insurance, many are either underinsured or unaware of what their policy actually covers. More concerning is the fact that only about 37% review their coverage annually, meaning potential gaps could leave families vulnerable during times of crisis.
For first-time buyers, diving into the world of life insurance can feel overwhelming. With so many terms, options, and price points, it’s easy to get confused. But the truth is, life insurance is not just a policy—it’s a financial safety net for your loved ones when they need it most.Whether you’re starting a family, buying a home, or simply planning ahead, here are five comprehensive life insurance tips to help you make an informed and confident decision in 2025.
1. First Things First: Do You Really Need Life Insurance?
Before exploring quotes and coverage options, it’s essential to evaluate whether life insurance is a priority in your current life stage.
If you’re young, single, and have no significant financial obligations or dependents, you might assume you don’t need coverage. While that may be true in the short term, there are benefits to securing a policy early. Younger applicants typically enjoy much lower premiums because they’re at lower risk of health issues. A 25-year-old non-smoker in good health can get hundreds of thousands in coverage for a relatively small monthly premium.
However, the moment you take on responsibilities—such as having children, buying a home, or supporting aging parents—life insurance becomes vital. It ensures your family won’t be burdened with debts, living expenses, or funeral costs if you pass away unexpectedly.
Also consider this: even if no one currently depends on your income, life insurance can still be used to leave behind a legacy, cover final expenses, or donate to a cause you care about.
When You Might Need Life Insurance:
- You’re married or in a common-law partnership
- You have children or plan to soon
- You’ve taken on a mortgage or other shared debt
- You support aging parents or a disabled relative
- You want to cover burial and final expenses
2. Get to Know the Basic Types of Life Insurance Policies
Choosing the right policy starts with understanding the types of life insurance available. In Canada, the two main categories are term life insurance and permanent life insurance (which includes whole life and universal life).
Term Life Insurance
Term life insurance is designed to provide financial protection for a set period—usually 10, 20, or 30 years. If you die during the term, your beneficiaries receive a tax-free death benefit. Once the term ends, you’ll typically need to renew it, often at a higher cost.
This type of policy is ideal for temporary needs, such as:
- Covering a mortgage
- Replacing income while children are dependent
- Paying off student or business loans
- Providing a financial buffer for your spouse during your working years
Because term insurance is relatively affordable, it’s often the best option for first-time buyers who want a balance between cost and coverage.
Permanent or Whole Life Insurance
Permanent insurance offers lifetime coverage as long as you continue paying premiums. It also includes a cash value component—a portion of your premium builds equity that can be borrowed against or withdrawn later.
Permanent policies are more expensive but provide greater long-term benefits. They can be ideal if you want:
- To leave an inheritance
- To pay estate taxes
- To fund a lifelong dependent’s care
- To access cash value in emergencies
- To use insurance as part of a tax-efficient wealth strategy
Some policies also offer universal life insurance, a flexible form of permanent insurance that allows policyholders to adjust their premium and death benefit over time.
3. Figure Out How Much Coverage You Need
One of the most common mistakes first-time buyers make is underestimating how much life insurance they need. The goal of life insurance is to provide financial stability to your loved ones—not just cover funeral costs.
To determine the right coverage, start with a detailed assessment of your financial obligations:
1. Debts and Liabilities
Calculate how much money would be needed to cover:
- Mortgage balance
- Car loans or leases
- Credit card debt
- Personal loans or lines of credit
- Student loans
Make sure your insurance benefit is enough to eliminate these debts so your family isn't left scrambling.
2. Income Replacement
Ask yourself: how many years would your family need your income to maintain their standard of living? Multiply your annual income by the number of years you want to provide for.
A general rule of thumb is 10 to 15 times your annual income, but your personal situation could require more or less.
3. Future Expenses
- Childcare and school tuition
- University or college education
- Long-term care for aging family members
- Final expenses like funeral and burial (typically $10,000–$20,000 in Canada)
Don’t forget inflation: costs rise over time, so it’s wise to build in a buffer.
4. Existing Assets and Coverage
Subtract any existing assets, such as savings, investments, or group life insurance from your employer. This helps avoid over-insuring and paying for more coverage than needed.
