Life insurance ensures the people close to you will not suffer financial hardship should you pass away before your time.
While life insurance can be a complicated product, thankfully shopping for it is not. Getting life insurance quotes from Dundas Life could not be easier. Simply provide some basic information about yourself and we will get you quotes from the top Canadian insurers, so that you can make an informed decision on the best policy for you.
Life insurance and its benefits
Life insurance is not the most pleasant topic to think about because it raises some tough questions. The toughest one being: If you were to pass away suddenly, would your family’s future be financially secure? Coping with a financial crisis on top of grieving a loved one’s death is difficult. Thankfully, the latter is preventable.
Life insurance can help your family deal with the financial impact of your passing by providing them with a lump sum payout. While it cannot replace you, it can replace all or a part of your income and allow your loved ones to maintain their standard of living. Life insurance is an important income replacement tool. Without it, your surviving family might not be able to cover everyday expenses. It can also help them clear outstanding any debts, such as a mortgage, and afford future expenses, like college fees. Additionally, it can help them pay for your funeral services and end-of-life medical bills.
In short, life insurance provides your loved one’s with financial security at a time when they need it most. As such, it is an important risk management tool that you should consider. We know life insurance is not a fun topic, but if you pass away suddenly your family will be relieved you took out a policy. Get life insurance quotes today.
What are the different types of life insurance?
Life insurance plans are either term or permanent. Once you understand how each one works and their benefits, you will be in a better position to judge which will one is right for you.
Term life insurance
Term life insurance is simple, easy to understand, and affordable. Premium rates can be as low as $20 to $30 a month.
Term life policies provide protection for a set number of years, such as 10, 20, or 30 years, or until a specific age, like 65. Your loved ones will receive the death benefit amount if you die within the policy term. If you outlive the policy term, there is no payout. However, in most cases, you can renew the coverage without needing to give a proof of good health. The renewal option is available until you are a certain age, usually 70. Keep in mind that you will pay higher premiums at every renewal, because the cost of insurance increases as we get older.
When it comes to affordability, term life insurance wins hands down. Term life premiums can be five to 15 times more affordable than those of comparable permanent plans.
- Easy to understand: Life insurance contracts do not come simpler than term life. In exchange for monthly premium payments, the insurer agrees to pay a certain death benefit amount upon your passing away.
- Cost-effective: All else being equal, term policies are way cheaper than permanent life policies.
- Easy to cancel: You do not have to worry about cancellation charges if you want to end coverage. The policy automatically terminates when you stop paying premiums.
- Renewability: Most term policies are renewable up to a certain age.
- Temporary coverage: Term life plans come with an end date. While you can renew a term plan without a medical, renewal premiums are usually prohibitively high.
Permanent life insurance
Permanent life plans have no expiry date. They offer protection for your entire life. Your dependents are guaranteed a payout when you pass on, whether that is five or 40 years from now.
Apart from offering lifelong coverage, permanent life insurance is also an investment tool. A portion of your monthly premium is put into an investment account, which grows on a tax-deferred basis. When your policy has accumulated a sufficient amount of cash value, you can make a withdrawal or take out a loan against it.
The cash value is for you to use during your lifetime.Generally, the insurer pays out only the death benefit upon your death. If your policy has unused funds in the cash value account, they will revert to the insurance carrier. Because permanent policies provide protection for your entire life and build cash value, they are more expensive than term life insurance.
- Lifelong protection: A permanent plan provides coverage you cannot outlive.
- Builds cash value: One of the major attractions of permanent life is cash value, which you can use to fund retirement o for any other purpose, like meeting an unforeseen expense.
- Potential to earn dividends: Some permanent policies give you a chance to earn dividends. You can use them to purchase paid-up additional insurance, reinvest them in your policy, or take them out in cash.
- Costlier: Permanent life insurance is significantly more expensive than term life.
- More complex: Because permanent plans include an investment component, they tend to be more complex.
