Life insurance in Canada is a multimillion industry, as statistics show that more than 22 million Canadians have life insurance. This protects nearly $4.3 trillion in assets.
Buying life insurance is one of the greatest financial decisions you can make. Lots of people pass on prematurely every year due to accidents and illnesses. This brings devastating consequences to the family left, especially if it happens to the sole breadwinner.
The least you can do, therefore, is to buy life insurance to secure the future of your loved ones. In this blog, we will shed light on how to buy life insurance. We will also discuss what you should look out for in the best life insurance.
Why is Life Insurance Important?
Life insurance secures the future life of your loved ones when you are gone. If you love your family and don't want to let them down, get life insurance.
The insurance compensates for the lost income, pays your children fees, and much more. It also deals with any outstanding home and personal loans to keep your family free from debts.
A life insurance offers a diverse investment option. It helps you to achieve your long term financial Goals. Also, it acts a supplement for your retirement plans.
Who wouldn't like to have life lasting savings anyway? A proper insurance plan guarantees a regular monthly stream of income.
Finally, life insurance gives you peace of mind. In the face of a tragedy, the financial safety of your dear ones won't be interrupted.
Things to Look Out for in the Best Life Insurance Policy
1. Premiums
Life insurance policies offer two main types of premiums: the steeped and the level premiums.
If you choose the steeped premiums, the cost of the payments will keep on increasing as you get older.
On the other hand, level premiums don't change with time, but they are expensive at the beginning. Although the level premium doesn't go up, the premiums may increase due to price adjustments or inflation. Be sure to choose the one which fits your specific needs.
2. Benefit Indexation
Generally, life insurance lasts until the insured turns 65 years old. If you get it at a relatively younger age such as 30, then it can last for decades. For this reason, you should consider inflation when taking the policy.
Benefit indexation means that your cover will provide adequate coverage, whether you make a claim 30 years down the track or during the first year. The best life insurance should have the benefit indexation option.
3. Advance Benefit Payment
It's hard to manage someone's funeral expenses due to the costs involved. If you hadn't planned for it well, your family might suffer when looking for a proper send-off lump sum.
As such, the best life insurance should offer an advanced payment option. The option means that your family will get money immediately after your death so that they can arrange for your funeral.
4. A Cooling off Period
All insurance products should have a cooling off period. During this period, you can change your mind about life insurance. If you decide to cancel the policy during that period, you should get a refund of all the payments including the premiums that you have paid.
Generally, the cooling period ranges between 14 and 30 days long. The best life insurance policy should have a well-defined cooling off period.
5. Adjustment to the Sum Insured
No one can predict the future. Anything can change, and either increase or decrease your income. Such impacts can change your standards of living, making it necessary to adjust the insurance cover.
The option should be flexible enough to cover the changing circumstances such as divorce, spouse death, and much more. The best insurance coverage should allow you to change your premiums
6. Trauma, TPD, and Children's Cover
There are several cover options that you should purchase on their own, although they are bundled on the life insurance cover. These include total and permanent disability, children, and funeral covers.
A total or permanent insurance covers your medical costs when you are injured and can't attend your daily work.
A trauma cover gives you a lump sum payment in case you wind up with sudden serious illnesses. The common diseases covered by the trauma cover are cancer, stroke, and heart attack.
Funeral cover- this is explicitly designed to cover funeral costs. It is a cheaper alternative to the full life insurance cover. If you purchase it besides the comprehensive insurance cover, you will get an advance payment benefit.
Children's cover- this is something that no one would like to think about. However, the cover pays you a lump sum when one of your children dies, gets injured or ill. It helps you to cover their funeral and medical costs.
The best life insurance cover should be bundled with all these options. The flexibility allows you to cope with the unavoidable circumstances which happen around you, instead of focusing on death alone.
How to Buy Life Insurance
Before you start the life insurance process, understand your needs, and get quotes. Life insurance is a lifetime activity which requires a lot of dedication. So, sit down and think about your goals. Once you are sure that you need the cover, follow the following steps:
1. Choose a Life Insurance Company
Carry out a detailed search to find the insurance firms which offer the life insurance policy. The best search is through the internet as it provides a variety of affordable choices.
Compare premiums offered and go through the fine prints. Also, look for the company which provides a right balance between coverage and affordability.
Go for a local or national service provider. But, ensure that the one you select is experienced and can be relied upon for the provision of excellent long-term services. This will help you in securing the best deals in the market as well as quality service.
If possible, contact the insurance company to gauge their customer care services. The best communication platforms include social media pages, their websites, emails, or even over the phone.
Apart from an insurance company, you can also work with an insurance agent. The broker should be experienced and affordable. Insurance agents are compensated in various ways, although most of them earn through commissions.
2. Apply
Begin the application process right away once you get the right broker or insurance company. The company will give you an application form to fill your details. You will also answer several questions regarding your family's background.
Be honest; providing wrong information might cost you the coverage when the insurer finds out the truth.
After the application, the underwriting department will review the application to find out the degree of risk you represent.
In some cases, the insurer can request for a health exam. The main aim of the review is to find out the health status of the insurer to calculate the degree of risk.
The costs for the medical exam are catered for by the insurance company, and the medical professional can collect the samples from your home.
Some chronic illnesses such as heart disease, diabetes, and cancer can disqualify you from getting approved. Also, a smoking or heavy drinking habit can also either disqualify you or cost you more premiums.
3. Submit Your Application
Time spent between submitting the application and having the policy approved varies between organizations. However, keep in mind that you will need to submit your first premium alongside the application form.
Just like any other application, you can either get a positive or negative response. You can get the approval decision as coverage or as an offer. If you have excellent health and age, get lower premiums.
Unfortunately, your application can be declined. In that case, your insurance broker will contact you to inform you about the decline. They will also send you a written document explaining why the application was not approved.
This is not the end. You can still apply in other companies, or rectify the mistakes and reapply again.
4. Accept the Policy
If your application is approved, you will get a notification from your insurance agent. Your insurer will also direct you on the way forward.
Don’t Wait! Apply for Your Life Insurance Today
A life insurance policy is essential to everyone, especially when you have a family. Luckily, it's easy to find the right cover and insurer as we have a vast range of choice in the market.
This is the perfect time to start thinking about it. Don’t wait until you get sick to apply, since the application may be rejected. Plan well, research more on how to buy life insurance, and begin the application process.
You will be surprised by the peace of mind that a good life insurance policy will give you.
Check out our blog for more up to date and informative blogs regarding insurance. Our insurance articles cover all types of insurance issues and financial tips. We also offer advice on how to choose the best insurance plans.
