Life Insurance Plans
Get all the information you need about personal life insurance policies
Looking for an affordable life insurance policy? We’re ready to step in and assist you.
If you are in the market for life insurance, HealthRates.ca is here to help. We provide the information you need to find the right life insurance plan for you.
We are dedicated to our families. Whenever loved ones need help, we immediately rush to their aid, and they are quick to return the favour. Regardless of the situation, everyone benefits from the assistance and the issue is soon resolved.
It is possible to continue providing your family with support and protection even after you’ve passed away. One way is through inheritances which are distributed among your benefactors. Another is with a life insurance policy.
Read on to get some answers to some frequently asked questions about life insurance.
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Table of Contents
What is life insurance?
Life insurance is a type of insurance product that helps your family manage the financial implications of your passing. The beneficiary receives a tax-free payment after your death, usually in the form of a lump sum. This is often referred to as the death benefit.
Life insurance ensures that those you care about are financially covered in the event of you passing away.
Why should I get life insurance?
There are several reasons why you should get a life insurance policy. Firstly, the payment received by your beneficiary can be used to cover funeral expenses. Secondly, it provides your spouse with a source of income, which helps them to maintain the same quality of life within a double income setting. Thirdly, the death benefit also helps to cover recurring costs, such as mortgage payments or school tuition for your children.
Finally, you can use your policy like a home equity line of credit (HELOC) to gain access to your equity. The funds you receive are taken directly from your insurance premium payments and can be used for any purpose. If you choose to withdraw money from your life plan, its value will drop, which leaves less for your beneficiary unless you replenish it.
Now to answer the question,
Should I buy life insurance? Definitely Yes.
What are the different types of life insurance policies?
There are several types of life insurance available in today’s market. They include:
Permanent Life Insurance
This is an all-encompassing term that includes all life insurance policies that do not expire. Permanent life insurance includes a death benefit in addition to any accumulated savings, which gives the policy a monetary value. This allows you to borrow or withdraw money from the policy to help cover certain expenses.
Term Life Insurance
With a term life policy, the money you pay to your premium contributes to the death benefit your beneficiary will receive upon your passing. The beneficiary receives the death benefit as either a lump sum, monthly payment or annuity. The lump-sum option is the most common payment format.
Simplified Issue Life Insurance
When you apply for life insurance, the insurer will request a medical exam as part of the application process. This helps the insurer determine the risks involved, if any, of giving you a policy. Simplified life insurance eliminates this step, hence the name. While you will not be subject to a medical exam, you will have to complete a health questionnaire that documents your medical history.
Guaranteed Issue Life Insurance
This type of life insurance eliminates another step from the application, further simplifying the process. In this case, it’s the health questionnaire. If you can pay the premium, you will be approved by the provider.
Whole Life Insurance
Similar in structure to permanent life insurance, whole life insurance also includes a death benefit and a monetary value. The value increases every time you make your premium and fee payments. The fees eventually decrease, allowing more of your premium to be contributed to your policy’s value.
Variable Life Insurance
Like whole life insurance, a variable life insurance policy also has a dollar value attached to it. But the main difference between the two is how the value is determined. This policy features a monetary value account, and the funds in that account get invested in various sub-accounts that are part of the policy. These sub-accounts effectively function like mutual funds. Like any investment product, the money distributed among the sub-accounts can increase or decrease over time.
Universal Life Insurance
Another type of life insurance with a monetary value, the premium payments made to a universal life policy add to the death benefit and the policy’s cash value. What sets this plan apart from other cash value policies is that you can modify the amount of the death benefit and premium without having to apply for a new policy. If you have accumulated enough funds through your plan, you can use them to pay for your premium. Additionally, the cash value gains interest over time, allowing you to bypass regular premium payments and let the interest pay for the premium. It’s important to note that the policy’s interest rate can fluctuate based on current market trends and that directly affects the premium. Decreased interest rates would result in a higher premium to make up for the drop in the cash value of your coverage.
Variable Universal Life Insurance
Essentially an amalgamation of variable and universal life insurance, this product allows you to alter your death benefit and premium amounts. At the same time, you would then invest the monetary value you’ve accrued in the various sub-accounts.
Final Expense Insurance
Sometimes referred to as funeral insurance, this insurance product is designed for those looking for a way to cover the cost of a funeral without the need for a guaranteed issue policy. A final expense policy covers death-related costs, including funerals and medical expenses, and the cost varies based on your age. These policies are generally available to people between the ages of 45 and 85, although the age range may vary from one insurance provider to the next.
Group Life Insurance
Usually offered by employers as part of their employee benefits packages, group life insurance is a distant cousin of the traditional life insurance policy. While somewhat helpful in theory, group life insurance plans are limited in their functionality. The coverage provided is relatively low compared to privately purchased insurance products. It generally covers one to two years’ worth of your salary, which is often not enough to cover medical procedures or other major expenses. As a result, many employees opt to purchase their life insurance policies for added coverage and flexibility.
How to get or where can I get life insurance?
The life insurance policies described above are all available from most major insurance providers, while group life insurance is often included in employer-provided benefits packages. If you need a life insurance policy, simply dial their respective hotlines or through us. HealthRates.ca allows you to review multiple insurance products and compare rates from top insurers in Canada.
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What are the two types of life insurance beneficiaries?
There are two types of beneficiaries for life insurance policies. A primary beneficiary is your first choice to receive the death benefit upon your passing. A contingent beneficiary is named if the primary beneficiary passes away before you do.
Can I name multiple beneficiaries on my life insurance?
You have the option to name multiple beneficiaries in your life insurance policy. If you choose to go that route, there are three ways of determining how the death benefit is split:
- Percentage – Each beneficiary named in your policy receives a specific percentage of the death benefit. You must determine the percentages beforehand.
- Per stirpes – The death benefit is split evenly amongst every branch of your family.
- Per capita – Everyone entitled to receive a share of your death benefit receives an equal payment.
What happens if I don’t name a beneficiary?
When you obtain a life insurance policy, you usually name a beneficiary. That individual can be your spouse, another relative, a friend, or even a charity. You can even name your estate as the beneficiary if you wish. If you do so, the death benefit becomes a part of your estate.
If you do not name a beneficiary, the death benefit will be automatically paid to your estate, which effectively becomes your beneficiary. When this happens, the money immediately goes into estate probate. This is a long and often arduous legal process where your outstanding debts are paid off and your estate is divided up among your living relatives.
Get Informed, Get Insured
There are many life insurance policies and insurers to choose from in today’s market, and our goal is to help make your decision easier. We have connections to several major insurance providers and would be glad to discuss your life insurance options with you. For more information, please contact us today.