Why you need Life Insurance in Canada and what you can expect from it.

Life insurance in Canada can help your family and your loved ones to be able to deal with the financial crisis imposed after your death. The death benefits that are provided from a life insurance policy are tax-free, most of the amount that can be used for the following.

  • To maintain the standards of life and living of your family, it will forward your income to them.
  • This income will provide for your children or family.
  • It will pay for funeral expenses.
  • It will pay off your debts.
  • It will make a gift to charity according to your will.
  • If you want to pass this money to your estate or to a trust, it will happen accordingly.

Term life insurance

If a person has term life insurance, your insurance provider will be bound to pay a death benefit if that person dies before he reaches a certain age. The time period of your coverage can be as follows. 

  • If someone dies before the end of the duration period of the policy, your family will be given the death benefit.
  • It can be a time period that is fixed, like a term of 10 or 20 years.
  • Until the time you are a certain age, such as the age of 65.
  • If in case the term ends, the cover from the policy comes to an end too and your beneficiaries will not receive any benefit.

Your insurance company will fix your premiums amount or the fees you have to pay, for the duration of the term. The premiums can be increased if you renew the policy. For example, the premium amount would increase after every five years on the policy renewable.

If you are unable to pay your premiums, then the insurance company has the authority to cancel your policy. Term life insurance policy premiums are cheaper than permanent life insurance policies. 

Life insurance options for couples

When you think of buying life insurance as a couple, you must be aware of what coverage you are already receiving through your services.

If you make a decision to purchase insurance as a couple then ensure you have considered all the options mentioned in the policy. Consider both of its positives as well as negatives mentioned there in the policy.

Joint first-to-die term insurance

  • Each partner should have the same coverage.
  • You have to insure two people under the same one joint policy.
  • Death benefits will be paid to the second partner when the first partner meets an untimely demise.
  • Joint term insurance is less expensive than two single policies.
  • In some cases, it will be less flexible if the couple gets separated or gets divorced.
  • It provides only one death benefit, so in case of the death of one partner, the other partner will have to apply for a new life insurance policy if they want to have coverage.

Permanent life insurance

Lifetime coverage is provided under permanent life insurance. Your family or beneficiary will get financial support through this policy if you die at any time while your insurance policy is active.

A cash value is also attached to Permanent life insurances. This means you will receive a cash amount less that is than the amount you paid as premiums for the insurance costs in case you cancel your life insurance policy.

Your life insurance policy can act as collateral for a loan when you take cash from someone and fail to repay the loan. It deducts that specific amount that will be received by your beneficiary. 

Whole life insurance

This is a plan that covers your whole life. Its premium amount will not increase as you get older. Your policy will also give a guarantee to provide a cash value.

Universal life insurance

Similar to permanent life insurance in many ways, universal life insurance also collaborates life insurance with an investment bank account. The investment bank account under this policy has a cash value. You can withdraw the money and also get loans under this policy. The benefit you receive at death and the cash value may change under-investment account depending on the following. 

  • What types of investments do you choose to use your account for.
  • Return of those investments.
  • Selection of your premiums on the invested amount. You can change the amount of your investments up to a limit mentioned in your insurance policy. 

Naming a beneficiary

The person who has to receive the benefit from your insurance policy upon your death is called your beneficiary. You can choose the name of your spouse or any other family member, friend or charitable trust as beneficiary.

If you choose more than one beneficiary for your life insurance policy, your insurance company will carry out your wishes and divide the benefits of the policy upon your death among them. You may be able to fix different percentages of benefits of your life insurance policy to each beneficiary.

You can change your beneficiary if you wish to at any time. If you select that the beneficiary is irrevocable, you have to take written permission from the irrevocable beneficiary before making the beneficiary change.

Under legal age beneficiary

An administrator or trustee is required if your named beneficiary is under the legal age at the time of your death. This person holds the death benefits on behalf of the minor.

If you don’t choose any trustee or administrator, the benefits from the policy upon your death and any interest it will earn will be held by the province or territory and will be made available to your beneficiary when they reach legal age. You have to consult with your financial advisor or lawyer for a complete understanding of the terms.

