Life

Find Canada's Best Insurance Solution With Rate Genie

WRITTEN BY
Caitlin Wood
Updated September 30, 2020

Life

If you are a breadwinner or a significant financial contributor to your household, you may want to consider taking out a life insurance policy in case you pass on. This type of policy will protect your family and allow you to leave your beneficiaries a non-taxable amount of money. It will also cover your mortgage if you still have one, as well as any loans you have, such as your car loan.

Life insurance policies come in two forms: term and permanent. While permanent life insurance provides coverage for your entire life up until the day you die – regardless of when that happens – term life insurance is designed to protect you for a certain amount of time, usually during the years when your loved ones are still financially dependent on you. 

How Does Term Life Insurance Work?

While your term insurance policy is active and you are making regular premium payments into it, the insurer promises to pay out your beneficiaries a certain amount if you pass away during the term of the policy. Once your policy expires, your beneficiaries will no longer be covered. Generally speaking, policyholders will choose a term length that ensures their beneficiaries are covered while they are still dependent on you to cover the cost of life’s most costly expenses, such as your mortgage. 

Your term life insurance rate will be based on your life expectancy, which is why policies get more expensive with age. The older you are, the more you will likely have to pay for your policy. Your health is also a huge factor that plays into the overall cost of your policy. The healthier you are, the less your premiums will be, as good health is usually an indication of longer life expectancy. 

If the term ends before you die, the policy will simply terminate. If you still wish to be insured, you will have to purchase a new policy. But in this case, you could be looking at a more expensive policy because you will be much older at that point. For this reason, choosing a suitable term length earlier on is your better option, as your premiums will be lower. 

Finding The Right Life Insurance Provider in Canada

Types of Insurance offered Geographical Availability 
Emma– Term life insurance
– Permanent life insurance
PolicyMe– Term life insurance
– Disability life insurance
– Critical illness life Insurance
ON, AB, MB, NB, BC 
PolicyAdvisor– Term life insurance
– Whole life insurance
– Disability life insurance
– Critical illness life insurance
– No medical life insurance
– Mortgage protection insurance
ON 
Kanetix– Term life insurance
– Permanent life insurance
– Critical illness life insurance
BC, AB, SK, MB, ON, QC, NB, NS
Insurance Hotline– Term life insurance
– Permanent life insurance
All of Canada

Emma 

Emma Insurance

Emma is an online life insurance portal that Canadians can use to research and compare life insurance policies from multiple providers. By completing Emma’s online health questionnaire, you can receive multiple quotes in minutes for both term and life insurance policies. Emma is particularly great for younger families and women as it was built in response to the issues that both families and women face when trying to find the right life insurance for their unique needs.

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PolicyMe

PolicyMe Insurance

PolicyMe is an online platform that helps Canadians choose a life insurance policy that best meets their needs. Through PolicyMe, you’ll be able to compare various rates and policies against multiple insurance providers in Canada. This in turn will allow you to choose an offer that has the best coverage for the most affordable rate. Currently, PolicyMe offers term life insurance, disability life insurance, and critical illness life Insurance in Ontario, Alberta, Manitoba, New Brunswick, and British Columbia.

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PolicyAdvisor

Policyadvisor Insurance

PolicyAdvisor is an innovative platform for Canadians to find life insurance. They are an online insurance brokerage that compares Canada’s top life insurers to provide you with the best rates possible. Currently, they offer term life insurance, whole life insurance, disability life insurance, critical illness life insurance, no medical life insurance, and mortgage protection insurance in Ontario. 

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Kanetix 

Kanetix

Kanetix is an online platform where you can compare insurance rates and policies from different providers. Whether you’re looking for term life insurance, permanent life insurance or critical illness life insurance, simply fill out Kanetix’s questionnaire to get a list of rates from different insurers for the coverage you want. 

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Insurance Hotline

InsuranceHotline

Insurance Hotline is another online platform that allows Canadians to compare life insurance rates and policies from multiple providers. It was established in 1994 and has been providing Canadians with great offers since. They currently work with over 30 insurers and provide both term and permanent life insurance. 