- Higher fees: Fees for permanent life investments are quite high compared to traditional investment options.
- High cancellation fee during the first several years: You can lose all or most of your cash value if you cancel the policy during the first few years.
What type of life insurance do you need?
Each family is unique, as are their life insurance needs. Which type of life insurance you need depends largely on your reason for taking out a policy and, of course, your budget.
If you want to take out a policy to cover temporary financial needs, you should be looking at a term policy. For example, if you need life insurance until you are financially independent or your children complete college, a term life plan is likely to suit you better. You can pick a policy term that matches your needs. Likewise, term life insurance is a better option for debt management as you can pick a policy that matches the term on your biggest debt. Finally, individuals who want to keep insurance costs low without compromising on the coverage amount might be better off with a term policy.
On the other hand, permanent life insurance is ideal when your financial needs do not have an end date. Do you wish to leave an inheritance for your children or grandchildren? Do you have a lifelong dependent? Do you want life insurance for estate planning? Do you wish to leave money for a cause close to your heart?
If you said yes to any of these, permanent life is right for you. Additionally, since a permanent policy includes an investment component, it can be a good option for a high-net-worth individual who has maxed out other investment vehicles.
How much life insurance do I need?
Look at your financial needs and resources to determine how much coverage you should carry to safeguard your family’s future.A general rule is you should be covered for at least 10 times your annual income. So, if your annual income is $60,000, you are looking at $600,000.However, the “10 times income” rule has certain limitations. For one, it does not take your debts into account. Also, if you have a young family, it may leave you underinsured.
Another method is to first determine how many years your loved ones would need support. Then, multiply your annual income by that number. For example, let’s say your family will need support until your child, currently aged three, finishes university — which, on average estimates, will be roughly 20 years from now. So, if you earn $60,000 a year, you should buy a20-year term plan with a death benefit of 1.2 million.
Yet another method of finding your life insurance needs is the DIME method. It ensures you have the following four key areas covered — debt, income, mortgage, and education. Here’s how it works:
- Debt – How much debt do you presently have? This will include any loan that will not get written off at your death, such as a student loan.
- Income – Consider how many years your loved ones would need support. Then multiply your yearly income by that number.
- Mortgage – When you pass on, your mortgage does not simply disappear. Therefore, it is important that you factor it in as well.
- Education – Determine how much money needs to be set aside for your children’s college education.
Add up all the four numbers to get a fairly accurate estimate how much life insurance you require.
What factors impact the cost of life insurance?
How much you will pay for life insurance depends on many things. Some of these are beyond your control, like your age or gender. But others, like your health and smoking status, are within your control. A healthy weight and lifestyle can help you secure a Preferred or a Preferred Plus rating, which can cut down your insurance cost by a few hundred dollars over the life of your policy.
You pay more for life insurance as you age, because, your life expectancy decreases as you grow older.
Life insurance companies offer the lowest rates to applicants who are young and healthy since they are low risk. If you purchase 10- or 20-year term plan in your 20s or early 30s, odds are the life insurer will not have to pay out.
Likewise, when you take out a permanent plan early in life, chances are you will be paying out premiums over a longer period. Since the risk is well spread out for the insurance company, they will offer you affordable rates.
Everything else remaining equal, younger individuals pay less for coverage than older people.
It is no secret that women have a longer life expectancy than men. For this reason, they pay less than men for life insurance coverage.
Life insurers look at our mortality risk while setting our rates. Since healthier people tend to live longer, they get better rates than those with health issues.
When you apply for life insurance, insurers will ask you to take a paramedical exam and answer certain health questions. They may also request for an attending physician’s statement to accurately assess your health.
One of the things life insurance companies consider is your BMI. For instance, people with a higher BMI are currently considered at a greater risk for several health problems, like high cholesterol, diabetes, and heart problems. Consequently, they receive higher rates than those who have a BMI falling in the lower range.
