Life Insurance

Q.1. What is life insurance?

Life insurance is a legal contract that spells out how much money an insurance company will pay your beneficiaries on your death. It also spells out how much you will pay each month and how long you will be insured. Your personal situation will help you to determine if you need life insurance, and the value of that insurance to meet your needs. There are two basic types of life insurance available to Canadian consumers – term life insurance which covers you for a specific period of time and permanent life insurance which covers you as long as you live.

Q.2. How much does it cost?

The cost of life insurance varies depending upon such things as: whether it is permanent life insurance which costs more than term insurance but offers special benefits; the amount of the coverage; whether or not you are a member of a group plan whether it is at work or through associations such as the Canadian Automobile Association (CAA) or the Canadian Association of Retired Persons (CARP); and any extra benefits that you may add to the policy.

Q.3. How do I choose what is right for me?

The first thing to do is to make certain that the insurance you are getting suits your Canadian life situation. There are many different types of life insurance – such as the basic term and permanent, as well as more detailed types such as whole life and universal insurance. Buy only what you need and buy from a licensed insurance agency.

Q.4. What are the steps in buying life insurance?

Before you contact any insurance company or institution try to have a clear sense of your needs and wants. Once you have determined the scope of your insurance needs contact various licensed insurance companies or agents and compare their policies. Only then should you take out a policy. The company will require you to complete various forms including some medical checks and statements.

Q.5. As my needs and responsibilities change what should I do?

We go through many stages during our lives and our needs change as a result. This is true of our life insurance needs as well. Getting married, having children, retiring, divorcing, and deaths of partners or spouses all change our circumstances and our needs. Take care to ensure that your current policy reflects those changing needs and desires.