How to Buy a Life Insurance Policy in Canada

Most people have a general idea that they should have life insurance to protect their family in case something bad should happen to them. The problem is, buying life insurance can be intimidating for many people, especially if they don’t have a specific understanding of the costs, options, and requirements involved.

It’s important to understand how much insurance you need and how much you are able to spend on it, but once you are clear about those things, buying a life insurance policy can be much easier than you might think. Here are some things to think about when you begin to consider buying a life insurance policy.

• Do you even need life insurance? Since life insurance’s basic function is to protect your survivors against the income they will lose if you die, you need to ask yourself if there’s anyone who would suffer if your income was removed from their budget. If you are single or have no dependents, you may not need life insurance at all, or you may only need enough to cover funeral and burial expenses.
  
• How much coverage will you need? This will require you to do some math. You will need to figure out how much money your family needs to live on and for how long they will need it. Keep in mind also that you will not be around to help pay for big expenses like college tuition and weddings. On the other hand, your dependents can take your settlement and invest it, thereby increasing their income beyond what you had provided.
  
• What kind of coverage do you need?
  There are several different kinds of life insurance policies.
  
  • Term life insurance is the most affordable option. It covers a family for a preset term, such as ten or twenty years. It is the plan most commonly bought by families with children, because it provides a higher level of protection for a shorter amount of time, usually replacing the parent’s income until the children are grown.
    
  • Whole life insurance policies are a bit more expensive than term life policies. These plans do not expire; rather, they offer the same level of coverage for as long as you have your policy. They have a much higher cash value after you have paid into them for a while.
    
  • Universal life insurance is a less common option. You are responsible for investing your own premiums. If your investment isn’t as successful as you had hoped, you might experience a decrease in the value of your policy, which might leave your loved ones without the protection they need if you die. However, you might also increase the value of your policy.
    
  • Guaranteed life insurance. This is the plan to use when you do not have any life insurance, and you are dying, or you are too old or too sick to be approved for a new policy. Guaranteed life has high premiums, but it can also help leave your loved ones with at least the minimal coverage they need.