Despite the unfolding coronavirus pandemic that’s swept the nation, life insurance companies based inside Canada continue to accept new insurance policy applications.
Opinions are everywhere on the internet. But which ones can you trust? That’s a good question that people face in many aspects of their lives, including when seeking to take out life insurance.
Being able to compare multiple insurance providers rather than only getting one choice is beneficial to people looking to select the right one. When doing so, you can feel pleased that you have the best life insurance in Canada for your requirements.
To help with this, we provide specific recommendations catering to certain groups of people:
- Life insurance for couples in Canada
- Best life insurance for smokers
- The best individual life insurance in Canada
- The best bank owned life insurance
- Choices available for people with health problems that are considered higher risk
So, let’s proceed.
What is Life Insurance?
Life insurance is designed to protect the ones you love. It ensures that should something happen to you, your partner, spouse, and any children will be provided for financially. It’s possible to purchase insurance policies for a couple or get individual life insurance. Ultimately, when your income provides for other people like a partner or children, then it’s helpful to have life insurance to protect against the worse that could happen.
With life insurance, insurance companies agree: In exchange for a monthly premium, they will agree to pay out a sizable amount in cash (on valid claims) to the family should you die at a time when the policy was active and fully paid up.
How Does Life Insurance Work in Canada?
The way that life insurance policies work is straightforward.
An insurance premium is paid every month to the insurer for the duration of the agreement. Should you die while the insurance policy remains active (i.e., when premiums have been paid properly), the insurer agrees to provide your benefactors with a tax-free lump sum known as a ‘death benefit’ in insurance terminology.
The idea with the death benefit is that at a difficult time, it provides some financial relief and support to make up for the loss of the main breadwinner’s monthly income.
What Types of Life Insurance Exist?
Just before we lay out the best life insurance in Canada that you can get, it’s useful to understand the two types of life insurance that are available. They’re either term life insurance or permanent life insurance.
Term Life Insurance
Term life insurance gets its name because it covers a specific number of years, e.g., 10, 20, or more years. The idea is that it may cover, for instance, a parent to ensure there will be enough money to bring up their children should something happen to them.
Getting term life insurance is a popular choice. After the children are grown and have “left the nest”, there’s no longer a need for such coverage. Because the insurance covers a fixed duration, rather than being ongoing with no end date, the premiums tend to be notably lower.
The quotes that you see provide an initial guide. However, when you apply, your information is sent to an underwriter who looks at the submitted information and determines the final cost to provide life insurance to you. This includes consideration of your financial position, health, lifestyle choices, and more.
Permanent Life Insurance
The other kind of life insurance is permanent life insurance. It’s called this because the insurance policy pay-out isn’t something that stops being available after a fixed period. Within permanent life insurance, there are different types such as variable life, whole life, or universal life insurance.
Due to their perpetuity, permanent life insurance policies cost more than term life ones. Effectively, they’re like a piggy bank or investment. The policy's cash value rises over the years as additional insurance premiums are paid. However, it works out to be an expensive, inflexible way to invest.
Permanent life insurance policies are sometimes easier to understand than term life ones. Being clear about all the specifics and clauses in your chosen policy is important. For instance, understanding how the cash value component works are necessary. An interest rate guarantee comes with every permanent life insurance policy which is not the same between insurers, so appreciating how this affects the policy is valuable too.