Life Insurance Basics

In Canada, there are two types of life insurance policies

• Term life insurance (lowest up-front cost)

• Permanent life insurance (lifetime coverage)

Often, your choice of a type of life insurance depends on your goals and needs; the differences in rates and premiums can be surprisingly vast, and that’s why completing our life insurance quotes form is so helpful. Just answer a few basic questions, and instantly our system will provide you with life insurance quotes from many of the top life insurance companies in Canada.

Term life insurance

Term policies typically provide insurance coverage for a short-term or specific period, such as a fixed number of years or a set age or financial commitment like a mortgage and then expire. These policies are designed to cover insurance needs for everyday life in case of premature death like:

• Maintaining family lifestyle
• Reduction in family income
• Insuring a mortgage and other debts
• School tuition for the children
• Business continuity and obligations
• Key-persons, partners, shareholders

Term policies are non-participating and do not include cash values or other non-forfeiture values, so premium costs are always lower than permanent policies while you are younger.

The insurance lasts for a certain period, such as 10, 20, or 30 years. It becomes more expensive as a person ages. Eventually, it is no longer available or affordable—these types of policies payout at claim time the amount of money you are insured.

Types of term life insurance

• 10, 15, 20, 25, 30, 35, 40 year terms

• The 20-year term is a popular choice

• Aso available to age 65, 70 or 75

Permanent life insurance

These policies are designed to meet long-term insurance needs for things like:

• Enduring family lifestyle
• Asset and estate protection
• Estate planning and giving
• Estate liquidity needs
• Tax sheltering and planning
• Planned charitable giving

Permanent insurance policies are essentially made up of the following four components:

1. Mortality Cost: the pure cost of the life insurance death benefit
2. Administration Charge: the fee charged for administering the policy
3. Savings or Investment: the amount left from your deposit after the Mortality Cost and Administrative Charge have been deducted from it. It is also referred to as the ‘cash value,’ ‘fund value,’ or ‘cash surrender value.’
4. Return on Savings: the amount of interest earned on the savings or investment

Types of permanent life insurance

Three options when applying for life insurance

1. Fully Underwritten: In the past, these processes require a lengthy paper application form, a nurse visit and medical exams. However, with the advent of technology, many applications can now be completed over the phone using web-based applications. Many companies accept electronic signatures and also issue life insurance policies electronically for your convenience.
2. Simplified Policies: These policies involve a few questions, but no exam is involved. The application process is electronic and web-based. Our advisor will guide you through the entire process effortlessly while assisting you in placing the policy with the most suitable insurance company.
3. Guaranteed Policies: These policies do not require you to answer any questions, and you are guaranteed to be accepted. A few companies offer these policies for quick issuance; the coverage is typically smaller while taking on increased risks. The premium for these policies tends to be higher than fully underwritten policies.

Save up to 40% by comparing life insurance rates

Generally speaking, a term life insurance policy is usually a more cost-effective solution for most people. Still, there are many occasions when a term-to-100, whole life or universal life insurance policy makes much more sense, even though it may cost a bit more. Get yourself a quote to see the cost differences, or speak to our advisors if you would like to get some free, unbiased advice from experienced, independent life insurance professionals.