Life insurance for newcomers to Canada

Starting a new life in a new country may involve taking on new financial obligations such as buying a home, getting married, starting a family, putting your kids through university or college, etc. As a Canadian newcomer, applying for life insurance could be an important step during these stages or generally as it can help financially protect your loved ones in the event you pass away.

The lump sum, tax-free payment received by your selected beneficiaries can be used however they choose. For example, it could be used to: 

• replace lost income (helping your family maintain their standard of living)
• pay for children's post-secondary education
• pay off a mortgage or other debt
• pay for final expenses
• be donated to charity

It's worth considering having a Canadian life insurance plan, even if you have an existing policy from back home. If you do have an existing policy, it's important to review the policy terms to see if it allows for continuity in Canada.

As you reassess your new financial situation and obligations in Canada, you should be asking yourself if you have enough coverage. Do you have any new debts? Or a new mortgage? If yes, and you are considering getting more coverage, then it might be time to speak to a life insurance licensed advisor about your coverage needs.

It's important to understand that your Canadian life insurance policy won't be the same as your policy you may have from back home. Key differences can include eligibility criteria, limitations and exclusions, premiums, the process of opening and submission of claims, and the currency in which the death benefit is paid out.

Generally speaking, life insurance plans can be classified into: 

Term life insurance is a type of coverage that covers a policyholder for a specific length of time or "term". There are various term life insurance options on the market. Some plans offer shorter-term lengths (like a 10-Year TD Term Life plan), and others offer longer-term lengths (like a 20-Year TD Term Life plan).

Term plans can be renewable where premiums remain the same for the term selected and the policy automatically renews at the end of each term. That said, as you age and your policy renews automatically your premiums are likely to increase because you're moving into an older age range, which is associated with a higher risk of health issues. 

Permanent life insurance, as the name might suggest, is a type of plan that lasts the whole lifetime of the insured person.

There are different types of permanent life insurance plans like whole life insurance and universal life insurance. In general, these types of plans are usually priced higher than other life insurance plans as they last a lifetime. Aside from the death benefit, some of these plans also have cash values.

The types of permanent life insurance offered by TD Insurance are TD Term to 100 Life Insurance and TD Guaranteed Acceptance Life Insurance.

As you read on, we'll explore term life insurance in greater detail, focusing on its benefits, cost, how to determine your coverage amount needs, and the term life plans available at TD Insurance.

Here are some of the benefits of term life insurance in Canada:

• Term life insurance generally has lower premiums and is simpler than other types of permanent life insurance.
• Premiums remain the same throughout each policy term. Knowing that your premium will stay consistent for the length of the policy term can make budgeting easier.
• Term life plans typically renew automatically at the end of each term until the policy expires. At renewal, the rates increase to reflect the life insured's age at the time.
• You can choose from a variety of term options to help you find coverage for your needs.
• Like with other life insurance products, the death benefit is paid out to your beneficiaries tax-free.

There are several factors that are used to determine the cost of a life insurance policy. As a new Canadian resident, it can be helpful to know these factors to better understand why you're asked certain questions to get a quote or apply for coverage. The following are factors that help determine life insurance premiums: 

• Age: Usually, the younger and healthier you are, the lower the premium for a plan.
• Sex: Your sex at birth also matters since men statistically tend to have a shorter lifespan than women.
• Coverage amount: As the coverage amount increases, so does the premium paid for it. The higher the coverage amount, the higher the risk being undertaken by the insurer.
• Smoking or vaping: Since smoking affects a person's life expectancy, smokers can expect to pay a higher premium than a non-smoker.
• Overall health: A healthy person will usually end up paying less for a plan than someone with health issues.
• Lifestyle and occupation: If your job is physically challenging or puts you at risk, you might pay a higher premium as the risk an insurer takes also increases.

Here's an example of what a healthy, non-smoker female can expect to pay for $250,000 of coverage for a TD 10-Year Term Life policy.

Cost calculated as of September 2024

The amount of term life insurance you need is different for everyone. A place you can start would be to assess your financial situation to help determine how much term life insurance you may need.

• Start by assessing your total financial obligations (household living expenses, mortgage, children's education fund, caring for aging parents, etc.) and debt along with your total household income and assets. The difference between your debts and assets should give you an idea of how much coverage you might need. You can also factor in any additional money you might want to leave behind for your family.
• You can use the TD Life Insurance Calculator to get an idea of how much coverage you may need.
• Now, you can start comparing term options (10-Year Term, 20-Year Term, etc.) and select the one that best suits your needs.

Once you have determined how much term life coverage you need and what type of term life insurance plan you would like to apply for, you can start your application process. Or learn more about the different TD Term Life Insurance plans below.

TD Insurance offers the following term life insurance plans: 

You could get a shorter-term plan like a 10-year term life policy, which may be more suitable with relatively short-term financial obligations like a car loan, student loan or any other short-term debt. The premiums for the plan are guaranteed not to increase during each 10-year term³. It automatically renews at the end of each term and expires when the life insured turns 80. There is also the option to convert this policy to the Term 100 lifetime coverage plan by age 69. 

A longer-term plan like a 20-year term policy could be useful if you have relatively long-term financial obligations, like those that come with buying a new home, getting married, or having kids. The premiums for this plan are guaranteed not to increase during each 20-year term³. It automatically renews at the end of each term and expires when the life insured turns 80. There is the option to convert this policy to the Term 100 lifetime coverage plan by age 69.

A 100-year term life plan could be suitable if you are looking for coverage that lasts for a lifetime. This type of plan doesn't expire.