May 25, 2020

Why do you need to buy a Life Insurance policy? When should I get one?

Purchasing Life Insurance need not be complicated if you’ve never done it before. Unlike home or auto insurance, there are many types of life insurance policies. Each comes with pros and cons and different price tags. If you’re in the market for life insurance, here are suggested steps you should follow to purchase a policy that is right for you.

Life Insurance – Why Do You Need It & How to Buy?

For Canadians, Life Insurance is an essential service as it helps make sure your family is taken care of financially in the event that something happens to you. It’s important for each individual to review why they need it by considering their personal situation. Understandably, Life Insurance can sound overwhelming; however, it should be part of everyone’s plans when it comes to protecting the financial future of your dependents and yourself. Taking time to understand the basics of purchasing life insurance will help you make the right decisions that fit your needs and budget.

At what age should you buy Life Insurance?

The younger you are, the less you’ll pay for Life Insurance. However, most people don’t think they need life insurance until they are older or retired. If you can afford to purchase life insurance in your 30’s or 40’s, it’s a smart idea. Buying a Whole Life Participating Policy when you are in your 30’s or 40’s will be built up into a big tax-free investment asset for you in 20 years.

Most life insurance companies will allow you to purchase a policy up until age 80 to be used for transferring wealth tax free to next generation.

Glenn Stewart Life Insurance Specialist Talking About Life Insurance Canada

What are the best Life Insurance companies?

There isn’t one life insurance company that stands out as the best for everyone. It just depends what insurance product suits you need and situation because all Canadian Life Insurers are very financially sound.

Wondering if you need life insurance and how to buy it?
We can help. Here we answer common questions and offer tips on what to look for when purchasing a policy.

How to Buy Life Insurance Policy?

1. Decide if you need Life Insurance coverage

First, decide if you need life insurance. The main reason why
people buy life insurance is to financially support their spouse or children
after they die. If you are widowed, unmarried or have no children, there’s a
good chance your only need is for tax free savings for your retirement income. However, if you have debt, a mortgage or
little income due to retirement, having life insurance can give you financial
support when you’re older.

2. Pick a Life Insurance policy type

There are two types of life insurance coverage – term and permanent. There are also two types of permanent insurance – whole and universal. Term life insurance is less expensive with less benefits, while permanent life insurance is more expensive with more benefits.

Term Life Insurance: Term Life Insurance Companies Ontario is generally the cheapest and most common option. It provides coverage over a specific term period, usually between 10 and 30 years. Term life insurance is used to provide financial support to your designated beneficiaries. For example, if you die during the term, your children or spouse will inherit the money from the insurance company. Once the term is over, the benefits end.
Whole Life Insurance: Whole Life Insurance is a type of permanent life insurance that has consistent premiums and accumulates cash value overtime. If you get a participating whole life insurance policy, you will get dividends that can accumulate in cash or annually buy you additional insurance. With whole life policies, policyholders must pay their premium until they die, or can pay for a certain number of years.
Universal Life Insurance: Universal Life Insurance is the other type of permanent coverage. It accumulates cash value and comes with investment options. It can also be broken down into variable and indexed universal life insurance. Universal life insurance is recommended for people who are comfortable with financial investments. It can be tricky to navigate universal life insurance, so speak with an insurance agent to answer all your questions.

You may want to do more research or speak with a Licensed Life Insurance Broker to find out which option will best meet your needs. The broker will also research the best insure for your need.

3. Fill out the application

The broker will ask some personal information, including your
age, address, gender and basic information about your medical history. You will
be asked about your lifestyle, if you smoke, past surgeries and medications
you’re taking into complete the
application. You will also be asking your SIN # and driver’s license number. The
insurer writes your doctor for an Attending Physician Statement (APS), which
helps the insurance company verify your medical history. The APS ensures you
get the right policy and is used when calculating death benefits. Most life
insurance applications can be filled out online, and it’s usually a quick
process.

4. Prepare for your phone interview

After applying, the insurance company might require a phone
interview. The interview is mostly used to confirm the information you included
on the application, but there may be some additional questions asked. For
example, the interviewer will want to know more about your lifestyle and
hobbies, your financial health, your income, and any other life insurance
policies you have. The interview is generally quick and will be scheduled
shortly after submitting your physical application.

5. Schedule a Life Insurance medical exam

Today, depending on your age and the higher amount of insurance you are applying for most life insurance companies require applicants to get a physical exam before they can be approved for coverage. The life insurance medical exam is like a regular doctor appointment, but the insurance company’s medical examiner will visit your home or office to see you. They will take your vitals, like height, weight, and blood pressure, and draw blood. The exam takes roughly 30 minutes, and you can schedule it during your phone interview.

What To Expect In A Life Insurance Medical Exam

6. Wait for approval

When the application process is complete, your job is done. The
insurance company’s underwriter will take the information they gathered from
your application, phone interview and medical exam to determine if you’re
eligible for coverage, and if so, what your premium is. Because there is so
much information to review, the approval process can take several weeks, or up
to a month.

If you get approved and are happy with the quoted premium,
you’ll be sent the policy documents. You will also decide if you want to pay
your premium monthly or annually.

Life Insurance is an investment tool that allows you to protect yourself from financial ruin.
Learn more about Life Insurance today!