If you want to be prepared for the unexpected, you must have life insurance. No one out there likes to think about their mortality, however, in case something bad happens, it’s important to have a financial plan.
And when it happens, the beneficiaries of your life insurance policy will be very glad you had the foresight to purchase one. But here’s the problem, it’s estimated that around 90% of Canadians are underinsured.
For some, the price of life insurance is the main barrier to entry. After all, is there anyone who wants to pay cash for something you hope you never have to use? But the truth is, good life insurance won’t empty out your pockets.
Depending on your situation, you can get a life insurance policy for less than $100 per year. And if you compare rates from different companies, you’re sure to find a policy that fits your budget and coverage requirements.
Here are a couple of easy tips to help you find a cheap life insurance policy that meets your needs.
Assessing Your Financial Situation
The first step is to assess your financial situation.
Meaning you need to calculate how much money your loved ones would need if you were to die suddenly. To do this, add up all your debts and final expenses, like your outstanding bills.
Then, calculate how much your household members would need to maintain their lifestyle. That includes mortgage payments, childcare costs, and college tuition.
Once you know how much money your loved ones would need if you died, you can start shopping for a life insurance policy that meets those needs.
Knowing How Much Coverage You Need
Next thing you need to determine: how much coverage you need.
That’s usually calculated by multiplying your total debt by 10. So, if you have $50,000 in debt, you would need a life insurance policy with a death benefit of at least $500,000.
Similarly, if you have a $200,000 mortgage and $30,000 in credit card debt, you would need a life insurance policy with a death benefit of at least $2.3 million.
Choosing the Type of Life Insurance Policy
When Canadians look at life insurance, there are two types they can choose from: term life insurance and whole life insurance.
Term is the most affordable insurance option, and it covers you for 10, 20, or 30 years.Whole insurance, on the other hand, is more expensive, but it covers your entire life.
Most experts recommend term life insurance because it’s more affordable and allows you to choose how long you need coverage.
Comparing Companies for Cheapest Rates
Now that you know how much coverage you need, it’s time to compare rates from different companies.
There are a couple of ways you can do this. The first is to go online and use an insurance comparison website, such as LowestRates.ca.
With this option, you enter your information once, and the site does all the heavylifting for you.
The second way to compare rates is to contact each company directly and get a quote. That can be time-consuming, but it’s a good way to understand how each company works.
You can also try working with an independent insurance broker with several companies. That way, you only have to provide your information once, and the broker will do the work of shopping around for you.
Preparing to Answer Lots of Questions
Once you’ve found a few companies that offer the coverage you need, it’s time to start the application process. How the application process works will vary from company to company, however, you can expect to answer many questions about your health, lifestyle, and work.
The insurance company will also order a medical exam, which is usually done at your home or office. Some of the questions you can expect to answer, include the following:
- How often do you see a doctor?
- Do you have any chronic health conditions?
- Do you have any family history of health problems?
- Do you smoke cigarettes or use other tobacco products?
- What are your height and weight?
- What is your annual income?
- What is your job?
- Do you have any risky hobbies?
- What is your credit score?
Being Honest on Your Application
Although this should go without saying, being careful not to omit or falsify any information on your application is a must. In the past, while personal information wasn’t so widely-available, many people lied on their applications to get a cheaper rate.
Nowadays, insurance companies have access to a lot of information, and they will catch any discrepancies between what you say on your application and what they can find on their own.
They can get information about you by accessing medical records, ordering a credit report, or simply doing an internet search.
Some insurance companies even use 3rd-party services to verify the information on your application. If you’re caught lying on your application, your policy could be voided, and you could find yourself in hot water.
Locking In Temporary Coverage
Once you’ve submitted your application, you’ll likely be given a temporary life insurance policy with a death benefit that’s a fraction of the coverage you applied for.
That is called a “contingent policy,” and it’s designed to protect the insurance company if the worst happens to you before your actual policy is approved.
To get the coverage you applied for; you’ll need to pass the medical exam and be approved by the insurance company.
The Process of Finding a Cheap Insurance Policy Can be Easy
During the application process, it’s important to be honest, compare rates from different companies, and understand the coverage you’re getting.
If you do all that, you can rest knowing you’re getting the best deal possible on a policy that meets all of your need.
Don’t let the process overwhelm you; with a little research and preparation, you can find a cheap insurance policy that meets your criteria. We can also help, you can reach out to us any time by letting us know that you want a call from us.
