Purchasing life insurance is one of the biggest financial decisions Canadians can make to protect their loved ones. Though many agents are trustworthy, you must advocate for yourself and ask the right questions to ensure you get the right life insurance policy for your needs and budget.
Our ultimate guide outlines the 25 most important questions to ask your life insurance agent before buying a policy in Canada.
Questions to Ask Your Life Insurance Agent to Research on the Agent
Before even asking about policies, do some background research on the agent you’re considering working with. This helps assess their level of experience and trustworthiness.
What are your credentials and qualifications?
Only work with agents who have proper training and certification in Canada. Look for designations like:
- CLU (Chartered Life Underwriter)
- ChFC (Chartered Financial Consultant)
- CFP (Certified Financial Planner)
These signify the completion of advanced coursework and exams on insurance fundamentals, financial planning, ethics, and Canadian regulations.
How long have you worked in the insurance industry?
Look for an agent with at least 5 years of experience. This ensures they have substantial knowledge and are established professionals. Be wary of brand-new agents.
Can you provide references from current clients?
Speaking to an agent’s past customers gives insights into their service quality, responsiveness, professionalism and trustworthiness.
How often will you contact me after the policy purchase?
Ongoing communication ensures you stay informed on your policy. Look for at least an annual review.
Do you have professional liability insurance?
This protects you if the agent makes an error that causes financial loss. Reputable agents carry E&O coverage.
Questions to Ask Your Life Insurance Agent to Understand Your Canadian Life Insurance Policy Options
With many types of life insurance available, the right questions to ask your life insurance agent help uncover what’s best for your needs and budget in Canada.
What types of life insurance do you offer?
Key policy types include:
- Term life insurance
- Permanent life insurance
- Whole life insurance
- Universal life insurance
- Survivorship life insurance
- Guaranteed issue life insurance
Term life provides temporary coverage, while permanent life offers lifelong protection. Understand the differences to choose what fits your needs.
Popular Life Insurance Policies in Canada:
Policy Type | Description |
Term | Temporary coverage for 10 – 30 years |
Whole Life | Lifelong coverage with cash value |
Universal Life | Flexible permanent coverage |
How do these policies differ regarding cost, coverage duration, cash value, investment components, and guarantees?
- Term life premiums are lower since coverage expires after the term. It only pays if you die during the term.
- Permanent life premiums are higher but remain in effect while you pay premiums. It builds cash value and pays a death benefit whenever you pass away.
- Whole life offers guaranteed death benefits, cash value, and fixed premiums that never increase.
- Universal Life provides flexible premiums and adjustable coverage. Its cash value is invested, so it can fluctuate.
- Survivorship life only pays a benefit when the last insured spouse passes away.
- Guaranteed issue life is available without medical exams but has much higher premiums.
Key Differences Between Term and Whole Life Insurance:
Factor | Term Life | Whole Life |
Duration | 10 – 30 years | Lifelong while premiums paid |
Premiums | Lower | Higher |
Cash value | None | Yes, builds over time |
Investment component | No | Yes, in whole life and universal life |
Which insurance carrier do you represent?
Ask about the insurer’s financial strength ratings from A.M. Best and Standard and Poor’s and customer service reputation.
Top-rated life insurance companies in Canada include:
Read more: Compare iVari vs Manulife
Do you broker policies from multiple insurance companies?
If so, the agent can provide quotes to compare different insurers side-by-side.
How do you ensure the policy you sell me best suits my needs?
A good agent will take time to understand your financial situation, future goals, and risk appetite before making policy recommendations.
Questions to Ask Your Life Insurance Agent to Clarify Your Coverage Amount and Costs in Canada
A clear handle on the policy premiums, fees, and protection amount needed is essential.
How do you determine the right amount of coverage I need?
The agent should calculate your needs based on factors like:
- Income replacement to maintain the family’s standard of living
- Paying off debts like mortgages, loans, and credit cards
- Covering university costs for kids
- Funeral and final expenses
- Special needs of dependents
This should result in a specific recommended coverage amount, not a vague ballpark figure.
How are your policy premium quotes calculated?
Factors that affect pricing include:
- Age
- Gender
- Lifestyle habits like smoking
- Health conditions
- Family medical history
- Occupation risks
- Policy type
What discounts can I qualify for to reduce my premiums?
- Multi-policy discount: 5-15% for bundling home and auto with life insurance
- Group discount: 10-15% through employer or association
- Paying annually vs. monthly: Saves 8-10%
- Non-smoker discount: 40% lower premiums than smokers
Are there any fees or charges beyond the premiums?
Watch for hidden administrative fees, policy fees, and transaction fees. Common extras include:
- Annual policy fee: $60
- Partial withdrawal fee: $25-50
- Insufficient funds / late payment fee: $25
Will my premiums ever increase?
Term life premiums often increase at renewal. Permanent life premiums remain fixed, but insurers can increase fees or the cost of insurance charges over time.
What is your commission from the sale of this policy?
Ask upfront so you understand how the agent is compensated for your business.
Questions to Ask Your Life Insurance Agent to Understand Underwriting and Approval in Canada
It helps to be aware of what’s involved in the life insurance application and underwriting process.
What medical tests or exams do you require during underwriting?
Be prepared for insurers to assess your health. Tests often include:
- Paramedical exam
- Blood and urine samples
- EKG heart test if over 50
- Potential review of prescription history
How long does underwriting and approval typically take?
Expect 4-8 weeks from application submission to policy issuance. Let your agent know if you need coverage enacted sooner.
If my health changes, what conversion options do I have?
You may be able to convert term policies to permanent coverage without medical underwriting if your health worsens.
