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Life Insurance in Canada: Things you need to know

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Everyone has their own way of dealing with money. However, they would certainly like to have their living standards and health guaranteed by a life insurance policy. Especially in the new norms after the Covid-19 pandemic, the demand to protect people’s health and reduce financial burden becomes more fundamental. Therefore, life insurance is getting increasingly critical in Canadians’ lives. This article will help provide some helpful information you need to know about life insurance in Canada.

How to exactly understand life insurance?

When you buy Canada life insurance from any Canadian insurance company (e.g., Sunlife, Manulife), you will get a life insurance policy. If you, unfortunately, pass away, this life insurance will provide the beneficiaries with an agreed amount of money. Just imagine, one day, you are no longer in this world; who will take care of your children? Who will help your parents overcome difficulties? Life insurance is the best answer to clear all your worries in no time.

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What kind of life insurance Canada has to offer?

Usually, life insurance in Canada is divided into two common types: “term life insurance and “permanent life insurance.” Depending on your needs, conditions, and income, you can choose the most suitable one. Here, we will share some information about those types for you to make better decisions:

  • Term life insurance: when you enter a term life insurance policy, the insurance company will provide you with a term life insurance policy – coverage for you in a fixed period of time. If the insured dies within this period, the insurance company will pay the face amount to the beneficiaries. When the contract of term life insurance expires, the insured may continue to enter another contract or not, depending on your choice. Besides that, the period time of this type typically lasts 10 years, 20 years, or more. 
  • Permanent life insurance: In contrast to term life insurance, a permanent life insurance policy provides you with an insurance policy for your whole life. And when you die, the beneficiaries receive money from the contract. Because the time for insurance is longer, the premiums of permanent life insurance are more expensive than those of term life insurance. 

In addition to those two types, insurance companies in Canada also offer: “universal life insurance or “term-to-100″ (meaning the premiums will be paid until you are 100 years old). Depending on the characteristics of each type of insurance, the insurance company will ask you to pay the premiums. 

Reputable life insurance companies in Canada

Services for Life Insurance in Canada are growing at an exponential rate. In Canada, you can choose to purchase life insurance from top reputable insurance companies. In the Companies that offer the Best Life Insurance Canada article, we introduced some of them, who can sell you the best life insurance in Canada, for your reference: 

In this list, Manulife is at the top of the rank with total assets of 809.130 C$bn (12/31/2019). If you wish to get a more profound insight into their operations and insurance product quotes, you can contact them on their websites, or via a trusted insurance broker in Canada

How to choose a suitable Canada life insurance policy for yourself?

First, you must determine whether you want to own life insurance or not. If the answer is: “Yes, I do,” you should consider the following matters:

  • Finding many different life insurance companies and selecting the most suitable
  • Exploiting all the essential information in the best way from your life insurance consultant, broker
  • Considering between term life insurance and permanent life insurance based on some elements:
  1. Your financial conditions in the present: For low-income people, term life insurance may be a better choice. But if your family has good financial conditions, we encourage you to buy permanent life insurance. 
  2. Your family’s situation: If you are the breadwinner of your family, life insurance will become more necessary. Sometimes, the number of your family members will influence your decision of which life insurance policy is more beneficial. 
  3. Your age and health status: An essential piece of advice is to join life insurance as soon as possible because the better your health and the lower your age, the lower your premiums. Insurance costs are higher as you get older because the higher your age, the higher the potential risks to your health.
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When you join a life insurance policy, you will receive benefits to protect your life and support your beneficiaries – now and then. Life insurance can be seen as an investment for the future, and you should not ignore it. In the recent period, the wave of the Covid-19 pandemic makes the insurance market in Canada more vibrant, so the choice of buying an insurance package is more imperative than ever. Hopefully, through this article, you will understand more about life insurance Canada offers, and you can find out the most satisfying choice for yourself.

If Vancouver is your home in Canada, don’t forget to also check out our “Life Insurance in Canada” article.

To get quotes for the best life insurance in Canada, feel free to contact us via this link or call us at +1-877-611-6722, via email – hello@bestinsuranceonline.ca or the chat bubble in the right corner.

Frequently Asked Question

Do I need Life Insurance?

This type of insurance protects both you and your beloved ones from the monetary loss resulting from your unexpected death. There can be multiple financial needs your family might encounter, such as:
– Expenses for burial and cremation, fees for lawyers, and other relevant taxes
– Looking after your remaining mortgages
– Replacing your lost income
– Paying off big, previous loans that you or your family took
– Covering your children’s education
And most importantly, life insurance ensures that your family has an emergency fund to help them through the tough time.

How valuable my life insurance policy should be?

As mentioned above, you should consider buying a big enough coverage for all your family’s relevant needs. You can use this Insurance Quotes Calculator at your own pace and at the comfort of your home to figure out what your life is worth.
Another way is to look for insurance advisors, brokers for the best life insurance Canada. They will be willing to inform you of your options and help you with the purchasing process.

In what situation should I not get life insurance yet?

If you are not married and do not have any dependents or debts, you don’t need to think about life insurance. Also, the same goes for when you are sure that you have adequate savings and assets to take care of your funeral expenses and leave behind for your beneficiaries.
Your family should also be considered. In the case of your sudden death, should they be financially supported to pay for future education, funerals, and daily expenses, and of course, they have no debts or mortgages, both you and your family do not need this kind of insurance.

What won’t life insurance cover for me?

There are some circumstances when your beneficiaries cannot collect benefits from your life insurance.
First, if you participate in high-risk activities, either for recreation or professional reasons, your insurance policy can withdraw payments. Some sports such as scuba diving, hang gliding, racing, flying on planes, rock, and mountain climbing may not be covered. Specific jobs (e.g., logging, aviation, offshore fishing and oil rigging, underground mining) are also considered highly risky.
Secondly, if your family murders you, then they cannot receive life insurance payments either. In this case, your contingent beneficiaries or your estate will receive the payouts from the insurance provider.
The final reason for no coverage is suicide but during the policy’s first two years. To illustrate, if you die from a drug overdose in these two years and the insurer can prove that you do this to claim death benefits, then the company will refuse to pay.

Will my family be taxed when they receive the insurance benefits?

Even though most of the time, the beneficiaries do not have to pay tax for the policy, there can be exceptions (e.g., business planning related).
If your family receives a lump sum, then the benefits are not taxable. But otherwise, the interest coming with the money left in the insurance company can be considered taxable income. Specifically, your beneficiaries should include both lifetime and installment payments in their income reports.

What happens if I outlive my term life policy?

You have four alternatives when your term life insurance policy expires.
* Renew the same policy: if your health is suffering, renewal is a rather viable choice. But of course, the rates will be much higher since you are a higher-risk policyholder. Also, when you are closer to the end of your life, the insurer will increase the premiums.
* Buy a new one: on the other hand, if you are young and fit, this is a wiser alternative. The insurance company will require some medical checks to ensure that you are not substantial risk so that they don’t have to pay out earlier than they need to.
* Switch to permanent life policy: the good thing is that you will not have to undergo all the application processes again. This policy allows you to increase cash value in your insurance account and withdraw money out for your family. However, note that changing to another type of policy is not cheap, and some companies can deny your requests.
* Stop life insurance altogether: this is, of course, an option for people who cannot afford or don’t want to renew or buy new policies. If you know that you have saved enough money for your family to pay all the expenses, then you can consider dropping it. It is not the most reasonable alternative out there since you have spent money on term life insurance already, but it is there as a last resort.

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