Thinking about life insurance? You’re making a smart move. Life insurance helps protect the people you love; it provides financial support when it’s needed most. Before you pick a policy, asking the right questions can make all the difference in finding the best life insurance coverage for your needs.
Here are key questions Canadians should ask an advisor they trust when exploring life insurance options.
1. What type of life insurance should I get?
The first thing to note is that not all life insurance is the same. In Canada, the 2 main types are:
- Term Life Insurance: Offers coverage for a specific period, like 10, 20, or 30 years. Term life is usually the most affordable option. It’s often used to cover short-to-medium term needs, like paying off a mortgage or funding a child’s education.
- Permanent Life Insurance: Covers you for your entire lifetime and can include a savings or investment component. It costs more, but can build cash value over time.
When deciding, consider:
- How long you need coverage
- How much you can afford now and later
- Whether you want insurance that also builds financial value
2. How much life insurance should I buy?
There are a number of considerations, which your advisor can help you with. Make sure the amount will cover your mortgage, debts, income replacement, final expenses, and future plans like tuition fees.
Supplementary question: How is the coverage amount calculated?
3. What exactly does this insurance policy cover?
Before you purchase, understand the benefits as well as any riders (optional add-ons beyond the standard benefits).
You’ll also want to ask what might be excluded. Some common exclusions are high-risk hobbies like skydiving or motor racing, suicide within the first 2 years.
4. What does life insurance cost?
Lots of factors affect the cost of your life insurance premiums: your age, health and lifestyle, occupation, and gender. Ask about premium guarantees, fees, and riders.
You’ll also want to know: Will your monthly premium stay the same?
5. What happens if I miss a premium payment?
Find out the rules around grace periods, reinstating coverage, and any penalties you might incur if a monthly payment is missed.
6. Can I renew or convert my policy later?
Some term life insurance policies let you extend coverage or switch to permanent insurance without redoing medical exams. There are many factors that impact whether you can to this:
- your age
- how your health has changed since the policy was purchased
- the type of policy you originally bought
7. How long does life insurance take to pay out?
The amount of time it takes to receive a payout is largely dependent on factors outside of the policy. Things like cause of death, and completeness of paperwork.
However, there are things related to payout conditions that can set expectations: policy status, the payment method, and your insurers process. These will help prevent surprises for your beneficiaries.
8. How does life insurance work for beneficiaries?
When the policy holder dies, your beneficiaries will receive a lump sum they can use for funeral expenses, debts, and other costs. You can tailor the policy for the beneficiaries. Ask about how many beneficiaries can you name and if there are claim limitations. These and payout rights can vary from policy to policy.
Finding a life insurance provider you can trust
Choosing a policy is just part of the process—you also want a provider who’s reliable. Here’s what to check:
- Company strength: Pick an insurer with a solid financial reputation. Look for strong ratings from agencies like AM Best or Standard & Poor’s.
- Discounts and savings: Ask about price breaks for non-smokers, healthy lifestyles, or bundling insurance products.
- Claims process: Know how the process works if your family ever needs to file a claim. Quick, clear claims handling is important.
- Flexibility: Life can change. Find out whether you can adjust, upgrade, or cancel your policy if your needs evolve.
Get the answers you need
Buying life insurance is about protecting your loved ones and your legacy. By asking the right questions—and getting clear, honest answers—you can choose a plan that fits your life today and prepares you for tomorrow.
When you’re ready, talk to a licensed Canadian life insurance advisor. We can help walk you through your options and find the best coverage for your needs.
