Is life insurance worth it? Weighing cost against value
- For most people with dependents, term life insurance costs far less than the financial gap it covers.
- Cost rises with age, so the "worth it" math changes the longer you wait.
- It isn't worth it for everyone, people with no dependents and no debt often get little value from it.
The short answer
For most people with a mortgage, a spouse, or kids who depend on their income, term life insurance is worth it. The math is usually lopsided: a modest monthly premium buys a death benefit that's hundreds of times larger, enough to replace years of income or pay off a home. It stops being worth it once you have no one depending on you financially and no debt someone else would inherit.
The math, in real numbers
Here's the actual trade: what you pay each month versus what your family would receive. As an illustrative example, median standard rates from four fully underwritten Canadian insurers for $500,000 of 20-year term, non-smoker (Alberta, September 2026):
| Age | Monthly cost (man) | Monthly cost (woman) | Coverage |
|---|---|---|---|
| 30 | ~$29 | ~$20 | $500,000 |
| 40 | ~$44 | ~$33 | $500,000 |
| 50 | ~$121 | ~$82 | $500,000 |
A 30-year-old paying about $29 a month is spending roughly $350 a year to put $500,000 behind their family. Framed that way, for anyone with dependents, the value case is straightforward. These are estimates, your actual price depends on underwriting.
Why waiting costs you
The math above shows the same pattern every time: price climbs with age. Waiting from 30 to 50 to buy the same $500,000, 20-year policy roughly quadruples the monthly cost in this illustration, and that's before accounting for any new health issues that could show up by then and affect your rate class. If you know you'll need coverage eventually, buying it while young and healthy is usually the cheaper path, not a reason to delay.
When it isn't worth it
Worth is relative to what you're protecting. It's often not worth much if:
- No one depends on your income and you have no debt that would fall to someone else.
- You already have enough liquid savings to cover final expenses and any shared debts outright.
- You're buying a large permanent policy purely out of habit or upsell pressure, when a much cheaper term policy would cover the actual need.
In these cases, the premium is money that could go somewhere else, savings, debt payoff, or simply spending, without leaving anyone worse off.
Term vs. permanent, worth it for different reasons
Term is worth it because it's cheap relative to the coverage, it matches a specific window of need like a mortgage or the years until kids are independent. Permanent life insurance costs a lot more for the same death benefit and is generally worth it only for specific goals: lifelong dependents, estate planning, or business succession needs, not as a general-purpose safety net. If someone suggests permanent coverage for a simple income-replacement need, ask why term wouldn't do the same job for less.
What longer or shorter terms do to the math
Term length also changes the value equation. A shorter term costs less per month but expires sooner, a longer term locks in your rate for more years but costs more up front. As an illustrative example, a 35-year-old non-smoking man pays roughly $24 a month for $500,000 of 10-year term, about $36 for 20-year term, and about $61 for 30-year term (median standard rates from four fully underwritten Canadian insurers, Alberta, September 2026). If your need genuinely lasts 25 years, a 20-year term that expires early can leave a gap at the worst possible time, when you're older and re-buying is far more expensive. Matching term length to the actual need, not just the lowest monthly number, is part of what makes a policy worth it.
The "peace of mind" factor is real, but not the whole story
Some of the value of life insurance isn't in the spreadsheet at all. Knowing your family wouldn't be forced to sell the house or change schools if something happened to you has a value that's hard to put a number on. That said, we don't think peace of mind alone justifies overpaying. The honest version of "worth it" combines both: a policy sized to an actual financial gap, at a price that reflects your real risk, bought while you're young enough that it's still cheap.
What to do next
If the value case makes sense for your situation, read life insurance 101 for how the buying process actually works, then get a quote to see real pricing for your age and health.
FAQ
Is life insurance a waste of money if I never make a claim?
It's the same logic as home or car insurance, you're paying for protection against a bad outcome, not for a guaranteed payout. If you never need it, that's the good outcome, not a wasted purchase.
Is permanent life insurance worth it compared to term?
For most people covering a mortgage or income-replacement need, term is worth it because it's far cheaper for the same death benefit. Permanent life insurance can be worth it for specific estate-planning or lifelong-dependent situations, but it's a different tool for a different job.
Philip Setter has been a licensed life insurance advisor since 2014 and founded Affinity Life in 2020. He's a climber, ice climber and ski tourer based in Calgary.