Using an online life insurance calculator—or working with a licensed advisor—can simplify this process and help you arrive at an accurate number.
4. Understand What Affects the Cost of Your Policy
In 2025, life insurance in Canada remains relatively affordable, especially if you’re healthy and apply early. But several factors can significantly affect how much you pay in premiums:
Personal Factors:
- Age: The younger you are, the lower your premium.
- Gender: Women tend to live longer, resulting in slightly lower rates.
- Health History: Chronic illnesses like diabetes, heart disease, or obesity can raise premiums.
- Family Medical History: A history of genetic conditions can impact pricing.
- Lifestyle Choices: Smoking, excessive drinking, or extreme sports can increase costs.
Policy Factors:
- Policy Type: Term life is cheaper than permanent life insurance.
- Coverage Amount: More coverage means higher premiums.
- Term Length: Longer terms cost more but offer extended protection.
- Riders and Add-Ons: Additional features (like critical illness coverage or waiver of premium) can raise costs.
How to Reduce Premiums:
- Apply Young: Lock in low rates while you’re still healthy.
- Quit Smoking: Non-smokers pay drastically less.
- Improve Your Health: Better lifestyle habits can reduce risk classification.
- Compare Providers: Shopping around helps you find the best deal.
- Bundle Policies: Some insurers offer discounts for bundling home, auto, and life insurance.
Working with an independent broker gives you access to multiple insurers, helping you find the most cost-effective policy based on your unique profile.
5. Find a Reputable Insurer
With dozens of insurers in Canada, it’s important to choose a trustworthy company that aligns with your needs. Your policy is only as good as the insurer backing it.
What to Look For:
- Financial Strength: Check ratings from A.M. Best, Moody’s, or DBRS Morningstar. These indicate the company’s ability to pay out claims in the future.
- Claim History: Look into how smoothly and quickly they process claims. Delays and denials can create additional stress for grieving families.
- Customer Service: Read online reviews and talk to current policyholders. Look for consistent, reliable support.
- Policy Features: Do they offer options like policy conversion, riders, or flexible payment terms?
- Digital Access: Many top insurers now offer convenient online applications, digital claim filing, and mobile access to your policy.
You can use quote comparison tools like Insurdinary to compare multiple providers in one place, or work with a broker who can explain the fine print and negotiate on your behalf.
FAQs About Life Insurance for First-Time Buyers
Got questions about buying life insurance for the first time? Here are quick answers to some of the most common ones Canadians are asking in 2025.
The general rule is to get coverage equal to 10 to 15 times your annual income. However, your exact needs depend on your debts, mortgage, dependents, income, and future expenses like education or final costs. Online calculators or licensed brokers can help tailor the right amount for your situation.
For most first-time buyers, term life insurance is the best option. It’s affordable, easy to understand, and provides coverage for a set period—usually enough to protect your family while paying off debts or raising children. Permanent insurance is more expensive but may be ideal for long-term planning.
Yes, standard life insurance in Canada typically covers most causes of death, including illness, accidents, and natural causes. However, some policies may exclude certain scenarios like suicide (within the first two years), high-risk activities, or death related to fraud or criminal activity.
Yes, you can still get life insurance in Canada with a pre-existing condition, but your premiums may be higher. Some insurers offer simplified or guaranteed issue policies with no medical exam, though these come with lower coverage and higher costs. It's best to compare quotes across providers.
The best time to buy life insurance is as early as possible—ideally in your 20s or 30s. Younger applicants benefit from lower premiums and better health classifications. Delaying your purchase often leads to significantly higher costs or limited options due to health issues.
Conclusion
Buying life insurance for the first time is a powerful step toward protecting your family’s future. It’s more than just a financial decision—it’s an act of love and responsibility.
By taking time to understand your options, calculate your needs, and choose a reputable insurer, you can secure peace of mind knowing your loved ones will be taken care of.
Whether you're in your 20s, 30s, or beyond, the best time to act is now. Rates are lower the younger and healthier you are, and your future self—and family—will be grateful you planned ahead.
Ready to take the first step? Get a free, no-obligation quote from Insurdinary and explore the top life insurance options in Canada.
