Tips For Buying Life Insurance For The First Time in Canada

Tips For Buying Life Insurance For The First Time in Canada

Tips For Buying Life Insurance For The First Time in Canada
Reading Time: 5 mins

Life insurance is one of the most important things you can buy for peace of mind. Life is unexpected, and accidents can happen no matter how healthy you are. If the worst should happen and you were to pass away unexpectedly without life insurance, then your loved ones could be in a very bad financial situation for years to come. 

Purchasing a life insurance policy guarantees that your loved ones are financially taken care of in the event of your death. However, buying life insurance can at times be complicated, especially if it’s your first time taking out a policy.

In this article, we will explain the steps you should take to purchase your first life insurance policy so you can be sure you are getting the right coverage for your family.

Keep reading to learn: 

  • What you need to know before purchasing life insurance 
  • The different types of life insurance policies
  • The factors that affect your life insurance rate
  • How to find the right life insurance company
  • And much more

Examine Your Current Financial Situation

The first thing you need to do when thinking about life insurance coverage is to examine your current financial situation to determine what monthly life insurance payment you can afford This is very important because if you miss any of your scheduled payments, then your policy might not pay out upon your passing, meaning that everything you paid into the policy will have been for nothing. 

Assess How Much Coverage You Need

The next step is to figure out how much coverage you need from your life insurance policy. In other words, you need to calculate exactly how much money your family will need in order to cover your funeral expenses, end-of-life costs, and their own living expenses after you pass away. 

Some people only purchase basic life insurance policies, which cover the cost of a burial and a few months’ worth of living expenses for their loved ones. On the other hand, some life insurance policies pay out millions of dollars, ensuring that the beneficiaries will be able to live comfortably for the rest of their lives.

Of course, everyone wants their loved ones to have millions of dollars worth of coverage, but there is an obvious trade-off that occurs here: the more coverage you have, the more money you’ll pay for your policy premium each month. The goal is to strike the perfect balance between what you can afford to pay out each month and how much coverage you can provide to your loved ones. 

Also, consider whether or not you have life insurance coverage through your employer. If you have life insurance benefits through your employer, then you may not need to purchase life insurance coverage at all, or you may only need to purchase a smaller policy to provide the difference between what your employer-based life insurance policy covers and the needs of your family in the event of your passing. However, if you don’t have life insurance through your employer, then you’ll definitely want to get a larger policy to ensure that your family is taken care of. 

Choose a Life Insurance Policy Type

Now that you’ve determined how much money you can afford to pay each month for life insurance and how much coverage you need from your policy, the next step is to choose a life insurance policy type. 

The two main types of life insurance policies are term life insurance and permanent life insurance. Let’s briefly go over each type now so that you can understand each of them and select the one that’s right for you. 

Term life insurance is essentially temporary coverage that insures your loved ones for a certain amount of time. Typically, term life insurance covers your family until you reach a certain age or until a set number of years pass. Term insurance is good to have if you expect to have sufficient funds in retirement to provide for your family after your passing, and if you don’t want to pay into your life insurance policy until you pass away. 

Permanent life insurance, as the name suggests, is permanent, meaning that you’ll pay into it for the rest of your life, and whenever you die, whether that be tomorrow or when you’re 120, the policy will pay out the amount you’re covered for. Permanent life insurance policies provide the most peace of mind because they allow you to know for certain that your family will be covered whenever your time is up. However, the drawback to permanent life insurance is that you will be paying into it for the rest of your life, no matter what. 

So, carefully consider both options and decide whether you need a term policy that will cover you for a limited amount of time, or if you need permanent life insurance that will cover you until the very end. Once you’ve made your decision, you can move on to the next step, which is shopping around for a policy. 

Understand What Affects Your Life Insurance Rate

Life insurance policies are not all created equally, and there are a number of factors that can affect how much you pay for your life insurance coverage. In some cases, you may not even be able to buy life insurance, so let’s go over these factors now. 

The two main factors determining your eligibility for life insurance coverage and the amount of your policy premium are your age and your health. Younger people tend to pay much less because they are perceived as being less risky to insure. That said, some younger people pay a fortune for life insurance because they have hazardous jobs, but, generally speaking, the younger you are, the lower your policy premium will be. 

As mentioned, the second factor is your health: if you have factors that the insurance company perceives as making an early death more likely, your coverage will be more expensive. For example, smokers pay considerably more for life insurance than non-smokers. However, you should never lie about your health when purchasing a life insurance policy, because the life insurance company will certainly contact the coroner for an autopsy report when you pass away, and if you lied when you took out the coverage, then the insurance company will not pay out the benefit, and you will have paid into your policy for nothing. 

People with pre-existing conditions also need to disclose that information to their life insurance provider; failure to do so can, again, result in the insurance company not paying. People with terminal illnesses will not be able to purchase life insurance policies because they are already dying.

Find the Right Company

Make sure you shop around for not only policy types, but also different providers. Keep in mind everything that we’ve gone over in this article, including how much you can afford for monthly premiums, how much coverage you need, what type of life insurance policy you need, and whether the company offers the flexibility to convert term coverage into permanent coverage. Once you find a policy that checks all of these boxes, you can confidently sign up for life insurance. 

Conclusion and Recommendation

Life insurance is one of the best things you can buy for your family. Life is short, strange, and mysterious; no matter how healthy you might be today, that can change unexpectedly, and by having a good life insurance policy, you can ensure that your family will be well taken care of in the event of your passing. If you don’t already have life insurance, we highly recommend that you get a policy as soon as possible .


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