Life Insurance at Every Stage of Life: When to Update Your Insurance

Few things say “welcome to adulthood” quite like buying life insurance. It’s something people find themselves doing, along with assembling furniture and building a career.

For other Canadians, life insurance becomes a priority after a major milestone — getting married, buying a home, or having a child. But while those big moments often spark the conversation, life insurance shouldn’t be a “set it and forget it” purchase. Life changes, and the policy that made perfect sense a decade ago may not reflect your reality today.

This guide looks at how life insurance for different life stages changes, including how much life insurance costs and when it may be time to review, update, or rethink your coverage.

Why life insurance needs change

Your life insurance needs are usually closely tied to your financial life, including your current income, assets, debts, dependents, and long-term goals. As those things shift, or new responsibilities arise, your coverage needs may change.

A policy that made sense when you were renting an apartment and driving a used hatchback probably won’t provide the same level of protection once you’ve bought a home, had kids, or built a business. That’s why it’s a good idea to revisit your coverage, especially after a major life event.

Another reason? Life insurance generally becomes more expensive as you age. Buying coverage earlier often means lower premiums, since younger, healthier applicants typically present less risk to insurers. Depending on the policy, you may also be able to lock in that rate for many years, helping create predictability as your financial responsibilities grow.

In Canada, life insurance generally falls into two categories:

If you’re debating term life vs. permanent life insurance, just remember that each serves a specific purpose, and the right choice largely depends on where you are in life — and where you’re headed next.

Life insurance in your 20s

If you’ve ever thought, “I’m young and healthy. I don’t need life insurance yet,” you’re not alone. Many people put off buying coverage for this reason.

But hold that thought; the reality is that your 20s can be one of the best times to explore life insurance options. Premiums are typically lower when you’re younger, and you’re more likely to qualify while you’re in good health.

Not having a spouse, children, or a mortgage yet, doesn’t mean you have nothing to protect. Student loans, a car loan, financial obligations, and final expenses are all worth considering. If something happened to you, those costs could fall to family members to manage.

Plus, none of us has a crystal ball. A health condition that seems unlikely today could make coverage more expensive — or harder to get — later. Locking in coverage now while you’re healthy can help protect your options if your health changes down the road.

Key takeaway: start early

If you’re asking, “Do I need life insurance?” or “Am I too young to buy life insurance?”, the answer largely depends on your circumstances. There are benefits of life insurance at a young age, including securing lower rates and creating a financial buffer before major financial commitments arise.

For many young adults, term life insurance tends to be an affordable and flexible option. Coverage is available for terms ranging from 10 to 40 years, and some policies can be converted to permanent coverage later if your needs change.

Coverage is probably cheaper than you think. This term life insurance quote tool is a good place to start. And your future self may thank you.

Read more: Should I Buy Life Insurance in My 20s or 30s?

Life insurance in your 30s

For many Canadians, your 30s are when life starts to become more expensive. You may be sharing finances with a partner, paying down a mortgage, raising children, or saving for long-term financial goals — or a combination of these things.

That’s why this is often the most critical stages of life to have coverage. More people likely depend on your income, and without adequate life insurance, a surviving spouse or family member could be left dealing with the financial fallout.

As you review your coverage needs, consider what you’d want protected, such as:

If you don’t already have coverage, your 30s are still a great time to buy life insurance. Rates are often lower than they’ll be later in life, and you’re still likely to have access to a wide range of coverage options.

Key takeaway: protect the people who depend on you

For many families, term life insurance is a popular choice at this stage. It’s typically more affordable than permanent coverage, and terms of 20 to 30 years can help protect against many of the financial risks that come with everyday life.

Even if you have an employer-sponsored policy, it’s worth looking at how much coverage you actually have. Workplace benefit plans can provide valuable protection — but it may not stretch as far as you think. If something happened to you tomorrow, would it be enough to help your loved ones carry on financially?

Read more: What Does Life Insurance Cover? A Complete Guide

Life insurance in your 40s

By the time you reach your 40s, your income may be at, or near, its peak — but so are many of your responsibilities. Between a mortgage, growing children, caring for aging parents, post-secondary education savings, and retirement planning, there’s a lot depending on your financial stability.

If you purchased life insurance in your 20s or 30s, now is a good time for a coverage gap check. Has your income increased? How much remains on the mortgage? Is your coverage enough to fund a child’s post-secondary education? A policy that seemed like plenty 15, or even 10 years ago may be outdated.

This is also when many 40-somethings start to layer coverage. That could mean keeping an existing term policy in place to help protect income and debts, while adding additional coverage, such as whole life insurance, to support estate planning goals.

Key takeaway: make sure your coverage keeps up with your success

Your 40s are when the conversation shifts from building wealth to thinking about how to protect it and who will benefit from it in the future.

But one thing that doesn’t change? What affects your life insurance premiums. The cost of life insurance generally increases with age, which is why reviewing your coverage in your 40s can be a smart move. Waiting until your 50s — or until your health changes — could mean paying more for the same amount of coverage.

Life insurance in your 50s, 60s, and beyond

By your 50s and 60s, life may feel a bit lighter than it did a decade or two ago. The kids may be grown, the mortgage balance may be shrinking, and retirement could be just around the corner — or already here!

