If you have a family, or even if you don't, life insurance is one of the simplest and most important ways you can help protect yourself and the financial future of your family. Here are some of the most frequently asked questions about Life Insurance.
What type of life insurance should I buy?
Life insurance comes in many shapes and sizes, but the different types of life insurance policies generally fall into two categories: term life insurance and permanent life insurance. The type of life insurance you should buy depends on your personal situation and financial goals.
What factors affect my life insurance rate class?
Factors such as tobacco use, high cholesterol, risky activities, like skydiving or bungee jumping and some pre-existing conditions will likely have a negative impact on your life insurance rate. Alternatively, if you're in overall excellent health, your life insurance rate should be very affordable. Common conditions like allergies and asthma (depending on the severity) will usually not play a role in determining your life insurance rate.
Can I get Life insurance without a medical exam?
Yes, there are an increasing number of non-medical life insurance providers in Canada. The two types of non-medical life insurance policies are, Simplified Issue coverage and Guaranteed Issue coverage.
Will my life insurance policy ever be cancelled because of health reasons?
No. Your life insurance policy will never be cancelled because of a change in your health, and you will not be asked to provide evidence of good health in order to renew your policy each year.
Can I get life insurance if I am in poor health?
Yes. You may have to pay a higher premium for your life insurance but you can certainly get some type of life insurance coverage. If for some reason, because of a severe medical condition, you cannot qualify for traditional term life insurance, you can apply for a type of life insurance that requires no medical exam. Learn more about no medical exam life insurance.
When does my life insurance coverage begin?
Your coverage does not begin until your life insurance policy is approved and your first premium has been paid. Most companies provide some temporary coverage during the application/underwriting process (assuming certain conditions are met). Temporary life insurance provides you with coverage during the life insurance application/underwriting process. Most life insurance companies give you the option of obtaining temporary coverage by remitting the first month's premium payment with your application. This will ensure that your loved ones are financially protected if you die before your policy is issued.
Important! If you are replacing existing coverage, you should never drop your existing coverage until your new policy has been approved, and your first premium has been paid.
How much life insurance should I buy?
One rule of thumb is to buy an amount equal to five to seven times your annual gross income. But the real question is how much your family will need when you're gone. That depends a lot on the family and what stage of life you're at. There are also forms one can fill out to find out how much you need by answering questions about your financial situation.
When you plan to buy a life insurance policy, the factors to consider when deciding on the amount of coverage include funeral expenses, education loans, any pending mortgages or debts, and the financial support your family would need in your absence. Five to ten times your annual income is the normally recommended amount suggested.
It is preferable to get a professional opinion about this before signing up for anything and many insurance providers and companies offer a personalized analysis of your financial needs, as part of their service.
If you were a non-smoker when you bought a policy but now smoke, would this raise your rates?
The life insurance company is stuck with the policy and must pay the full claim, as long as the applicant did not lie during the application process.