Wherever you live, there is one thing that is for sure, life insurance is important and you need it. The same goes for Canada, where, like in all other countries, you should get life insurance in any case of unfortunate events that could happen to you. However, it is not enough just to get paid for your life insurance, you should also get some valuable information on how it works in your country, and in this case, Canada. Follow this article to learn everything you need to understand about life insurance in Canada?
What Do You Need To Understand About Life Insurance In Canada?
In order to get life insurance and not be tricked during the process, you should know the basics of it. This way you will have a better understanding of why you need it and what you can do to get it. You will also get some other useful information on when you will need this, and when it is time to take it out because it is not necessary for you until a certain part of your life. Here is all you need to know.
How Do You Know You Need It?
Not everyone needs life insurance especially if no one depends on you, you aren’t in debt or facing other similar problems. However, before you denounce this idea completely you should get yourself a little survey:
- Do you have someone depending on you (partner, spouse, children, parents)
- How many student loans do you have?
- Are you planning on leaving money to charity?
- Are you in a committed relationship?
- Is there a mortgage to worry about and how many years of it?
- Is your family okay with your income?
- Would you like to have life insurance in case you need to cash it out for something else?
- How much money did you save?
Whenever you are feeling that your loved ones could have some benefit out of you taking out life insurance for a payout if god forbid anything happens to you they could request a quote. These quotes for life insurance could also be bought and compared. However, never overdo them because they could alert the company and increase your premium after which you will be denied coverage.
How Much Life Insurance Do You Need?
The first step in getting life insurance is deciding how much you actually need. Once you get a number, you will know just how comfortable your family will be after your passing, but also the amount you’ll pay. Averagely in Canada, the insurance policy is $200.000 but some suggest it may not be enough, and they say that the rule of thumb should be 10 times what you make in a year. The true amount is specific to every person and here is a calculation:
LIFE INSURANCE POLICY AMOUNT = Outstanding debt + (Net annual income X number of years you want to provide for the family) + Mortgage still owing + Children’s educations
What types are there and what is the best one?
There are two major types of life insurance that you can get in Canada: term and permanent.
- Term life insurance is something you get and you have deals that cover a certain period, like for example, 10, 20, or 30 years. This is a cheaper type for most situations.
- Permanent life insurance is just what it says, a policy that never expires, and it covers you for your whole life. This also splits into two other types: universal and term-to-100. Universal life insurance is based on the investments you put in your policy, while term-to-100 covers you until you are 100 years old.
These two types are often compared and people say they are the best options in Canada. One major difference is that with the whole life insurance you can pay off premiums early on and you will still be covered, while the term one finishes covering you as soon as you stop paying.
How much does it cost?
There are various types in which you can pay your life insurance in Canada where monthly premiums range from $13 to $100. The reason behind this is because these types of policies are based around an individual so you can make it as unique as it fits you. Another important thing is that insurance packages pay off even after you pass, and your debts and risks of death affect the costs.
There, now you know all the essential things about life insurance in Canada. Make sure that you get the right quotes and you will be on your way to a good policy. Always make sure to look into every possible deal to get the best one that fits you whether it is the term or the whole package. Get your life insurance as soon as possible and stay safe.