7 TIPS To Know About Purchasing Life Insurance In 2021

Here are 7 quick tips for anyone purchasing Life Insurance in 2021:

MOST BROKERS AREN’T REALLY BROKERS

Going to a broker seems like a good idea to many Canadians. You want the best policy for you, regardless of your situation. So you decide to go speak to a broker, you know, someone who can shop the market for you. Find you the best policy and who can help you apply. However, most brokerages aren’t TRUE brokers. You see, most brokerages only offer a few companies.

You might think you are speaking to someone who can find you the best company out of all the companies in Canada, only to later find out most brokerages don’t offer every company in Canada. It’s best to ask your representative which companies they offer and are there other options available on the market.

INSURANCE COMPANIES WILL NOT OVER INSURE THEIR CLIENTS

Many wonder if they are overpaying for their coverage or if they should cut back their coverage to save on premiums. But did you know, insurance companies look for the need for insurability when you apply, even if they don’t directly ask it? Insurance can be purchased to:

• Help replace a loved one’s income 
• Pay off debts 
• Pay off expense that could occur when someone passes away unexpectedly 

Read “When Should You Buy Life Insurance?”

When you are asked for your income, debts, assets, and beneficiary the insurance company begins to have an understanding of your particular situation. From here, insurance companies can decide if the amount of coverage is in the range of acceptability or if they need more information regarding your need for insurance.

If you have applied for an amount of coverage that does not meet the guidelines set by the insurance company you could be declined due to over coverage. Or the insurance company might decide to offer you a lesser amount of coverage than you originally applied for.

WHOLE LIFE ISN’T FOR EVERYONE

Whole Life Insurance has its place in the market, but it’s not for everyone. For most Canadians, it’s a better idea to buy term and invest the difference. The reason for this is long but one of the major reasons would be that your need for insurance decreases over time. Hopefully, over time, you pay down your debts, pay off your mortgage and your liabilities become assets (for example paying down your mortgage). This would also decrease the need for life insurance over time, which is why for many Canadians term life insurance is a better choice (and it’s more affordable).

TERM INSURANCE ISN’T A BAD THING

Most Canadians need a term insurance policy and that is it. The best part is term insurance is the most affordable form of life insurance. As we get older and our liabilities turn into assets and the need for life insurance becomes less. In situations like this, term insurance is a great fit.

HOW YOU PLACE YOUR POLICY IS A VERY IMPORTANT STEP

Often you hear of “horror stories” of people who bought a life insurance policy paid for it for many years and when they went to file a claim the payout was denied. But did you know, this often comes down to the fact that the policy wasn’t placed correctly in the first place?

For Canadians who lie on their application, there is a good chance your coverage will not pay out when you need it to. Lying on your application whether it’s saying you a non-smoker when you are or you lie about your health in general is considered fraud or misrepresentation. In these cases, insurance companies reserve the right, not to payout.

YOUR ADVISOR IS WORKING ON 100% COMMISSION

We notice several years ago that many people had a hard time deciding on what coverage to purchase, just because they knew their advisors were working on 100% commission. Meaning the more you spent on your coverage the more the advisor would make. This became very problematic.

This is why we created TIP Services to have non-commissioned staff members to help you through your decision making process regardless of your choice they are paid the same salary. Which helps to take their bias out of the conversation.

ASK FOR HELP

Life insurance can be confusing. It can be confusing for people who are looking for coverage or those who have purchased coverage years ago and are looking for new coverage. Don’t be afraid to ask for help and work with someone who is will to help you through the process as opposed to pressure you into making a decision quickly.