If my application is declined, what are my options?
Ask about guaranteed issue policies which provide a low coverage amount without health questions.
Do you offer accelerated underwriting to speed up the process?
Some insurers use data like MIB checks and Rx history to underwrite in days without paramed exams.
Questions to Ask Your Life Insurance Agent to Clarify Benefits and Claims Procedures in Canada
You or your loved ones will eventually file a claim, so know this process upfront.
What living benefits are included in my policy?
Ask about chronic illness, terminal diagnosis, disability income, and long-term care provisions.
If I’m diagnosed as terminally ill, what amount can I accelerate from the death benefit?
Many policies allow withdrawing 25-75% of the death benefit while alive if terminally diagnosed.
Does my policy accumulate any cash value?
Whole life and universal life policies build cash value that can be borrowed against or withdrawn.
What supporting documentation is required to file a death claim?
Beneficiaries must provide the death certificate, policy contract, and I.D.
What is the average claims payout timeframe in Canada?
Look for insurers that pay claims quickly within 1-2 weeks on average after claim approval.
How are the death claim proceeds paid out?
Beneficiaries can opt to receive the full amount in a lump sum or set up installment payments over time.
What exceptions could disqualify a death claim payout?
Suicide clauses often impose a 2-year waiting period. Ask about any other exclusions.
Questions to Ask Your Life Insurance Agent to Choose the Right Supplementary Riders in Canada
Riders enhance and customize your base life insurance policy. Make sure you understand the options.
What riders are available with this policy?
Popular options include:
- Disability income rider
- Critical illness rider
- Accidental death rider
- Children’s term rider
- Waiver of premium rider
How much does each rider increase the policy premium?
Have the agent break down the costs. Expect increases of:
Rider | Cost |
Disability income | Adds 10-15% to premiums |
Critical illness | Adds 15-30% to premiums |
Accidental death | Adds 5-10% to premiums |
Which riders do you recommend for my specific needs and why?
Experienced agents will explain which riders make sense for your situation rather than push you to add unnecessary extras.
If I become disabled, what income amount would that rider provide?
The monthly disability payout depends on your income and the rider’s terms. Understand how this works.
What illnesses are covered under the critical illness rider?
Conditions include cancer, stroke, heart attack, paralysis, and major organ failure. Verify the complete list.
Questions to Ask Your Life Insurance Agent to Understand Policy Flexibility in Canada
Make sure you can adjust your policy as your needs change over time.
How can I adjust my death benefit, premiums, and terms later?
Ask about processes to change beneficiaries, coverage amount, payment mode, and duration after issue.
What if my budget changes down the road?
Explore options such as lowering coverage amount, switching to annual premiums, substituting term for permanent insurance, or canceling the policy.
What if I struggle to make premium payments at some point?
Learn about grace periods, reinstatement rights, policy loans or non-forfeiture options if you lapse.
Say I develop a health condition later on. What are my options?
Conversion to permanent life may be available without new medical underwriting.
Conclusion
Getting the right life insurance takes research. By asking these questions, you can gain confidence you’re getting the best policy for your needs and budget. Don’t hesitate to request clarification from your agent on anything you don’t fully grasp. An experienced professional will welcome the chance to ensure you feel educated and certain as you make this important insurance decision.
FAQs Related to Questions to Ask Your Life Insurance Agent
How do I know if my life insurance agent is qualified?
Look for respected designations like CLU (Chartered Life Underwriter), ChFC (Chartered Financial Consultant), or CFP (Certified Financial Planner) which require extensive training and exams. Checking credentials ensures your agent has proper licensing and education.
What questions should I ask when choosing a life insurance policy?
Key questions cover the policy type, duration, costs, benefits, exclusions, options, insurance company reputation, and more. Ask your agent to explain differences between term life, whole life, universal life, etc. and recommend the best match for your budget and needs.
Where can I find ratings and reviews for life insurance companies?
Independent rating firms like A.M. Best, Standard and Poor's, and Moody's rate the financial strength and claims-paying ability of insurers. Reviews on sites like TrustPilot and Google can provide insights on customer satisfaction.
Why is it important to use an independent agent?
Independent agents can provide quotes and policy comparisons across multiple insurers to find you the best fit. Agents who solely represent one company are limited to their products.
When should I buy life insurance?
Ideally purchase life insurance when young and healthy to lock in lower premiums. Key life events like getting married, becoming a parent, or buying a home are prime times to consider coverage. The older you get, the more expensive life insurance becomes.
Do all life insurance policies require a medical exam?
Term life usually requires a medical exam for underwriting health class and rates. No medical exam policies called guaranteed issue life insurance are available but cost significantly more.
Can I change my life insurance policy after purchase?
Many policies allow you to adjust the death benefit, switch premium payment schedules, and add optional riders even after purchase. Certain changes may require additional underwriting.
Is a life insurance drug test required?
Insurers may require drug screening along with medical history and exams during underwriting. Marijuana use may increase premiums. Hard drugs often lead to declined applications.
How much life insurance do most people need?
A common guideline is 10-12 times your gross annual income in coverage to replace income and cover debts like mortgages, loans, and final expenses. The exact amount depends on your unique financial situation.
Can I get life insurance if I have a pre-existing medical condition?
Yes, there are options like guaranteed issue policies that don't require medical exams. You may pay higher premiums with conditions like diabetes, heart disease, etc. An independent agent can help you explore choices.
Article Sources:
At Bestinsuranceonline.ca, trust is paramount. We pride ourselves on providing accurate, transparent information, making us a go-to resource for insurance insights. Rely on us for professional guidance to navigate the intricacies of insurance with confidence.