Life Insurance in Canada; Making Sure Your Loved Ones Will Get On in Case You’re Not There for Them Anymore!

What are other types of life insurance in Canada?

• Non-Medical Life Insurance
  These types of life insurance in Canada are suitable for elderly people, and people with serious health problems. No medical check is needed for them. It is only natural that the premiums are much higher.
  • Guaranteed Life Insurance
    In this type no questions are asked, and no medical tests are needed. It is only natural that this type of insurance has more limited coverage numbers, and the highest rates of premiums.
  • Simplified Life Insurance
    In this type no medical tests are needed, but you probably will have to fill a questionnaire which causes a denial for your insurability.
• Couples Life Insurance (Here)
  • Joint Life Insurance
    Joint Life Insurance is an option for couples to get life insurance. Also called first-to-die term, this policy pays the coverage when the first of the couple dies. The premium rates are lower than 2 separate life insurance policies, but in case of divorce or separation the couple might face problems.
• Children Life Insurance
  A policy aimed for children under 18. It can be looked at as an investment for their future too (getting dividends).

• Last Expenses Insurance
  In Canada, funeral expenses might be much more than what you think. A number between 5,000 and 15,000 CAD is not extraordinary at all. Last Expenses insurance is a type of permanent life insurance, aimed to cover funeral expenses.

• Critical Illness Insurance
  This type of insurance helps you with your finances in case some certain illnesses render you unable to work. You can read more about it in the following of this article.

• Group Life Insurance
  Group life insurance is an offer made by a large entity, like an employer, an association, etc. to cover its members with life insurance in Canada. These policies usually come with fairly cheap prices, and also, a limited amount of coverage. It is wise to add more policies for yourself if you are in a large debt, like a mortgage, and not only rely on your group life insurance.

Child Life Insurance for insuring your loved ones too!

Child life insurance is a type of insurance purchased by under 18 children’s parents or legal guardians with two major goals. The first is the coverage you get in case of your child’s death, and the second is to guarantee the child’s insurability.

Most companies have a rider in their child life insurance contracts that lets it turn into a permanent life insurance once the child has turned to an adult. This will help get lower rates and ensure insurability.

What is final expense insurance?

As said before, funeral costs are quite high in Canada. Depending on the method (cremation or burying) it could easily take somewhere between 5,000 CAD to 15,000 CAD.

Final Expense Insurance, funeral insurance, burial insurance, or whatever other names it is called, is basically a form of whole life insurance with a smaller amount of coverage.

Final Expense Insurance premiums, like other forms of life insurance, depend on your age, gender, and health mostly. It could cost as low as 20 dollars per month (non smoker female around 40 years old) to 130 dollars (65 years old male smoker). Keep in mind that if you get life insurance, you can add your final expenses to the coverage so you won’t have to get separate insurance for this matter.

How life insurance will help you!

Who needs life insurance?

You might be asking yourself now, “I’m young, do I need life insurance?”. There is no certain answer to this question.

First of all, no one knows when their days are over, it could happen any moment as far as we are concerned. Life insurance can help your loved ones a lot should the worst come. A tax-free notable sum of money could get them through the hard times easier. Also it can help with:

• Making up for your income, so your family can go on;
• Provide for you dependants and children;
• Covering the funeral costs (In Canada it could easily be somewhere around 10,000 CAD); and
• Paying your debts, and your possible mortgages

What are life insurance options for couples in Canada?

• Joint first-to-die or last-to-die term insurance:
  The couple get one insurance policy, which costs less than 2 separate policies. And depending on the type, as the names suggest, if one of them, or both of them, pass away, the money will be paid to the beneficiaries. It can be a good option for couples, but keep in mind, divorce could nullify this policy, so discuss it with your insurer before getting it.
• Single term insurance
  The couple gets two separate term life insurances, it will cost more, but in case of separation or divorce the policies still stand.

Getting Deeper into the Life Insurance Matter

So far we have talked about life insurance in Canada generally. Here, we want to get deeper into the matter, and give you more detailed information.

How much coverage is enough?