Smoking is not only bad for your health but also wealth. It is a big red flag for insurance carriers because it shortens your lifespan significantly. On average, smokers die 10 years earlier than non-smokers. So, it should come as no surprise that smokers pay two to five times more in premiums for insurance coverage.
Family medical history
Life insurance companies do not just look at your medical history. They also consider your family’s medical history. They do so because many illnesses are hereditary. Examples include diabetes, heart disease, hypertension, certain cancers, and dementia. A family history of such conditions can bump up your premium rate, especially if you have other contributing factors. For instance, if you are classified as obese and also have a family history of diabetes, you are likely to receive higher rates.
What you do for living can also affect your cost of insurance. Certain jobs are riskier than others, so if you have a dangerous occupation, brace yourself for higher premiums.
Although each provider has its own definition of“dangerous”, it typically includes any occupation that considerably increases the risk of serious injury or death. You are likely to be classified as high-risk if you are a firefighter, construction worker, pilot, or race car driver.
Adventurous and extreme hobbies are sure to give you an adrenaline rush, but they will also push up your life insurance premiums. Examples of high-risk activities include skydiving, rock climbing, scuba diving, and adventure travel.
How do I get life insurance quotes?
If you want to pay the lowest possible premium, you should get as many life insurance quotes as possible. Each provider has a unique rating algorithm. So, if you apply for the same coverage with multiple carriers, you are likely to receive different quotes. However, because many companies in Canada do not provide online quotes, comparing them on your own can be time consuming. But you do not need to worry about anything, sinceDundas Life has your back.
Our online quoting tool makes shopping for life insurance easy, simple, and fast. Simply, tell us a bit about yourself and we will get life insurance quotes from all the top insurers in Canada— and that is not all. We will help you make sense of your quotes and review and prepare your life insurance application, so you can get the desired coverage quickly and effortlessly.
If you are looking to purchase life insurance, it is important you get multiple life insurance quotes, as it improves your chances of getting the most affordable rates. Dundas Life can help you search for the right coverage at a low price by getting you quotes from leading life insurers in Canada. We will also make sure you understand your quotes and pick the one that best addresses your financial needs.
Frequently Asked Questions
Who should get a life insurance quote?
The two most common reasons for taking out a life insurance policy is to protect your loved ones from the loss of your income and ensure someone else does not inherit your debts. If someone in your life would be impacted financially by your death or would inherit your debts, you should seriously think about getting life insurance. The easiest way to save on premiums is to compare multiple life insurance quotes, because rates vary from one carrier to another.
What is the difference between term and whole life insurance?
Term life insurance has an end date. It provides life insurance protection for a specific period, like 10, 20, or 30 years, or till you reach a specific age, like 65. The insurer pays out only if you pass away during the policy’s term. Term life has no cash value and is more affordable than whole life. You can cancel your term policy any time without worrying about any surrender charge.
Whole life insurance lasts as long as you live. This means your beneficiaries are guaranteed to receive the death benefit. Whole life policies build cash value, so they also act as an investment tool. When you cancel a whole life plan, the insurer is likely to charge you a surrender fee, which can be quite high during the first several policy years.
Do I have to take a medical exam to buy a policy?
Most life insurance policies require you to take a paramedical exam. It helps the insurer to thoroughly assess your health and risk. However, individuals who do not want to undergo a medical exam, have the option of taking out a no-medical policy. As the name suggests, it does not involve a physical exam. If you would rather buy no-medical life insurance, DundasLife can get life insurance quotes from different providers and help you secure the best coverage at an affordable price.
What are life insurance riders?
Life insurance riders are add-ons that offer extra benefits or coverage, usually for a small fee.
What is a life insurance beneficiary?
A beneficiary is an individual or entity that receives the proceeds of an insurance policy upon the insured’s death. The policyholder is the only person who can update beneficiary designation. In most cases, the policyholder and the insured are the same person, but there is no law that states they cannot be different.