Fact or Fiction: How well do you really understand life insurance?

March 1, 2018

Think you have a good handle on all the ins and outs of life insurance? Take this quick quiz and find out!

Life insurance is all the same, so just pick the lowest premium.

Fact

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Fiction

Fiction! Know that all life insurance is not the same, and if you’re purchasing simply based on price, you may not be getting adequate coverage. Instead, evaluate your choices by finding a policy that meets your needs and would provide your loved ones with finances to keep going in your absence. A life insurance advisor can help you calculate that amount and explain the differences in policies.

My life insurance plan at work covers me, so I’m good.

Fact

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Fiction

Fiction! Whether your company matches your plan contributions or subsidises your life insurance entirely, your payout may not adequately cover your needs. Figure out how much your loved ones would need to get back on their feet again, should you no longer be providing for them (see above). If your work payout isn’t enough, then consider augmenting that insurance policy with another one. Remember, if your employment ends, so might your coverage. So, a separate policy makes even more sense.

I can change my beneficiary at any time.

Fact

It’s a fact! Your beneficiary can easily be changed at any time. Life happens, and circumstances can change. Perhaps your spouse has become your “ex” or your designated beneficiary has died. Maybe you’ve lost contact with the person you originally appointed. To change your beneficiary, just notify your life insurance advisor and complete some simple paperwork. Experts even recommend naming a “backup” beneficiary; if your primary beneficiary can’t perform as needed, you are covered.

Fiction

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Purchase a policy. Then you’re done.

Fact

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Fiction

Fiction! Your life insurance policy should be continually re-evaluated as your life circumstances change. Do you still want your ex-spouse in charge? Were there any children born who should be added to your policy? Review your policy after the birth of each child, a marriage or a divorce, or the death of a beneficiary.

Life insurance is something you worry about when you’re older.

Fact

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Fiction

Fiction! It’s smart to think about purchasing life insurance when you’re young and healthy: that is when you’ll be able to secure the lowest premiums. Since the cost increases exponentially as you age, waiting to get insurance isn’t always wise. Remember, if your health begins to fail, your premium will rise. The longer you put off buying life insurance, the more it will cost!

Life insurance is expensive.

Fact

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Fiction

Fiction! A Life Insurance and Market Research (LIMRA) study revealed that people overestimate the cost of life insurance by nearly three times. In fact, the cost is far more affordable than most people think. For example*, depending on age and health, there are plans that work out to be as little as under $5/week for a 20 year term, with a payout of $250,000 tax-free, for your family’s well-being, should the unexpected happen.

If you have health problems, you won’t be able to get affordable life insurance.

Fact

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Fiction

Fiction! Many people believe that pre-existing conditions such as diabetes, cancer or heart disease make securing affordable life insurance next to impossible. If you have health issues, simply look for a provider that offers No Medical Life Insurance plans. Be sure to ask before purchasing; depending on the provider, you do have a choice in life insurance coverage – even if you’ve been declined in the past.

So… how did you score? Want to learn a little more about life insurance options?

Talk to your advisor or call Canada Protection Plan at 1-877-851-9090. With plans to suit different lifestyles, health conditions and life stages, there’s sure to be one that matches your needs.

* Example of premium, based on age 34 year female, good health, non-smoker.
To find out what your rate could be, try Canada Protection Plan’s life insurance quick quote calculator.

The information contained is as of date of publication, and may be subject to change. These articles are intended as general information only, a licensed advisor should be consulted regarding your specific situation.