When it comes to life insurance, one size definitely doesn’t fit all. Two of the most common types in Canada are term and permanent life insurance — and understanding the differences can help you choose the right coverage for your stage of life, goals, and budget.
What Is Term Life Insurance?
Term life insurance provides coverage for a fixed period — often 10, 20, or 30 years. If you pass away during the term, your beneficiaries receive the tax-free payout.
Pros:
- More affordable
- Easy to understand
- Great for covering temporary needs like mortgage payments or raising children
Cons:
- No payout if you outlive the term
- Premiums increase significantly if you renew later in life
Best for: Young families, homeowners, or anyone looking for affordable short-to-medium-term coverage.
What Is Permanent Life Insurance?
Permanent life insurance provides lifetime coverage and includes a savings or investment component called “cash value.”
Pros:
- Lifetime coverage
- Cash value grows over time
- Can be used for estate planning or tax-advantaged savings
Cons:
- More expensive than term
- Can be complex depending on the product (e.g. whole life vs. universal life)
Best for: High-net-worth individuals, estate planners, or those who want lifelong protection and investment growth.
Which One Should You Choose?
Ask yourself:
- Do you need coverage for a specific time or for life?
- Is budget a top concern?
- Do you want your policy to grow money over time?
Many Canadians start with term life and later convert or supplement with permanent insurance as their finances grow.
Final Thought
There’s no wrong choice — only the one that fits your life today and tomorrow. A licensed insurance advisor can help you customize the right plan. If you would like for a licensed professional to help you explore your options, fill in a quick form below to get connected to a Canadian Insurance Broker.
