Are you thinking about getting a life insurance policy to protect yourself, your loved ones or your assets? You’re not alone. With the emergence of the COVID-19 pandemic, many Canadians are starting think more about the future and the possible event of a life insurance claim. But where to start? Our article on life insurance basics can help get you started by going through the fundamentals. We have also compiled some information about the different types of life insurance policies, and how to make the right choice when it comes to your policy and finding the right coverage.
Is it good to have life insurance in Canada?
Typically, life insurance is used as a way to pay off a large debt, such as a mortgage on a home, that you want to leave to your beneficiaries. But technically, you do not need life insurance. It’s not required by law in Canada, like car insurance is.
How much life insurance do you need in Canada?
Experts generally recommend purchasing life insurance coverage worth seven to 10 times your annual salary in order to protect your family.
How long after death do you have to collect life insurance?
Life insurance companies pay out the proceeds to your family after you have died and the beneficiary of your policy files a claim. A beneficiary is the person, persons or organizations you name to receive the payout (death benefit) when you die. They should be able to collect the life insurance payout within 30 to 60 days after submitting the completed claim forms and the supporting documents.
Which is the best type of policy to have?
There are several types of life insurance policies to cater to each individual’s personal situation:
- Term life insurance
- Whole life insurance
- Universal life insurance
- Mortgage life insurance
- Group life insurance
Can my life insurance claim be denied?
Insurers deny the death benefit on life insurance claims for reasons of policy delinquency (non-payment), material misrepresentation (inaccurate information on your policy), contestable (questionable) circumstances and documentation failure.
Is life insurance taxable?
No. The good news is that most of the money received from a life insurance policy is not taxable. However, there are fees that accrue tax that will come out of the money left for them. These fees probate fees, estate planning fees and more.
When should I get life insurance?
While many believe timing has to do with your health, the real sign that you may need life insurance is whom you’re leaving behind. Deciding to get life insurance is about leaving money for your loved ones. Do you have dependents whose lifestyles would change should something happen to you? This would include a spouse, children or someone elderly. If yes, then it’s time to get coverage.
How do I know how much life insurance I need?
It depends. The amount of life insurance you need depends on many things, like your income, outstanding debt (like your mortgage), your assets (including savings), number of dependents and more. Speak to one of our isure brokers to help calculate what would be reasonable for your individual circumstances.
Why should I shop for life insurance online?
You could get life insurance from the place where you bank or where you got your mortgage, but it’s worth shopping around for the best rates. That’s where isure steps in. We shop the market for the best life insurance rates to compare products and coverage.
Do I need life insurance if I already have mortgage insurance from my bank?
Mortgage insurance is for your mortgage; life insurance is for protecting more. If you’re unable to pay for your mortgage, the lender is protected with mortgage insurance. But that doesn’t help replace missed income or help your loved ones maintain the lifestyle they once had when you’re gone. The two types of insurance aren’t interchangeable, and it’s good to know that.
Do I really need to do a health exam to get life insurance?
It’s your choice. No-medical life insurance is available in Canada. But it is worth knowing that these types of policies can cost more than ones that require medical. With that said, it’s worth asking about how COVID-19 has affected testing, as you’re going through the process. You may find out that the medical exam isn’t as rigorous as you might expect.
How does life insurance work if you don’t die before the end of the policy?
If your policy expires and you have not, then everything you paid into that policy is gone forever, unless you have a whole or permanent policy. However, term life insurance policies do have an end date. Most life insurance companies offer the option to convert your policy to a permanent one before expiry, which is a good option if you want access to some of that cash.
Can I cancel my life insurance policy early?
You have more options if you decide to cancel a permanent life insurance policy. There are some permanent policies whose features will pay out an amount, known as the ‘cash value’, if a policy is cancelled early. Additionally, if extra amounts are paid into your investment portion of a permanent policy, some or all of that investment would be paid to the policy owner when cancelled.
What if I am self-employed or my coverage at work isn’t enough?
If you are self-employed, or if your group benefits from your employer are no longer enough to serve your needs, you have options. Whether you pay for your policy or your company does, always ensure that it includes short term and/or long term disability. If you didn’t ask about it when signing your employment contract, it’s not too late to ask the HR department. Critical illness is another type of coverage to consider. It offers you a single payment if you are diagnosed with a condition or disease, such as cancer, multiple sclerosis or paralysis.
No two people are the same, therefore neither is their insurance coverage needs. Be sure to take stock of your situation and assess how much coverage you may need. Check out the different types of life insurance available to you, and be sure to contact one of our isure representatives to assist you in choosing a policy that promises ample financial security to those who love you.