What is life insurance?

Simply put, Life Insurance is an agreement between you and your insurance company. You will pay a monthly fee known as the premium. In exchange, the insurance company will cover you with a specified death benefit. In the event, you (or the insured) pass away. Your beneficiary will collect the death benefit. 

The average monthly premium for most people is around $30-50/month.

Who needs life insurance?

Simply put, if there is someone who depends on your financially you should consider life insurance. You should consider purchasing life insurance if you wish to leave your loved ones with financial security.

Most of the people don’t know about benefits of life insurance and are confused whether to purchase it or not. Allow us to inform you of a bit of mystery: life insurance is a lot easier to purchase than you may think.

These are the key factors which could impact your rate

• Age
• Gender
• Smoking status
• Personal health
• Driving history
• Risky hobbies

Age

A 60-year old is more likely to die in the next 20 years than a 20-year old. The 60-year old will pay a lot more for a 20-year policy than the 20-year old. Sorry, there is no senior discount.

Gender

Gender can have an impact on your price. Women live longer than men. Their average life expectancy is 3 years higher. This means that women will receive slightly lower prices.

Smoking Status

Smoking can cause serious health problems and increase your chances of early death. Insurance companies are well aware of this. Smokers are twice as likely to get life insurance than non-smokers. They will therefore receive double the rates. Insurers will reward you if you quit smoking. After quitting smoking, you can get your rates reduced if you do not continue to smoke for at least 12 months. If you’re looking for another reason not to smoke, this can well be it!

Personal Health

Insurers will scrutinize your medical history when you apply for life insurance. Life insurance companies may increase your rates if you have suffered a stroke, heart attack, or other serious illness within the past 5 years. It is important, to tell the truth about your medical history when applying for insurance. Insurance fraud is lying about your health. This could result in a denied claim, which would be much worse than having to pay higher rates.

The good news is there are some great guaranteed life insurance options if you do have health concerns. 

Driving Record

Car accidents are the leading cause of death in Canada. Insurance companies will ask you if there have been any serious driving accidents within the past few years. Your rates could be affected if you have a DUI or have been convicted of careless driving. The most weight is carried by insurers when they look at your driving record.

Risky Hobbies

If your hobby is skydiving or amateur flying, you are more at risk than the average Canadian. These hobbies could have an impact on your insurance rate.

How do insurance companies gather information about all these factors?

Many insurance companies will request that you make a quick call to one of their healthcare professionals and answer 20-30 questions about yourself and your lifestyle. A medical exam is required by some life insurance companies to determine basic metrics such as height, weight, and blood pressure. This data will be used to determine the final price of your policy.

Term vs. Whole Life Insurance vs. Term

There are two types of life insurance available: Whole and Term:

Term life insurance covers you for a set amount of time. Usually, it is 10-30 years. Your loved ones will receive the amount you have paid if you die during this period.

Whole life insurance can also be called permanent insurance. This coverage is good for your whole life. It might not seem like much, but it is. You will eventually die and therefore you want to make sure your family is protected for as long as you can.

While whole life insurance premiums tend to be higher than those for term life insurance policies (although they are generally lower), they tend not to change with age. Your premiums are designed for cash value growth over the course of your life. This is not a cheap way to invest your money. It can be more difficult and expensive than other options.

Request a quote for life insurance

There are many places where you can get life insurance quotes. Numerous companies offer instant online life insurance quotes.

These quotes can only be based on 3 factors: your smoking status, age, and gender. These quotes are not tailored to your particular health situation. To confirm the rate your insurance company offers, you will need to go through life insurance underwriting. At least not for now, you can’t do underwriting with a click of a mouse.

How to purchase life insurance?

There are three main options for purchasing life insurance:

• Online access to a life insurer company 
• A local independent insurance broker can help you
• Online insurance can be purchased from an independent broker

Do some of these methods work better than others? 

Yes. It is smart to buy life insurance online or from a local broker. Why? Agents who only work for one life insurance company won’t be able to help you compare life insurance policies from different companies. Prices for life insurance can be very complex and may vary between companies for the same policy. It’s important to compare quotes and shop around if you don’t want to pay more for life insurance.

The first step in buying life insurance is to determine how much you really need. The amount you need depends on the financial situation of your family (including your spouse and dependent children) as well as your financial status. Do you have any outstanding debts? Is it possible for your family to supplement your income to pay their daily living expenses? Are you willing to pay for college educations for your children?

Online life insurance quotes

Many websites and online platforms allow you to compare and obtain life insurance quotes. These instant price quotes are often estimates. They are based only on 3 factors: your smoking history, your age, gender, and the amount of your income.

How to compare life insurance quotes?

Compare life insurance quotes from multiple companies to find the best rate. Prices will vary depending on what coverage you choose, your health, and other factors such as age and gender.

Do life insurance quotes impact your credit score?

Because life insurance companies don’t usually report payment history to credit bureaus, buying life insurance won’t impact your credit score.

Life insurance is not free. There are consequences to not paying your premiums for life insurance. Your policy will be canceled and your coverage will end. However, this will not directly affect your credit score.

Life insurance and COVID-19

You might start to consider buying life insurance or wondering how an outbreak could affect the policy you have.

The good news is that your life insurance policy will cover all causes of death once it is in effect. This includes any complications from COVID-19 and any other diseases. The only exceptions to this rule are suicide within the first two years and if your policy contains a clause exempting a specific cause (like skydiving if you’re a professional skydiver). But as always it’s best to check before purchasing life insurance.