Life Insurance Canada

Life Insurance - Canada

Human life is precious and it is always at risks of death or disability and the cause could be natural or other causes. In the event of loss to human life or temporary disability, it is the household that suffers due to loss of income. The family comes under tremendous hardship, to the extent that the family’s survival is at risk for the dependants. A risk to human life is unpredictable as death or disability to human life could happen at the least expected place. It is life insurance that can protect an individual against such contingencies.

Life insurance gives insurance on human beings. Although, on cannot value human life, a monetary sum could be determined after considering loss of income in future years. So in life insurance, the assured sum is a means of a ‘benefit’ that should be paid in the event of loss. Hence, life insurance is an agreement between the policy owner and the insurer, whereby, the insurer agrees to pay back a fixed amount of money to the dependants of the insured person in the event of death of the individual (life insured), like terminal illness or critical illness, during his active income earning period or become disabled due to an accident resulting in reduction or complete loss in his income. The insured makes an agreement to pay as insurance premium the cost for the service rendered.

There are different life insurance products available that in addition to providing protection, comes with savings. Some of the common types of life insurance are discussed below.

In Canada, the major life insurance companies have been in operation since about 1870, selling insurance policies and paying claims.

Life insurance protects your family from financial hardship. It can protect your business from loss of key people instrumental to the future of the business. Life insurance can create a legacy for the next generation, or your life insurance contract can be used to give a charitable donation when you are gone.

How Much Life Insurance Is Enough?

How to find the right amount of life insurance for you? A laymen’s way to determine is to have seven to ten times of your gross income as your insurance coverage. However, it is best to make a proper analysis after pinpointing the amount of capital your survivors would need in the event of your death. A life insurance need analysis takes into account your assets, the liabilities to be paid off, and covering the lost income for the future of the family.

Do You Need Life Insurance?

If you are married or in a dependant partnership, how much money do you contribute or what is the value of your care-giving? Would the family be able to get by financially if you were no longer there to contribute? What would the future of dependent children be without your financial support?
Does anyone else depend on you financially, like parents, brother or sister, business partner?
If you are a single parent, what are the levels of your support payments? Would these be kept up if the contributor died?
Do you have a mortgage or other major debts? Would you want those paid off for your survivors?
If you have children, would you want to set aside money for their future education needs?
If you own a business or farm, could insurance play a role in your succession plans?
If you are looking at large capital gains taxes for your estate, could life insurance be a solution to pay these taxes?

What Are The Main Types Of Life Insurance?

Term Life Insurance

Life is unpredictable, that means you need protection against it. Life could bring changes in your life in different ways and it could be in the form of having a new baby, starting a new job, buying a new home or sudden loss of life. These situations influence your insurance needs.

The term life insurance policy is meant to cover risk only during the selected term period. The insurance company pays a specific amount of money to the designated beneficiary in the event of death of the insured person before the term. Term life insurance policies are usually sold for 10, 15, 30 years. The premium on this type of life insurance is comparatively lower in comparison to whole life insurance policies.

The situations that require consideration nowadays include children’s education, mortgage, car loan, credit and other debts, loss of group insurance plan as a result of job change, emergency need for home or car repairs, and sudden illness among others.

According to need, one can avail affordable term life insurance for longer duration. If you are planning to purchase term life insurance policy, make sure that you cover the following things:

Permanent Life Insurance

Permanent life insurance is designed to provide insurance protection for your entire lifetime, as long as you keep the policy in force. Permanent Life insurance not only has lifetime protection, but also has cash values inside the policy, making them an investment asset. There are a few major types of permanent life insurance.

Universal Life Insurance

Arguable the most flexible life insurance policy in Canada, and one of the most popular. Universal life insurance consists of two parts, the basic life insurance and an investment account under one umbrella. It is flexible and powerful, but requires consistent management.

Whole Life Insurance

Whole life insurance is a traditional policy that fully guarantees premiums you pay, the death benefit and the cash values inside the policy. It is simple and strong.