Pros and Cons of Term Life Insurance

There are a few perks and drawbacks to term life insurance that you should consider before choosing this type of policy over a permanent one.

Pros

  • Cost-effective. Term life insurance is a more affordable life insurance option compared to permanent life insurance.
  • Pay for what you need. Term life insurance lasts for a specific period of time so you don’t end up paying for coverage that you don’t need.
  • Financial help. Your beneficiaries will have enough financial assistance to pay off any debts or expenses that you leave behind.
  • Safety net. Your policy will offer a financial safety cushion for your dependants.
  • Flexibility. You can cancel your term life insurance policy whenever you want, which may be more difficult to do with a permanent policy.

Cons 

  • Coverage may not last your entire life
  • No cash value component
  • Potential for premiums to increase as you age or your risk of death rises

Types of Term Life Insurance

Term life insurance can be broken down into single and joint insurance:

Single term life insurance. As the name suggests, this type of life insurance covers only one person. It pays out a lump sum benefit if the insured person passes away during the policy’s term. 

Joint term life insurance. While two people who are married or in a common-law relationship may take out their own single term life insurance policies, they may also choose to take out a joint policy. In the case of the latter, the policy will cover both individuals. While joint insurance is typically bought by couples who want to cover themselves together under one policy, it can also apply to business partners. In this case, the death benefit can be used to settle business liabilities in the event that one partner passes away. 

How Much Does Term Life Insurance Cost?

The cost of term life insurance will vary from one individual to the next. There are several variables that determine the exact cost of an insurance policy, including the following:

  • Age
  • Gender
  • Health history
  • Family health history
  • Lifestyle behaviours (ie. smoking or alcohol consumption)
  • Occupation
  • Coverage amount
  • Term Length

For instance, a young, healthy individual who does not engage in any risky lifestyle behaviours can expect to pay less in premiums compared to an older individual with health issues and who smokes. Further, the higher the coverage amount, the more expensive the policy. So, a $100,000 policy would be much less expensive than a $500,000 policy, for example. 

Having said all that, term life insurance policies can range anywhere from $15 to well over $100 per month, depending on the factors listed above. 

How to Choose a Life Insurance Company 

Before you settle on an insurance company, consider the following first: 

Their financial health. You want to know that you can depend on the insurance company to pay out your beneficiaries in the event of your death, and the only way they are going to do that is if they are financially healthy. The good news is that the life insurance industry is a highly regulated one that is overseen by the government, so odds are the insurer you work with is in good financial health.

Their products. The actual life insurance products that companies offer is something you should consider, too. You want a policy that gives you ample coverage, flexibility, few exclusions, and a renewal option in the future. 

Reviews. You may be able to screen online reviews of insurance companies from current and previous clients, which can be easily found on Google and various review sites. 

Purchasing platform. These days, not only can you buy a policy directly from the insurance company, but you can also use an independent insurance broker who can do all the comparison shopping to find the best company and policy for you. Further, you can also use an aggregator, which is simply an online platform that will populate various insurance providers and policies based on a search query. They operate similar to how Kayak serves the travel industry, and offer the ultimate in convenience when shopping for a term life insurance policy.

How to Choose a Term Life Insurance Policy 

Choosing an actual policy requires a bit more work after you’ve chosen a company to work with. Here are some factors to consider:

Term versus permanent. Before you settle on a term policy, consider whether or not this is the best option for you. A term policy will cover you for a finite length of time, while permanent will never expire while you are still around. 

Price. One of the more important factors to consider when buying life insurance is price, particularly when it comes to buying term life insurance. Of course, you want to pay the lowest premium possible. If you do a comparison search, you’ll quickly notice that premiums tend to vary widely among companies. Be sure to do some shopping on policies and companies to get the lowest price for the same product.

Term length. You’ve decided to go with term life insurance versus permanent insurance, but exactly how long do you want that term to be? 10 years? 20? 30? Keep in mind how long you think it will take you to pay off your mortgage or any other expensive asset, or how long it will be before your kids are all grown up and have their own jobs without having to rely on you to pay the bills. And of course, consider the fact that the longer the term, the more expensive the premiums. 

