How term life insurance prices are set in Canada

Underwriting is the whole story

Every price you see starts with the same process. The Financial Consumer Agency of Canada describes underwriting as the way an insurance company assesses a risk in order to determine how much coverage it will provide, which conditions are excluded if any, and the premium you will need to pay.

That is worth reading slowly, because it contains the three answers people want: how much, on what conditions, and for how much money. Everything below is about the inputs to that decision.

What the regulator says goes into the decision

The agency lists the criteria insurance companies use when they decide whether to sell you a policy: your age, your sex, your medical history in the case of life or disability insurance, your credit history, any previous claims you have made, and the amount of coverage you are asking for.

Two of those do most of the work in a term life price. Age is the largest, and sex is the next structural one: at the same age and rate class, women are generally quoted less than men, because the mortality tables the price is built on differ. Neither is something you can act on. They are simply part of why two people who feel identically healthy see different numbers.

Age does the heaviest lifting

Age moves a term life premium more than any other factor, and it moves in one direction. Each year of age makes the same coverage cost more, and the increases get steeper as the years pass. The gap between buying at 35 and buying at 45 is not a rounding error.

There is no strategy that gets around this, which is why the plainest advice in this whole subject is also the most useful: if you are going to buy, buying sooner costs less than buying later. A price you lock in at 35 is priced on a 35-year-old for the entire term.

Health and medical history

As part of a life or health insurance application you may be asked to prove you are in good health by completing a medical questionnaire or an exam. In practice that means blood pressure, cholesterol, height and weight, anything you are being treated for, and your immediate family's history of certain conditions.

Most healthy applicants land in a standard band. Some land better than standard and pay less than the published rate. A condition that is diagnosed and well managed is usually far less of an obstacle than people expect, and it is much better disclosed than left out.

Nicotine, and cannabis separately

Smoking status is the second heavy lever you can actually act on, and it behaves like a switch rather than a dial. Insurers ask about cigarettes, and they ask about vaping, which almost always attracts smoker rates because nicotine is nicotine however it is delivered.

Cannabis is a separate question on the application and is underwritten separately. It is not nicotine, and many Canadian insurers will offer non-smoker rates for occasional or moderate cannabis use, with the threshold and the wording differing by company. Answer the two questions as they are asked, honestly and separately, and let the insurer apply its own rule rather than assuming the worst.

How much, and for how long

The last two inputs are the ones you choose. More coverage costs more, roughly in proportion. A longer term costs more than a shorter one for the same amount, because the insurer is carrying you for more years.

Term insurance is also the least expensive way into the market at the start. The agency's own comparison is that term life insurance premiums are generally less expensive than permanent life insurance premiums when you first buy the policy. The trade-off is that a term policy covers a defined period, and premiums may increase when it renews. Choosing that period well matters, which is why it has an article of its own.

What an example looks like

Prices belong to individuals, so treat any figure you read anywhere as an illustration rather than an offer. As an example, as of September 2026: a healthy non-smoking 35-year-old in Ontario applying for $500,000 of 20-year term coverage at standard rates is often looking at roughly $25 to $35 a month if she is a woman, and roughly $30 to $45 a month if he is a man. Those are estimates, not quotes, and an insurer sets the real number once it has reviewed the application.

The only figure that matters is yours, and you can see an estimate in about two minutes without giving anyone your name or phone number.

Why the bank's coverage is priced differently

Creditor insurance attached to a mortgage is not underwritten the same way. It is a group product with a short health questionnaire, and the agency says its premiums are based on your age when you apply and the amount of your mortgage when you apply, rather than on an individual assessment of your file.

That is a different pricing model, not automatically a worse price, and which one comes out ahead depends entirely on the person. The way to find out is to price both rather than to assume. The full comparison sets out the other differences that come with each approach.

What this means for you

Three of the inputs to your price are fixed: your age, your sex and your medical history. The rest you have some say in. You can decide when to buy, you can decide about nicotine, and you can decide how much coverage and how long a term you actually need.

So do the sequence in that order. Get an estimate first, because the number is usually lower than the one in your head. Then size the coverage and the term to your family, not to your balance. Then have a licensed advisor run the same application past several Canadian insurers, because the same person can be priced differently by each of them.