Many people are confused by Life Insurance. We get so many good questions! Here are some of the best questions.
Do I need Life Insurance?
This should be the first question you ask. Life insurance is used to protect you or your family from a financial loss in the event that you die unexpectedly. There can be many types of financial needs at death, including:
- Final expenses, like funeral or cremation costs, lawyer’s fees and taxes
- Paying off any outstanding loans
- An emergency fund to tide your family over through a difficult time
- A fund to cover your children’s’ education
- A fund to replace your lost income
If your family has any of these financial needs when you die, then life insurance can help.
How much life insurance should I buy?
You should buy enough life insurance to cover all of the needs you have identified. Figuring out what your life is worth – or what kind and how much insurance you need, is not that difficult. You can do it yourself using our Insurance Need Calculator, or you can call one of our Licensed Insurance Advisors and they will be happy to help you through the process. Either way, once you are done, you will know whether you need permanent insurance or term insurance, or both, and how much of each.
What kind of life insurance is right for me – Permanent Insurance or Term Insurance?
There are only two basic types of policies: Permanent Life Insurance and Term Life Insurance.
Permanent Life Insurance provides permanent protection – coverage as long as you need it, which means coverage until you die. This type of insurance:
- costs more, which makes sense because as long as you continue to pay premiums, this type of insurance will always pay out a death benefit,
- usually offers a partial refund of premiums if, for some reason, you decide to cancel your policy before you die. This refund is called a “cash value”.
- often offers a variety of premium payment options. Some permanent insurance plans are payable for as long as they are in force (sometimes called Whole Life insurance), while other plans allow you to pay a larger premium for a shorter period of time, such as 20 years.
- may offer a variety of additional benefits, either at no cost, such as a Terminal Illness Benefit, or for an additional premium, such as an Accidental Death Benefit.
Term Life Insurance is temporary insurance. It can last for 5 years, or 10 years, or 20 years, or to your age 65, or for any other period that is defined in the policy. At the end of the term period, the insurance may end, or you may be able to extend it for another term. You may also be able to convert your Term Insurance policy into a Permanent Insurance policy. This type of insurance:
- Costs less than permanent insurance. Usually, the shorter the term period, the lower the premium.
- Only pays a death benefit if you die during the term period. If you live beyond the term period, this plan does not pay a death benefit.
- Does not include any cash value if you cancel it early, and
- Like Permanent Insurance, may offer a variety of additional benefits, either at no cost, or for an additional premium.
What is Universal Life?
Universal Life is a “newer” type of permanent insurance policy which offers more flexibility than traditional permanent insurance. It does this by separating the insurance and the savings elements of the policy. Most Universal Life policies accumulate a cash value from one month to the next by adding any premiums received and any investment income earned and subtracting any expenses and any mortality (or pure insurance) charges. By accumulating values in this way, these plans often have greater expenses, but they also offer greater flexibility to make changes as your needs change over your lifetime. Universal Life has some advantages for some buyers, but is definitely not for everyone.
What is No Medical insurance, and what is the alternative?
There are really two kinds of life insurance:
- Traditional insurance is underwritten or assessed by an insurance company using an application that may be 20 to 40 pages long, with medical tests and doctors reports. It typically takes 4 to 6 weeks to be issued.
This type of insurance tends to be less expensive for healthier applicants who want larger amounts of insurance.
- No Medical insurance is underwritten with just a few medical questions, no doctors and no tests. It typically takes just a few days to be issued.
This type of insurance tends to be for smaller amounts of insurance and/or applicants who have more health issues. And it is often only available in one plan type – smaller amounts of permanent insurance.
However, Canada Protection Plan offers No Medical insurance in a wide variety of both Permanent and Term plans. Because we offer so many different choices, our plans offer better value than some No Medical plans available in Canada.
Canada Protection Plan believes that No Medical insurance can be an excellent insurance solution for many. But it is not for everyone. Our Licensed Insurance Advisors will help you to determine if No Medical Insurance is right for you, or if you would be better served by traditional insurance. Either way, our advisors can take the mystery out of insurance and help you to complete the necessary applications and obtain the insurance that you need.