Which Life Insurance Product Is Right For You?

With the majority of Canadians now purchasing Term Life Insurance online, it is important to look at what you need to know before getting Life Insurance online. Let’s break down the key factors in getting term a life insurance quote online, and what to look out for.

First, let’s look at coverage amounts. Many people think buying life insurance is like getting a mortgage, the larger the mortgage the more you pay. This is not necessarily true with life insurance. How much you pay for life insurance is more dependant on the type of policy you purchase. So when it comes to coverage amount, don’t be intimidated by the coverage amount, as many Canadians with children in their 30’s likely need over $1,000,000 of coverage. Where later in life very few Canadians need $1,000,000 of coverage. You need for life insurance changes over time.

Second, let’s look at the different types of policies so you know which is best for you:

Term 10

Term 10 coverage is the most common life insurance, with almost every insurance company offering a term 10. This coverage will last for 10 years where the amount you pay each month (your premium) and the coverage amount will stay the same for 10 years. At the end of 10 years, you can choose to either cancel your coverage, convert your coverage to permanent coverage or renew at a higher price (based on your new age).

• Most affordable
• Great for young adults who know they need coverage
• Typically bought when purchasing a mortgage

Term 20 

Much life term 10, you know your coverage and premium will stay level for 20 years. This option is slightly more expensive than term 10, however, if you are looking to compare a term 10 and let it renew at year 10, it will actually cost you more than to buy term 20 in the first place.

• Better for people who need coverage for longer than 10 years
• Very affordable
• Many companies offer competitive term 20 polices

Whole Life Insurance 

Whole Life Insurance is a little different than the term. Whole life offers a level amount of coverage for life. As well as level premium payments for life. What whole life insurance offers that Term doesn’t is a Cash Surrender Value. Think of this cash surrender value (CSV) as a forced savings account. Just by paying for your life insurance, this CSV will grow over time, you have access to the funds if you need it.

• Level premiums for life
• Cash surrender value for savings
• Some companies offer dividends on their whole life policies

Universal Life Insurance 

Universal life is arguably the most flexible coverage. UL has a cash account as well, unlike whole life, this account can be invested in market-based investments so your savings account could grow at a faster rate, but also lose money if not invest well.

• Most expensive option
• More risk, with a greater reward
• Only a few companies actively sell many UL policies

So which is best for you? Well, that depends on your needs. All of the options have a place in the market. It’s best to find an advisor who will work with you, regardless of their commission, they will make the best recommendation for you.

This article gives you the initial insight into which plans might be the right direction for you.