When advisors talk about the most essential forms of insurance, the ones that come out on top are typically health insurance and life insurance. Obviously, if you have a business you may need employee liability insurance, and car insurance is needed if you own a vehicle too.
But, despite the obvious importance of these forms of insurance, many choose to drive cars without any protection and go through life without worrying about how their family will be supported after they pass away.
Studies have shown that about 40% of Canadians don’t have any form of life insurance. And according to a report by NewsWire, 90% of those that do are seriously underinsured.
Do Canadians need life insurance?
The majority of people would want to ensure that their dependents are looked after financially once they pass away. For you this may mean your children, partner, or spouse.
Therefore, Canada Protection Plan recommends that most people take out life insurance to ensure that loved ones aren’t saddled with debts and financial problems.
Nevertheless, not everyone needs life insurance. If you are single for example and with no family, you likely don’t need life insurance. Similarly, those who do have families but are financially dependent may not need life insurance either.
If you have accumulated wealth and assets during your lifetime and left no debts, you might not need a life insurance policy. But, most people aren’t in this position. If you leave your family with no source of income you may be adding more trauma to those already grieving the loss of a loved one.
Consider your life insurance needs
As you have read, most people in Canada are underinsured, dangerously so. It is recommended that you don’t have life insurance to cover just the mortgage and debts, but also to provide money to support your family’s longer-term needs.
The recommendation is that your death benefit is equal to, or exceeds 10 times your current yearly salary. Most people (54%) have life insurance that only covers 2 years’ worth of pay.
Compare different types of policies and insurance providers
In the past, you would have always sat down with an insurance advisor when taking out a policy, and that is still highly advisable. But, the internet can provide a lot of information regarding life insurance.
Use comparison sites to see how your potential insurance providers line up and check the small print on policies too.
Understand the different types of life insurance
In Canada, there are two basic kinds of life cover. You can get cash value insurance or term insurance. The latter only covers you for a set period, say 10 or 15 years. If you die during this period, your family will receive whatever death benefit you paid for.
Cash value insurance can come in different forms but it can cover your whole life. This type will provide your beneficiaries when you pass away, as long as you have kept up the payments until that point.
You should work out your budget
A life insurance policy will only benefit your family if you can afford to keep up the premiums.
You may wish to discuss this with an insurance advisor, and you may want to take legal advice too for wills or a trust as estate planning is crucial in life.
Be honest with pre-existing illnesses and conditions
Your life insurance policy application will usually involve questions about previous illnesses and the current state of your health. If you miss anything off the form you could invalidate your policy.
If you die early into the insurance coverage and your insurer finds that you omitted valuable medical information, they may refuse to pay out. However, if you have a change to your health after you have paid for insurance, you are usually not obligated to inform your insurance provider.
Should you even change your existing policy?
If you already have a life insurance policy, does it really need changing? You might already have plenty of covers. Contact your agent to discuss your policy, and talk about your concerns.
A genuine insurance advisor or agent will come under the Canadian Council of Insurance Regulators, and they set rules about good faith and ethical treatment of customers. So, you can expect to get honest advice on whether your policy is adequate or needs changing.
Read the small print, compare insurance providers, take advice, and also review your existing policy before paying for life insurance coverage.
It may be that you don’t need life insurance if you have adequate wealth and assets, but the majority of people will benefit their families by leaving them financially cared for when they leave this world.
The Editorial Team at Healthcare Business Today is made up of skilled healthcare writers and experts, led by our managing editor, Daniel Casciato, who has over 25 years of experience in healthcare writing. Since 1998, we have produced compelling and informative content for numerous publications, establishing ourselves as a trusted resource for health and wellness information. We offer readers access to fresh health, medicine, science, and technology developments and the latest in patient news, emphasizing how these developments affect our lives.