Curious about life insurance? Here’s what you need to know
2 Minute Read
You might be wondering if you should get life insurance, but the thought of reading the legal jargon to find a plan that works for you seems too overwhelming.
Life insurance is an important part of planning for the future, and we’re here to break down what you need to know if you’re not sure where to start.
What is life insurance?
At its core, life insurance is a type of plan that provides a death benefit when the covered individual passes away. You pay into the plan and can choose whether you want your coverage to be for a specified term (term life insurance) or lifelong coverage (permanent life insurance).
If the covered individual passes away during the period that the policy covers, designated loved ones will receive a lump sum payment from the provider. Say you bought life insurance and included your spouse, children, and parents as beneficiaries. In the event of your passing while covered, those people will each receive money. Although most plans will give this benefit as a single payment, the amount varies depending on the policy.
When a loved one dies, there are often costs that you won’t want to worry about as you’re grieving. A life insurance policy can help with expenses like:
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Replacement income for the family/loved ones
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Provisions for dependents
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Coverage for funeral expenses
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Debt repayment
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Charitable donations
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Funding trusts or estates
Life insurance can also cover a range of other circumstances. Some plans can provide support during retirement and coverage if you fall ill or become disabled. No matter what your goals or life stage, there’s a policy that will suit your needs.
How does it work?
When choosing a policy, you have options—life insurance is customizable. You can opt for term life insurance, which will cover you for a period you choose, whether five years, 10, 20 or otherwise. These policies can have cheaper premiums, but your coverage ends once the term is over.
On the other hand, permanent life insurance will cover you for your whole life. If you're looking to save money in the long run, permanent life insurance means your premiums won't change as you age, even if you develop a health condition or make riskier lifestyle choices later in life. Generally, the earlier you buy a policy, the cheaper your premiums might be.
Once you’ve decided on a plan, you can choose the beneficiaries who will receive money if the policy is paid out. You can also select the amount to be covered by the policy. In the event of your passing while covered, the beneficiaries can make a claim to receive that money tax-free.
How much does life insurance cost?
The cost of life insurance depends on several factors, primarily age, health and lifestyle.
Younger and healthier individuals typically have lower premiums and more options to choose from. That’s why the best time to get life insurance is now, no matter where you are in life. Like health, a lifestyle with fewer risks—determined by your occupation, hobbies, etc.—can have more favourable life insurance options.
How can I get a plan?
Ready to plan for your family’s future? You can book an appointment with a licensed insurance advisor today to discuss your options.
Have a question about life insurance? To speak to a professional who can guide you to the right coverage from the right insurer at the right price call us at: 1-800-709-5809 or email us at info@caaprotect.ca.
