Life insurance is so important to the well-being of your loved ones in the event of your passing. In fact, a quality life insurance policy could determine whether your family succeeds or fails financially. Fortunately, Canadians have a wealth of options, thanks to the estimated 90 active life insurance companies in the country. Based on health, family history, occupation, and age, life insurance policies are typically available to those under age 80. The average policy size in Canada is $334,200.
The details on life insurance policies are a little fuzzy for many, so we’re going to break down the basics. If you’re getting ready to compare life insurance quotes, read this first. The more you know, the better equipped you’ll be to make a decision.
Who Benefits from Life Insurance?
If I die, what would I need money for? It’s a common question, but a misguided one. Life insurance isn’t for you. You won’t need the money, but your family, business, or favorite charity might. The best life insurance policies help you prepare so that they won’t be left in the cold.
What Are My Life Insurance Options?
Basically, there are two major ones.
- Term life insurance provides coverage at a fixed rate of payment for only a limited time. The idea is that you’re only covered for as long as you have dependents (i.e., children in the house).
- Whole life insurance remains in force for the insured’s entire life and requires yearly payment of premiums.
Where Should I Buy?
Right now, 90% of life insurance policies are sold in the home, though a growing seven-10% are sold online. Working with a company representative or an independent broker is up to you. No matter who you choose, make sure you get the customer service and help you need to choose the best policy.
When Should I Buy?
If you buy a term life insurance policy, there’s no penalty to committing right away. Just as you can refinance a mortgage at a lower interest rates, life insurance policyholders can cancel their policies at any time to replace them with less expensive equivalents, as long as their health remains stable.
Why Is Life Insurance Important?
Life insurance makes it possible for your family to meet the obligations that become due upon your death, allowing them to complete what you can’t finish. It’s also not taxable income, though that doesn’t mean that it should be your sole investment strategy.
How Much Should I Put Into My Policy?
A good rule of thumb is to ask yourself this question: “If someone wrote me a check today for the amount my your insurance policy, would I work for them for the rest of my life at no pay?” If your gut answer is “no”, you probably should get a better policy.
Fully understanding the purpose and policies related to life insurance is an important first step to comparing quotes. Remember that your agent or representative should be able to help you with any additional questions. Use your resources and do your research if you’re serious about finding the best possible option.
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