Do you need clarification on who is who and what is what regarding heirs and beneficiaries? Maybe you’re unsure whether to add your life insurance to the assets under your will or not.

The legal jargon can certainly spin anyone’s head, especially if they’re planning their estate for the first time. However, this guide will make everything as clear as day; read it till the end to understand the difference between life insurance and will.

Main Differences Between Life Insurance & A Will:

Life insurance and will are integral parts of a lifelong financial plan to protect your loved ones after you’re not around. If you have a husband/wife and/or children, it is imperative that you have both a policy and will in place. While both of them ultimately benefit your loved ones, there are critical differences between both; let’s discuss them below:

Life Insurance:

  • If you pass away, your assigned beneficiary will be provided with a lump sum of money, whether your spouse, children, or someone else. They are free to use that money for anything they want, as it will not be administered via your estate unless it’s under the assets included in your will.
  • The money assigned to your beneficiaries through the life insurance policy will be provided to them quickly. However, if the money is processed through your estate (if the policy is in the will’s assets), it will take much longer to land in the assigned beneficiary’s bank account.
  • You cannot choose the guardians in an insurance policy. The money will only be given to the beneficiary, so if you’ve purchased the policy for your children, your wife can be the beneficiary. However, since you cannot name minor children as the beneficiaries of the policy, things will get complicated if both you and your spouse pass away for any reason.
  • You can pay for a charity with a life insurance policy in three ways; taking out a policy in the charity’s name, transferring the existing policy’s ownership to it, or naming the charity as your existing policy’s beneficiary.


  • If you pass away, besides the money you have, other assets like property, jewelry, investments, vehicles, etc., will also be given to the people you’ve assigned them to in your will. This is not the case with insurance policies; they are limited to only a lump sum.
  • There are some moving parts associated with the execution. While an insurance policy is given to the beneficiaries after the owner’s death, a Will must be filed in court by whoever has it – typically the heir or executor. Because of this, it can take some time, even months, before the assets are given to their beneficiaries listed in the will.
  • Unlike an insurance policy, where the money is directly given to the beneficiaries, you can assign guardians in your will if your assets need to go to a minor. You can put the people you trust as the guardians of the children until they’re old enough to claim the assets you left for them.
  • You can also donate your assets to a charity using your will, called Planned Giving. Here, you can name any charitable organization you like as your beneficiary and list the amount of money or assets (or both) you want to donate. Visit here to learn more about planned giving in Canada.

What Happens If You Pass Away Without a Will?

In the case of a life insurance policy, you already have some beneficiaries listed (a mandatory thing to do). So you know who’ll get what if you suddenly meet your demise. However, what happens if you don’t do estate planning and leave your assets as orphans? Well, then, according to Canadian law, particularly in Ontario, your property will go to:

Spouse (if there are no children)

If you don’t have any children, your estate will go to your legally married spouse. This doesn’t apply to common-law spouses, so they may not get anything.

Spouse & Children:

If you also have children, your spouse will get a preferential share (the share before asset distribution) of up to $350,000, which will increase in 2021 from the previous amount of $200,000. Whatever’s left after that is called the residue. This amount will be divided among the spouse and children (yes, the spouse also gets a share of the residue).

So if there’s one child, he/she and the spouse get half each. If you have more than one child, the spouse receives one-third, and the rest is equally divided among the children.

Children Only: (No Spouse)

If you’ve only got children and no spouse, your children will get an equal share in the estate. If any children died before you, their children (your grandchildren) would get their share.

No Spouse & No Children:

Parents get the entire estate

No Spouse, Children, and Parents:

The estate will be divided between brothers and sisters or their children if your siblings died before you.

No Brothers & Sisters:

The children of your brother and sister (your nieces and nephews) will get equal portions of your estate.

No Nieces & Nephews:

Any other next of kin will get an equal portion of the estate.

No Next of Kin:

The Government will get the estate if you have no next of kin.

Parting Words:

If you want to benefit your loved ones after your demise, estate planning is a must. Make sure to make a will and keep updating it with the addition of people in your life.

As for the insurance policy, it will go straight to the people you’ve listed as beneficiaries. Unlike a will, they don’t have to be your family, relatives, or next of kin – whoever is listed as beneficiary will get the money.

Disclaimer: Different Canadian provinces have different laws, and we’ve provided a general idea of what to expect. Please contact a professional in your area to find out the respective laws.