Term Life Insurance Canada
If you are looking for term life insurance Canada you are obviously thinking about the financial well being of your family.
Life is messy and even the best-laid plans get derailed.
When you are young and healthy it’s really easy to convince yourself that life goes on indefinitely. It usually takes a tragedy for people to wake up.
This happened to my wife about 20 years ago. She saw an acquaintance lose everything when her husband died in a hiking accident.
It threw the family into a financial tailspin they would not have recovered from had it not been for the organized support of friends and family…
….her husband didn’t have life insurance. If he had they wouldn’t have to rely on the generosity of strangers or go through all the turmoil they sustained.
The most important reason for people to buy life insurance is for income replacement. Put it this way – When you die, your salary dies with you. Your loved ones depend on your income now and for years to come to pay the rent, mortgage and basic expenses. If that suddenly stops, not only will they be devastated emotionally, they will be in serious financial straits.
Life Insurance & The 7 Habits of Highly Effective People
In 7 Habits of Highly Effective People, Steven Covey suggests that all of human behaviour and activity falls into 4 quadrants:
- Urgent, Important
- Non-Urgent, Important
- Urgent, Not Imporant
- Non-urgent, Not Important
He argues very successfully – if you haven’t read this book, read it – that the most effective individuals in life spend more of their time in Quandrant #2: Non-Urgent, Important activities. These include planning and prevention, relationship building, important goals and exercising – “all things we know we need to do but somehow seldom get around to actually doing because they don’t feel urgent.”
Which Quadrant do you think purchasing life insurance is in? You guessed it, Quadrant #2! Most people agree, life insurance is something that is definitely important but it just doesn’t feel urgent…that is until our health changes or something drastic happens.
So let’s find out what term life insurance Canada is and how it can help you protect your loved ones from financial devastation.
My Name Is James Heidebrecht, the Founder of Policy Architects
My name is James Heidebrecht, the founder of Policy Architects. We work with families throughout Canada to protect the financial future of their loved ones.
If you have debt and dependents life insurance shouldn’t just be on your radar, it should be a priority.
Sure I’m an entrepreneur and this is how I make a living – but I use the product I sell. My wife and I both hold substantial policies just in case an unforeseen death befalls our family.
The truth is if either of us passed away and we didn’t have coverage the survivor would have to sell the house to move forward.
This is why I love my job. I get to help people take care of business before it’s too late. It’s a satisfying place to be.
Life insurance can cover the loss of your income from the household, plus offset your funeral expenses and pay off outstanding debts. While creditors might try to go after your assets or your family members to pay off debts, they can’t touch life insurance benefits.
What is Term Life Insurance Canada
The reason I started this blog is that I noted a lack of approachable information on the internet. Sure there are a ton of life insurance blogs but a lot of them jump into lingo without explaining the process step by step.
This was hard for my wife when she first embarked on the process of purchasing coverage.
Thankfully she had a great agent who gave her the best possible information. Unfortunately, this doesn’t happen for everyone.
Sadly I have clients who were convinced to buy policies that are completely wrong for them because an agent wanted to make a commission.
Don’t get me wrong, MOST life insurance agents are honest hardworking people.
That said, there are a few bad apples that spoil the bunch and they are responsible for the bitter taste left in people’s mouths, not to mention all the cliches and bad jokes about life insurance agents.
Types of Life Insurance Available
So to start at the beginning, there are two different types of life insurance you can buy.
- Term Life Insurance: This is the most common form of coverage. It’s the type of protection most people think about when they come to me. It’s basic income replacement (you choose a “face value” – or amount of coverage such as $250K, $500K, etc) for a period of time (known as a “term” which is typically 10, 20 or 30 years) when your family is most vulnerable. The most important thing to note about Term Life Insurance Canada is that its TEMPORARY coverage. You buy it for set period of time and after that, it expires. Typically, the cost (or monthly/annual premium) is determined by the state of your health. The healthier you are, the more affordable the coverage. If you have moderate to serious health issues, you will likely pay more or be declined coverage altogether. It is possible to get coverage without a medical exam and most people are healthier than they think. To put things in perspective, approximately 80% of all life insurance applicants in Canada will be approved at a standard health rate or better. 15% will be rated (have to pay more) and 5% declined outright.
