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Life Insurance in the Pandemic Time

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When life becomes uncertain, saving for the future matters more than anything else. The COVID-19 pandemic has stirred everything up and triggered an economic recession in many countries. Not to mention that the virus affected 852K and took the lives of over 21 thousand Canadians.

Amid this situation, many Canadians have pinned their hopes on life insurance policies. According to a recent study conducted by PolicyAdvisor.com, a leading online insurance brokerage in Canada, 44% of the respondents have either purchased or planned to purchase more coverage because of the pandemic.

What kind of policy would be a better choice to purchase during a crisis like this pandemic? Permanent or term insurance?

Permanent vs Term Policy in the Pandemic Time

During a crisis, it’s more practical to resort to cheaper options. Permanent life insurance policies can be expensive, along with many other issues. These are perfect for people who are financially stable and aged more than 55. 

The reasons to avoid a permanent policy are:


Compared to a term insurance policy, permanent insurance premiums can cost 10-time higher. The beginning years of the policy are even more expensive compared to the later years.


Term insurance is much more straightforward with easy-to-follow rules. The same doesn’t apply to permanent policies, which are more complex. Without an expert’s help, a regular person can’t understand all the terms. 

Less Monetary Benefits

Permanent insurance allows the policyholders to earn interest on its cash value. Still, the amount is lower than the investment return in a TFSA (Tax-Free Savings Account) or RRSP (Registered Retirement Savings Plan). Most plans also demand cancellation charges that make a dent in your already depreciated financial status. 

Permanent policies also restrict the options for withdrawing the annual contributions in case of an emergency. 

High Rate of Lapsing

The rate of people cancelling their permanent policies is significantly higher than that of term insurance. More than 80% of permanent life insurance policies don’t pay the claim because policyholders lapse at some point for being unable to afford the premiums.

Term policies are better because they warrant cheaper monthly payments. Also, you can choose to pull back the money at any time without facing any penalties. This option of getting out any time without paying any extra fees is what you need in the time of a universal crisis like the COVID-19 pandemic. 

What Should You Do?

The decision depends solely on your financial condition, income status, age, and several other factors. A permanent policy could be a good option too if considering several factors. 

If you want to purchase a policy but can’t do it all by yourself, contact a digital insurance agent and get the best quote. Insurance Direct Canada is one of the best insurance brokers in Canada. Upon your request, they will compare the plans from different providers and advise you on which you should buy.

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