Welcome to your life insurance guide. This page will give you a good understanding of life insurance, and will inform you of savings opportunities while also providing a number of other useful tips based on our publications. We will also help you to ind best life insurance quotes across more than 20 top Canadian insurers.
The main objective of life insurance is to provide financial funds in case an insured person dies so that their family members, significant others or any other beneficiaries can maintain their living standards. The secondary objective of life insurance (more sophisticated insurance types) is to serve as a financial vehicle accumulating value that can be recovered at a later point. Below you will find an overview of the major life insurance types.
Different types of life insurance explained
There are two main types of insurance: Term and Permanent, whereas term insurance is covering the risk of a policy holder dying for a predefined time period, say 20 years, and permanent insurance provides lifetime coverage. Term insurance is purely an insurance product, whereas permanent insurance has both insurance and an investment component. Below you will find the most frequent types of insurance with more explanation and the average premiums that Canadians pay:
Term insurance: This is the simplest life insurance type and typically the cheapest one. It works in a very simple way. You choose the length of the coverage, also called the ‘term’ of the policy (Term 10, Term 20, Term 50) in years, and if you die within this time period, your beneficiaries will receive the coverage amount. For example, life insurance quotes for Term 10 policy ($500,000 coverage) start from $19 / $25 monthly for women and men respectively.
Find out more about Term Life Insurance.
Whole life insurance: It is a type of a permanent life insurance that covers you as long as you live. Typically, you will be pay consistently higher premiums since, in the early years of your policy, it should accumulate enough value to off-set later, higher insurance risk. Your premiums will not change throughout your life. You can also terminate the policy (‘surrender’) if you want, and get part of the accumulated funds, or you can sometimes borrow money against your policy’s cash value.
Find out more about Whole Life Insurance.
Universal life insurance: This is another type of permanent life insurance. It is quite similar to whole life insurance, meaning that it stays in place until you die or decide to terminate (surrender) the policy. The difference is that you can choose the amount of premiums that are paid into the cash accumulation part of your policy.
Find out more about Universal Life Insurance.
Term 100: Despite its name, this is another type of permanent insurance, since it stays in place for your whole life as well. The difference is that there is no cash value accumulated through this policy and thus it can have lower premiums than whole or universal life insurance.
Some insurance policies are quite complex and can have a number of features such as guaranteed death benefits, guaranteed interest etc., incorporated into them. Our glossary section can help with these terms. Another important part of insurance is dealing with aspects reflecting your health condition: Standard and Non-medical life insurance
Standard life insurance: This type of insurance requires both a medical exam and completion of a medical questionnaire when getting a policy. As a result, the insurer knows more about your health, which reduces the insurers risk and offers lower premiums than the other insurance types described below.
Simplified issue life insurance: This type of non-medical insurance does not require a medical exam, but you will still be required to complete a medical questionnaire while getting life insurance quotes. This policy is more expensive and makes sense to consider if your current health condition would make it hard to get a standard life insurance policy.
Find out more about Simplified Issue Life Insurance.
Guaranteed issue life insurance: This type of non-medical insurance does not require a medical exam nor the completion of a health questionnaire when you complete life insurance quotes, but it would most likely result in the highest premiums (for the same coverage) and the size of coverage might be limited (e.g. $25,000).
Find out more about Guaranteed Issue Life Insurance.
How can you save on life insurance?
- Smoking matters less: The older you are the less insurers care about smoking. The difference between smokers and non-smokers erodes as people age
- Sometimes “no medical” can mean no money: If you choose non-medical life insurance policy and it offers a graded or deferred benefit it can mean that death benefits are limited during the first few policy years or simply not covered if death is due to medical reasons.
- Seniors have choices: The discrepancies in the amount you pay as a life insurance premium are much larger for seniors than for younger applicants. With such a range of premiums for seniors, it’s worth doing a little shopping around to see which policies might better meet your needs.
- Cancer cases are treated differently: Insurance companies treat cancer cases differently (it is often considered as a high-risk case) and thus talking to a broker, who knows that field well, can save a lot.
- Diabetics is insurable: Many companies will not cover people with diabetics issues but some will and again you’d better to rely on a broker who has experience in this field and can help to get insurance and optimize premiums.
- Annual vs. monthly payments: In comparison to monthly payments, annual payments save insurers administrative costs (e.g. sending bills) and therefore they may reward you with lower premiums.
- Age rounding is important: If you decide to buy a life insurance policy, make sure that your age rounds down and not up, i.e. if you are going to be 65 years old on December 31, buy the policy in the first 6 months of the year where your age is still rounded down to 64 and not 65.
- Other tips: Contacting an experienced, licensed broker (see a button below) will help you to find other ways to reduce insurance premiums of your life insurance premiums. Discussion with broker is entirely free and there is absolutely no obligations to buy.