- Permanent Life Insurance: This is protection until the day you die. If you take out a permanent policy your beneficiary will get a guaranteed payout as long as the premiums are paid. The process to get permanent coverage is similar to term. You select a face value and take a medical exam to determine your cost. There are also no medical policies or simplified issue options. Because you’re purchasing coverage for life, there really is no term in the traditional sense although insurance companies like to use the phrase “term to 100” to describe one type of permanent plan. This can be very confusing for consumers in the life insurance Canada marketplace. That’s why it’s important to talk to an independent agent. Some permanet life insurance has a cash value accumulation feature which can be exercised in a number of ways.
Term Life Insurance Canada - Why We Recommend It to Most People Most of the Time
If you are Googling Term Life Insurance Canada then chances are you are on the right track!
Because we recommend term to most people most of the time. It honestly provides clients with the most protection at a VERY reasonable price.
So let’s dig a little further to see why I made this statement.
Permanent life insurance is a lifetime commitment. If you fail to make your payments you lose your investment.
The thing is people don’t think about financial hardship BEFORE it happens. Things can be ticking along and boom you lose your job. Suddenly those big permanent payments look burdensome. There are a LOT of people that lose their shirts when something like this happens.
Term provides high coverage amounts for very little money.
This allows families to provide enough coverage without breaking the bank. Also if something changes on the financial front it’s easier to keep up with payments.
Most Important Things to Consider When Purchasing Term Life Insurance
Face Value - How Much Life Insurance Do You Need?
This is one of the biggest questions you need to answer before you buy term life insurance Canada is how much coverage do you need…
….and it’s not as straightforward as you might think.
Sure $100K is more money than most us will ever see in a lump sum in a life time. BUT is it enough to cover your family if you die?
Chances are it’s not!
Yeah, I know you probably think I am trying to sell you more life insurance but this is not the case. I’ve never suggested to someone that they buy more than they need. There are a lot of considerations you must address BEFORE you select a number. Here are just a few:
- How much money do you make? The general rule of thumb is at least 7 -10 times your gross salary should cover it. However, if you have small children, that figure should be closer to 15X or 20X your salary.
- Do you have debt? If you have a lot of debt this also needs to be taken into consideration. Remember debt doesn’t vanish when you die. Your estate has to pay off anything outstanding before your loved ones get a dime. **That being said, if you take out a life insurance policy, it’s very important to designate beneficaries on the policy rather than leave it to your estate. Doing so will enable the proceeds to be paid out to your loved ones faster, bypass your estate and probate and possibly creditors altogether.
- What does the future look like? Ok, so you are basing your numbers on your current financial situation. The thing is most people get salary increases, pay down debt, etc. Think about it, if you’re a breadwinner in your family and you die tomorrow, your family loses all the income you would have earned from now until you retire. How much is that? Chances are it’s a lot! If you’re 40 years old and earning a $60k salary, that’s at least $1.5 million. You need to really take a long hard look at what your future looks like in 10, 20 & 30 years!
Unfortunately, I think a LOT of people are underinsured. They don’t work with a good independent agent so they see large numbers and assume it’s enough.
Call us at Policy Architects and we will go through your needs and come up with the best possible plan.
Term: How Long Do You Require Coverage
This section actually bleeds down from the issues I talk about above.
When you look at your life you need to be aware that serious changes happen from decade to decade. Which means your needs may completly transform.
For the most part, I try to get people who are young and healthy to take out longer terms because they are just embarking on their obligations and coverage is CHEAP at this point.
Theoretically, a 25 year old can take out the coverage that protects them through every phase of their life for very little money.
BUT everyone’s circumstances are different. Some people need term life insurance to cover a short term obligation like a loan. In this situation, a 10 year term works a charm. Other people are well into parenting when they take note of their needs. In that case, maybe a 20 year term will save them some cash.
Others really like the idea of layered term policies that expire as they age. This way the lions share of the coverage is in place during your most vulnerable years (while the kids are in school) and drops away as you pay down obligations like your mortgage and debt. Your monthly insurance premiums will decrease as well over time.
Any way you look at it it’s important to make a plan BEFORE you buy a term life insurance policy.
What Life Insurance Company Should You Select?
If you have been reading my posts you know not all life insurance companies are created equal. There are a lot of differences that can trip you up if you make the wrong choice.
Each insurer has its own areas where they are lenient and strict. Some companies are easier on people with diabetes while others have less tolerance.