As a result, the role of life insurance in your financial plan often shifts, too. While income replacement is typically the top priority in your 30s and 40s, approaching 60+ is when Canadians shift their focus to zero in on estate planning, tax-efficient giving, covering final expenses, and leaving a tax-free financial legacy for people or causes they care about.

Do you need life insurance when retired in Canada? For some people who are focused on building wealth or legacy, the answer may be yes. But depending on what you’re hoping to accomplish, there are several types of life insurance for 50 and over:

Key takeaway: plan with purpose

With some major financial obligations now behind you, this can be a good time to review your coverage — whether that’s term, permanent, whole, or universal life insurance — and decide whether it still aligns with your goals.

Whether you’re reviewing an existing policy or researching a new one, this chapter of life is often less about protecting your paycheque and more about the impact you can have on future generations.

Read more: Best Life Insurance Options For Seniors

7 reasons to revise your life insurance needs

Reviewing your policy every year or so is a good habit, but some events deserve more immediate attention. Here are seven moments that should trigger a closer look at your coverage.

1. Getting married or entering a common-law partnership

Joining your life with someone else’s often means sharing more than a mailing address or the utility bills. Your income, debts, and financial goals may become intertwined, and your partner could come to depend on your earnings.

If you’ve recently married or entered a common-law partnership, review both partners’ coverage amounts and make sure your beneficiary designations are up to date.

2. Having a child or adopting

The minute you become a parent, the stakes change. Suddenly, you’re thinking years (or even decades) into the future. Childcare, education, everyday expenses, and your family’s long-term financial security all become part of the picture. Would your family be able to manage financially without your income?

Reviewing your life insurance before or shortly after having a child can help ensure your coverage keeps up with your growing family (and the responsibilities that come with it).

Read more: Life Insurance for Children: A Guide for Parents

3. Buying a home

For many Canadians, a mortgage is the biggest financial responsibility they’ll ever make. If something happened to you, would your loved ones be able to stay in the family home? Consider whether your coverage would be enough to help pay off the mortgage and stay afloat.

4. Changing or losing a job

If you have a policy through your employer, don’t assume it will follow you from job to job. In most cases, workplace coverage ends when your employment does.

A job change, layoff, promotion, a salary boost, or retirement are all good reasons to review your coverage. New responsibilities, a higher income, or the loss of workplace benefits can all affect how much protection you might need.

5. Starting or growing a business

If you’re the driving force behind a business, it’s worth considering what would happen if you suddenly couldn’t run it. Would your family be able to manage business debts or obligations? Would employees, clients, or business partners feel the impact? Could the business continue operating successfully?

Business owners, especially sole proprietors, often need extended coverage beyond just protecting their family and business liability. For example, Key Person Insurance can help provide financial support to a business if an owner, partner, or key employee dies or becomes unable to work. The benefit can help cover expenses, replace lost income, hire and train a replacement, or simply help the business navigate a difficult transition.

Read more: Life Insurance for Small Business Owners

6. Divorce or separation

When a relationship ends, life insurance paperwork doesn’t automatically update itself.

Beneficiary designations, coverage amounts, and ownership details should all be double-checked following a divorce or separation. If you’ve previously relied on a spouse’s coverage or don’t have an individual policy of your own, this may also be the right time to explore your options.

7. Approaching retirement

Retirement doesn’t always mean closing the book on life insurance. In many ways, it’s the start of a new chapter — one that focuses on how you’d like your wealth to support others in the years ahead.

Depending on your goals, life insurance can play an important role in estate planning, charitable giving, or providing a tax-free benefit to loved ones. It can also help make it easier to divide assets among multiple beneficiaries.

Before cancelling any policy, consider speaking with a licensed insurance advisor. The coverage that no longer seems necessary may still play a role in supporting the people, priorities, and causes that matter most to you.

Read more: How Much Money Do You Need to Retire in Canada?

How much life insurance do I need?

If you’re wondering, “How much life insurance do I need?” the answer is: it depends.

Your ideal coverage amount hinges on a variety of factors, including your income, debts, mortgage, family situation, and future goals. That’s why there isn’t a magic number that works for everyone.

Still, many Canadians may be putting off the conversation altogether. According to a survey from RBC Insurance, 58 per cent of Canadians say life insurance is important, but only 39 per cent have a policy. The same survey found that nearly one in three Canadians say their savings would run out within six months if they faced a major health setback.

A common guideline is to carry coverage equal to five to seven times your net annual income.  So, if you earn $80,000 annually after taxes, a starting point might be between $400,000 and $560,000 in coverage.

Of course, real life is rarely that simple. Someone with young children, a mortgage, or a single-income household may opt to extend their coverage beyond that.

Luckily, you don’t have to figure it all out on your own. Our online life insurance calculator can help you estimate your coverage needs. From there, a licensed RBC Insurance advisor can help you fine-tune the numbers and build a plan that fits your life and budget.

Take the next step in updating your life insurance coverage

If there’s one takeaway from this article, it’s that life insurance isn’t necessarily a one-time purchase. Your coverage should ideally keep up with your age and stage.

Not sure where to start? Here’s a checklist:

A policy review doesn’t have to take long, but it can make a big difference. Afterall, the goal isn’t to have the most coverage possible. It’s to have a policy that fits the life you’re living today.