It depends on many things, the pros say 6 to 10 times of your annual income could be a good number for you. But to break it down for you, there are things you must consider:

1. Your marital status:
   If you have dependents, wife, common-law partner, or children, they need money to live on with the lifestyle they had in case of your untimely death.
2. Do you have children?
   If you do, they will need money to grow, and educate. Life insurance could help them financially should the worst come.
3. You (and your dependants) annual income:
   It shows the lifestyle you and your dependents are used to. So to go on they need a replacement for their finances.
4. Your settlement status; do you own a house or are you renting one?
   Owning a home might mean you have to pay a mortgage. In case you pass away, the amount of your insurance coverage must cover for your mortgage.
   Renting a house has its costs too, which your insurance coverage must cover.
5. You (Or your family’s) savings:
   The amount of money you have in any form of saving, investment account, retirement savings, etc. should be considered too. If you have enough savings you might not even need life insurance!
6. Your existing life insurance coverage:
   If you already have life insurance, you might have to deduct the amount from what you are going to need.
7. Your (or your family’s) debts:
   For clearing the debts, money is needed (obviously). Life insurance could help your survivors deal better with the hurdle.
8. You (or your family’s) monthly expenses:
   Bills, phone, internet, groceries, transportation, vacations, children’s education, etc. All your other expenses should be considered too
9. How much of your income is needed for your family to go on, and for how long?
   Depending on your partner’s income, and circumstances of your life, you need to estimate how much of your income is needed for them to go on. Also you must estimate for how long they need that money, before they can live on their own financially.
10. Funeral expenses:
    This might not seem important at the first look, but a funeral in Canada could easily cost you between 5,000 to 10,000 CAD. In those distressful times, financial problems could add to your survivors burdens.

To get a rough idea of how much coverage you need, add up your debts (debts, mortgage, etc.) and deduct your savings, and your family’s future earnings from it.

For example, if:

• You are 30,
• Your mortgage balance is 300,000 CAD,
• Your annual yearly earning is 70,000 CAD, so is your partner’s,
• Your family still needs 60% percent of your income to go on, for 5 years,
• You have 25,000 CAD in savings,
• Your funeral will cost 10,000 CAD,
• And your total monthly expenses is 4000 CAD;

In this case a rough estimate shows that 300,000 + (5×0.6×70,000) + 10,000 = 520,000 CAD is the amount your family needs. Your savings cover 25,000 CAD. So considering the inflation rates, an amount close to 500,000 CAD could be a good number of insurance coverage for you.

How premiums are calculated?

Before contacting a broker or an insurer, you need to know what factors build up the premium numbers you must pay. It might be different for each insurer, but the whole idea is the same: the more likely someone is to die, the higher the numbers they should pay are. Here we will tell you about the factors that are usually considered when getting your premium:

• Age:
  The older you are, the more you must pay for your premiums. The reason is that the older one gets, the risk of death gets higher. So getting Life insurance while still young seems like a good idea!
• Gender:
  Women have a longer life expectancy, so the premiums are lower for them.
• Height and Weight:
  Your height and weight are indicators of your health, the healthier you are, you are less likely to pay higher premiums.
• Health Reports:
  It is quite self explanatory, people with health problems are considered riskier by the insurers, so they have to pay more.
• Smoking and Tobacco Use:
  Use of tobacco products and smoking cigarettes could even double your premiums!
• Driving history:
  If your record is clear of car crashes, you are considered a safe driver, so you have to pay less for your premiums.
• Hobbies:
  If your hobbies are dangerous, like climbing, skiing, etc. you will have to pay higher premiums.
• Lifestyle and Occupation:
  Consuming alcohol, participating in dangerous events, having high risk jobs (like fire fighters), etc. all make you pay more for your premiums.
  Apart from the mentioned factors, there are other ones that are related to your policy:
• Term Length:
  Longer terms mean being protected for longer, so you should pay more for your premiums.
• Coverage Amount:
  Higher coverage, higher premiums!
• Type of Insurance:
  We talked about types of insurance earlier in this article, so you should know how they affect your premiums!