The only way to really wade through all the information out there is to get someone to work with you that really knows the ins and outs of the current policies.
A solid independent life insurance agent is your best bet. If you happen to be a high-risk candidate we shop your information out to underwriters (the people that go through the medical records and results to determine your premiums) to see what they think.
Let’s say you make a bad choice and go from standard with one company to rated with another? The difference can mean paying $10,000 more over the course of your policy.
Once you’ve been rated or declined by a carrier, there’s no going back. That information is stored at the Medical Information Bureau (MIB) for any other life insurance company to uncover the next time you apply for insurance. It’s important to get this right the first time and apply to the life insurance company that will view your situation most favourably.
Doing your homework is the best possible way to get comprehensive coverage at the best possible price.
Always Work with an Independent Life Insurance Agent
Not to toot my own horn but it’s always best to work with an experienced independent life insurance agent.
Because I’m one….haha I’m joking of course.
…the truth is it’s the best way to get the cheapest premiums. Independent agents are NOT tied to one insurer. They have access to the best life insurance companies in Canada. A good independent agent takes time to go through all your needs to weigh which company offers you the best package.
Keep in mind, all life insurance products have a comission built into the price. You pay this regardless of whether you buy the product through a bank, captive broker or an independent agent. In other words, you’re paying a comission whether you receive good advice or not. Why not get your money’s worth and get a recommendation and the added value of working with an experienced, independent broker?
Don't Rely On Online Rates
Doing your homework is a great way to save some serious cash. This is why I started the Policy Architects blog. To help people dig up some really good tips and info BEFORE they speak to an agent.
….BUT and this is a big BUT…
…take online rates with a grain of salt. Yes, you can use them as a basic guide to see how much you MAY pay…but just because you see an advertised rate doesn’t mean you’ll get it.
Applying for a term life insurance policy is a process. If you are in terrific shape with no serious family medical history of illness you may very well qualify for the cheap preferred plus rates that lured you in.
The thing is MOST people won’t qualify. The majority of applicants get standard rates (which are still great by the way). The key is to find the company that is going to look at you most favourably to get your premiums down.
So please, please, please don’t contact an insurer directly because you saw some great rates – be sure to shop around it’s really in your best interest.
Fully Underwritten Term Insurance Is the Most Affordable Option
If you are looking for Term Life Insurance Canada then you should know that those no exam policies are going to cost you more money. Simplified issue term insurance allows people to get coverage without the needles and the visit from a nurse.
Underwritten insurance requires a medical exam and costs a lot less money. This is because the whole model of life insurance is built on assessing risk.
When you submit your answers, medical records, and bodily fluids to a life insurance company they can assess your risk VERY well. If you opt for the no exam route well that’s a different story altogether. The insurer takes on more risk and passes their burden on to you through more expensive premiums.
I encourage everyone to go for a traditionally underwritten policy if they want to save money.
Chances Are You Are Healthier Than You Think!
Which brings me to one of the biggest issues facing people looking for term life insurance Canada. That’s physical health.
Soooo many clients come to me concerned about the medical exam. You’d be surprised by the number of calls I get about simplified issue coverage because people are worried they will be rejected.
In my experience, people are far healthier than they think.
A good example is my wife. She was very concerned about a cyst her doctor found in one of her breasts. Follow-ups revealed the cyst was gone.
She hemmed and hawed at getting her physical done afterward- but the good news is everything turned out a-ok and she got a standard rating with Ivari!
If you are concerned about your health take solace. If you have a condition like elevated cholesterol or blood pressure and it’s well-controlled you can still get GREAT coverage.
Don’t let concern about your health hold you back from getting life insurance coverage. My guess is we can find you a great policy. Call us today.
Looking for Term Life Insurance Canada? Call Policy Architects NOW!
So if you are looking for Term Life Insurance Canada we’ve got your back.
For most people, 90 per cent of the, time term is the right choice. It’s affordable, flexible and allows you to buy enough coverage to protect your family if a worst-case scenario unfolds.
Don’t get me wrong permanent insurance is a GREAT product but’s it’s VERY specific and it costs a lot more.
Even if you have medical concerns my bet is we can find you affordable protection with one of the best life insurance companies in Canada.
Call us today to discuss your options. Remember our advice is free and there’s no obligation to move forward…
….and your savings can be in the thousands.