Naming your estate as the beneficiary

The estate will give the benefits received from your policy at your death according to the terms you set in your will if you choose your estate as your beneficiary. If it is part of your estate then creditors can claim the death benefits to pay for your debts.

How to name a beneficiary

When you purchase life insurance, it is very important to select a beneficiary who will get death benefits after your death. If you don’t do so, your insurer will select your estate as your beneficiary by default.

What is whole life insurance?

Whole life insurance provides cover for life and an investment or cash value is also associated with your policy. When you pay into your policy over time, it will maintain an investment value.

You can cash-in your whole life insurance policy as a supplement to your income on retirement. Sometimes you can borrow money or take a loan against the whole life insurance policy, keeping it as collateral. This insurance has a higher premium.

What is limited pay whole life insurance?

Limited pay insurance is similar to the former one. However, the term of payment is specified, mostly it is set to 20 or 30 years. After you have paid premiums for the specified time, the life insurance will become guaranteed and you will not have to pay any additional premiums. This policy is costly due to the premiums that are front-loaded.

What is universal life insurance?

Universal life insurance has a long term investment component that is self-directed. You can also be given the option to invest the cash value of your policy so it can be used as a way to save for retirement. If you are an interested investor or estate planner, you might look at universal life insurance as a more alluring option.

What is term-to-100 insurance or term life insurance to age 100?

It is a whole life policy that doesn’t have any cash-out option, it will be paid to your beneficiary after your death only and it makes it a little cheaper. If you continue it to 100 years then you will no longer need to pay any premiums and can get the benefit of coverage.

Cost of Life Insurance

  • Coverage. If you choose the policy which pays out $1-million as death benefit then you will have to pay higher premiums for a policy with $100,000 in coverage.
  • Gender. Premium cost is higher for men than for women in life insurance.
  • Health. If you have any health conditions (you are smoking) that may affect your life, you may be required to undergo a medical exam. It may affect the premiums. It will be higher than for a healthy (non-smoker) person.
  • Policy type. Term insurance is cheaper than permanent insurance.

You have to take a look at your expenses and you have to calculate how much your family or other beneficiaries might need if they no longer had your income on which they rely.

Top life insurance companies in Canada

Manulife Insurance

Manulife is one of the biggest and most well-known insurers in Canada. They have 30 million customers across the world, also one of the oldest insurers founded in 1887. Manulife offers a vital range of health and life insurance policies. 

This company offers Family term life insurance, a family policy that will cover you and your partner too. They offer their customers two separate death benefits and also a discount if you are willing to combine the policies into one.

This insurance company offers a discount when you apply with your spouse! Manulife provides an additional savings of 3% when you choose the same amount and policy coverage and length for you and your spouse. 

Wawanesa Life Insurance

Wawanesa is one of the famous and oldest Insurance companies in Canada. Established in 1896 in Wawanesa, Manitoba is it’s headquarters now.

Wawanesa’s Lifetime term plans offer huge selection options for their customers. Their plans contain 10, 15, 20, 25 and 30 years of policy duration. They also offer the best costs in the market, and most of their customers feel satisfied with Wawanesa’s most affordable options for their budget and lifestyle requirements. 

BMO Insurance

BMO Insurance is one of the largest banks in Canada and also a member of BMO Financial Group. BMO is a good option for life insurance seekers who want life insurance that is owned by a bank.  The cost of insurance is a very important factor to consider while choosing life insurance and BMO has the most competitive prices in the insurance industry. 

Canada Protection Plan

Canada Protection Plan is the leader in providing No Medical Life Insurance in Canada. It means you do not need any extensive medical exams which would be needed with the other insurance companies in Canada. These policies are much more highly-priced than other term life insurance and it will give you an upper limit on the total amount of coverage you can buy. 

Industrial Alliance

Industrial Alliance, founded in 1892, is one of the biggest Life insurance in Canada providers as well as wealth management corporations in Canada. It also operates in the United States.

If you are searching for Life insurance in Canada for a person who smokes, Industrial Alliance can be the insurance provider you want to approach. They offer more competitive prices for people who smoke than other life insurance providers.

Those who smoke, chew tobacco, will be required to pay higher prices for life insurance. Because smoking puts the person at a higher risk of getting a health issue. But IA provides the best rates for people who smoke in the industry.