Compare Life Insurance Quotes in Canada
Life may be complicated—and buying life insurance no exception, says Faisa Stafford, CEO and president of Life Happens, an industry-funded nonprofit that educates consumers about insurance. There are so many options that it’s hard to know what to get. “It can be extremely confusing,” she says.
Searching for insurance? It can be hard to know which companies have your interests at heart. Evaluate your options & speak to an advisor today.
Thinking about what will happen after you pass on may seem morbid, but imagine what it can do for those you leave behind. Have you prepared for your family’s financial security after your death? It is doubly essential if you have family members or loved ones who depend on you financially.
Life insurance may provide the solution. But similar to any other financial decision, you must understand what you are buying, whether you need it and determine whether it matches your situation.
Get the Best Life Insurance Rates in Canada
The law doesn’t mandate life insurance, so it could quickly feel like an unnecessary expense. But do you know that life insurance coverage can be affordable and financially support your loved ones when you pass on? Now that life insurance providers can offer quotes over the phone or online, it has never been easier to find the best rates to fit your needs.
Types of Life Insurance
Term Life Insurance
Term life insurance protects you for a certain period, typically 10 or 20 years. If you pass on within the term period, your death benefit is given to your beneficiaries. If the plan expires before you die, your policy closes, and you won’t receive any more protection. You may also convert term life insurance to permanent life insurance without providing lots of information.
Permanent Life Insurance
Permanent life insurance has no expiration date. It covers your whole life. You’ll continue having life insurance as long as you continue paying your premiums. There are no limitations or guidelines on how your beneficiaries can use your death benefit. Like other insurance types, your policy’s fine print depends on your provider and the plan you purchase.
Universal Life Insurance
Universal life insurance lasts for your whole life, provided you meet your premium obligations. This type of life insurance combines the advantages of a lifelong policy with an investment component. You pick a guaranteed death benefit that your beneficiaries will get while any payments made above the insurance cost earn some tax-preferred interest.
Participating Life Insurance
Participating life insurance is a form of permanent life insurance for which the premiums you pay go into a participating account. The insurance provider’s investment team manages your account, investing to increase the amount and potentially pay you some dividends. You may use the dividends to reduce your yearly premium, purchase more coverage or earn interest some interest inside the plan. Dividends are, however, not guaranteed.
Benefits of Life Insurance
Peace of Mind
Life insurance gives you the ultimate peace of mind. This is because you know that your family and loved ones will have a financial safety net if you die. Besides, any debts you carry to your death will be taken care of with the right policy.
Wealth Creation
Some life insurance plans also give you a chance for wealth creation. Besides life coverage, life insurance policies may invest a portion of your premium in various investment classes to provide risk-adjusted returns.
Completes Your Financial Plan
Many people save for retirement by buying an asset they can sell later for a profit, invest in an RRSP or TFSA, or put money in an interest-bearing account. Buying life insurance should complement your financial plan since many other investing tactics won’t bear fruits until you’re older.
Relatively Cheap
Depending on the amount of coverage you want and your age when applying, you could pay a little less than $20 per month in premiums. You may lower your term length and coverage amount to get even lower rates that match your budget.
Frequently Asked Questions
How Much Life Insurance Do I Need?
Figuring the amount of life insurance you need can be quite tricky. However, you should think about it in two terms:
- How much money do I intend to provide for the future, and how long?
- What will those I leave behind need to meet immediate expenses?
Most industry experts recommend carrying 8-12x your annual income in life insurance coverage. However, a more granular approach may be ideal while considering your ongoing financial commitments and debt.
How Does Life Insurance Work?
Life insurance is a contractual agreement between you and an insurance provider. You’re obliged to pay monthly premiums to the insurance carrier. In return, your insurance company will pay a lump sum or death benefit to your beneficiaries when you pass on. Your beneficiaries, at their discretion, get to decide how to use the money they receive.
Is Life Insurance Taxable?
Generally, life insurance isn’t subject to taxation since it is usually disbursed tax-free to beneficiaries. But there are a few exceptions. Instances when taxes come into play include:
- When you choose to receive your death benefit in an incremental payout
- When you don’t appoint a beneficiary to your policy
- When you hold a cash value life insurance policy
- When you use your policy as a loan collateral
- When you sell the rights of a life policy to a third party
Do I Need Life Insurance?
If you carry shared debts or have people who rely on your income for financial well-being, you need life insurance coverage. You’re a likely candidate for life insurance if you are a parent, student, spouse or entrepreneur.
Can a Life Insurance Policy Expire?
Term life insurance protects you for a specific period, from 5 years to 30 years, with companies providing policies in increments of 5 or 10 years. Once your period lapses, your policy will expire. However, insurance companies give you the option to continue coverage at a higher premium. Death benefits are only paid if you die during the policy period.
Can I Borrow from My Life Insurance Policy?
Yes, but only against a permanent life insurance policy. Permanent life insurance accrued a cash value the longer you live, and after a certain period, you can take out a loan from your provider. These loans are usually borrowed against your death benefit, where the insurance carrier uses your policy as collateral. Insurers add interest to the balance, which accrues whether you make monthly payments or not.
