Life Insurance for New Canadians: What You Need to Know

Canada has always been a land of immigrants. Even today, over half a million new immigrants come to Canada annually; the highest in any country. 

If you are planning to move to Canada or are already here, understanding Canada’s laws, regulations, culture, and job market can take time.

One financial tool that can help safeguard against uncertainty is life insurance. In Canada, opting for life insurance early can be quite beneficial for new families. 

However, choosing the right policy is easier said than done. With so many options, deciding on the right type of life insurance can often feel overwhelming. 

That is why we have prepared the following guide to walk you through everything you need to know about life insurance in Canada as a new immigrant.

Different Types of Life Insurance Options in Canada

While there are many variations of life insurance in Canada, the two main types are term life insurance and permanent life insurance.

Term Life Insurance

Term life insurance provides coverage for a set period, for example, 10, 20, or 30 years. It’s straightforward and has lower premiums, making it a popular choice for New Canadians. 

If you’re focused on affordability and protection during key life stages, term insurance may be ideal, especially if you have young children or a mortgage.

Permanent Life Insurance

As the name suggests, permanent life insurance policies provide lifelong coverage and can often build cash value over time. 

While pricier than term policies, they can offer long-term benefits, like cash value accumulation, which you can use for retirement or emergencies. 

For newcomers planning to settle in Canada for the long haul, permanent life insurance could be worth considering.

Additional Types of Coverage

Critical illness and disability insurance are additional types of coverage that pay out if you’re diagnosed with a severe health condition or become unable to work due to disability. 

With the healthcare system and job market potentially new territory, these policies offer an added layer of protection, ensuring financial security during health crises.

The Coverage Needs of New Canadians

Calculating the right amount of life insurance coverage can be tricky, even for Canadians who have lived here for generations. 

To avoid under or over-insuring think about your family’s immediate and future financial needs if you were to pass away. 

Jot down mortgage payments, education expenses for children, outstanding debts, monthly expenses, funeral costs, and any long-term savings goals. Also, consider your family’s size, and the needs of any supporting family members back home. 

Add everything up and that should provide an estimate of how much life insurance coverage you need.

The Cost of Life Insurance for New Canadians

Life insurance premiums in Canada vary based on age, health, gender, lifestyle, occupation, coverage amount, and type of policy. 

Permanent policies usually come with higher premiums than term insurance, but they offer the advantage of lifelong protection. 

On average, according to the Canada Protection Plan, the cost of life insurance in Canada for newcomers can range anywhere from $15 to $100 per month. 

To find the best value it is best to shop around or consult with an insurance broker. They can help you compare costs against potential benefits and find affordable plans that fall within budget. 

In Nova Scotia, for example, some banks or credit unions have exclusive options for newcomers and a trusted insurance broker can help you narrow down your options.

The Application Process for New Canadians

Applying for life insurance as a New Canadian is relatively simple but may differ slightly based on your immigration status and length of stay. 

Generally, you’ll need identification, proof of residence, and accurate disclosures about your health and lifestyle. 

Some policies may require a medical exam or credit check, and having a clean record can improve your chances of approval and lower premiums. 

Accurate information on the application is vital to avoid issues with policy payouts down the road.

Legal and Regulatory Considerations

Canada has stringent regulations around life insurance to protect policyholders. 

Provincial regulations, like those in Nova Scotia, safeguard policyholders, ensuring transparency and accountability from insurers. 

Always remember that as a policyholder, you have rights, including the right to fair treatment and transparent contract terms. 

You should also know that beneficiaries don’t pay income tax on death benefits. They get a full payout without any tax deductions.

Choosing the Right Life Insurance Advisor – McIver Insurance Inc.

When buying life insurance, it’s helpful to have an advisor who understands the unique needs of New Canadians. 

At McIver Insurance Inc. our advisors are familiar with immigrant experiences and can help bridge cultural or language gaps. Our licensed and experienced advisors take the time to answer your questions and understand your unique needs. 

As Nova Scotia’s most trusted insurance brokerage firm we can help you select a policy that meets your needs and budget ensuring you make the best choice for your family’s future.

FAQs

Q1) What is the difference between term and permanent life insurance?

The main differences between the two policies are coverage duration, cost, and benefits. Term life insurance provides coverage only for a specific period and is generally more affordable. On the other hand, permanent life insurance offers lifelong coverage and additional benefits such as “cash value” that accumulates over time and can be borrowed against or withdrawn at any stage. 

Q2) How can I lower my life insurance premiums as a New Canadian?

The most obvious way is to choose a term policy over a permanent one as term policies usually have much lower premiums. Another way to lower premiums is to ensure you maintain a healthy lifestyle by not smoking and exercising regularly. You should also try to get insurance as early as possible. The younger and healthier you are the lower your premiums are likely to be. 

If you are still not finding a quote that matches your budget try reducing your coverage amount or consider bundling insurance policies to get better discounts by consulting with a trusted insurance advisor. The more you shop around and compare quotes the better quotes you are likely to find.  

Q) What should I look for in a life insurance advisor in Canada?

When seeking a life insurance advisor in Canada make sure they are licensed to sell insurance and have proper credentials such as being a CFP or CLU. Ensure they understand the unique financial needs and considerations of new immigrants and offer a transparent fee structure. Look for positive reviews and recommendations and pick a provider that offers a wide range of insurance products and is always available to answer queries.