How much coverage you want. You’ll want to know what you’re insuring against and what types of expenses you want to cover.

Should You Use a Broker?

Your bank might offer life insurance policies, but you won’t know if you’re getting the best deal since you’re only seeing one offer from one entity. Instead, it might be a better idea to shop around from one insurance company to the next, and perhaps the easiest and most time-effective way to do that is to work with an insurance broker. 

While some people may think that buying directly from an insurance company will save them money by avoiding paying a commission to a middleman, that’s not exactly true. In contrast, insurance brokers can help Canadians save money by finding the best policy at the lowest rate, which can save you hundreds of dollars a year. 

An insurance broker does not work for one insurance company, Rather, they work for you and on your behalf. Their job is to do the comparison shopping for you to find the most suitable and affordable life insurance policy that suits your needs. 

Instead of working for one particular insurance provider, they have your best interests in mind. While they do get paid a commission for providing an insurance company with more business, they can pass on savings to you by finding the lowest price for a policy.

Plus, insurance brokers can educate you in the world of insurance so you can make a more informed decision about what company to work with and what policy to buy into. 

When Should You Get Term Life Insurance?

As noted earlier, the sooner you buy into a life insurance policy, the better. This is because the younger you are, the more affordable the policy will be. As you get older, you will be paying more to buy a life insurance policy. Plus, you’re likely to be in better health when you’re younger when you sign on. 

Having said that, when the term of your life insurance policy should begin may also depend on when you think you will have other people depending on your income. For example, are you planning to have kids at some point in the near future? The term of the policy should last as long as your dependents need your financial help. Generally speaking, this is until their children are all grown up. 

At the end of the day, however, your life insurance policy premiums will probably be lower if you buy into it earlier on in your adult life. 

What Kind of Information Do You Have to Provide When Applying for Term Life Insurance?

When you apply for term life insurance, your insurance provider will need the following information from you:

Your medical history. Your overall health is a very important factor when you apply for life insurance, as it will dictate not only the type of premium you will pay but whether or not you can be approved at all. While you may have already provided a brief explanation of your health when you obtained a quote, your insurer will need a lot more detail to complete your application.

You’ll need to disclose any medical conditions that you may have, as well as any medical procedures you’ve had in the past. It’s important to be truthful here because you could be penalized or have your policy revoked altogether if you knowingly suffer from an ailment and are not upfront about it.  

Drug and alcohol use. This may be a bit of an awkward subject, but you’ll be asked if you currently use drugs or abuse alcohol, or even if you have in the past. This may also include any prescription medication that you may be on or have been on in the past. 

Your family’s health history. Any history of health issues in your family could impact your health in the future, and your insurance provider will want to know about it. 

Payment frequency. Your insurance application will ask you how you prefer to be billed, whether it’s annually, monthly, or any other frequency.

Your beneficiaries. Lastly, you’ll need to name your beneficiaries who will receive your death benefit. You can even assign certain percentages to each beneficiary if you so choose. 

How To Make Term Life Insurance Claims

In the unfortunate event of your death, your beneficiaries will need to get a copy of your death certificate, which your insurance provider will need to see. Your beneficiaries will need to fill out a few forms and submit them along with your policy claim. Once the insurer has reviewed everything, a settlement will be issued after a few days. 

The proceeds will then be distributed according to your wishes. They can be paid out in one lump sum or in installments.

If the situation does not involve your death but a disability or other event that has rendered you unable to work, you can submit your claim yourself, and request the payout in whichever way you prefer. However, your life insurance policy must contain a disability rider in order for you to collect on this type of coverage, as most average policies typically don’t include this without an added rider.

What Happens If I Outlive My Term Life Insurance? 

The idea behind life insurance is to have your dependents taken care of in the event that you pass away. And term life insurance is meant to provide that type of coverage during the more important years of your life where your dependents may rely on you for financial support or where your mortgage still has yet to be paid off, among other things. If you die before your policy expires, your family will get the full death benefit.

But what happens when you outlive your policy? Will you be reimbursed in some way for all the payments you made toward your policy that you never ended up needing? 

By that time, you hopefully won’t need your life insurance policy. But if you do, you can review your coverage needs to see if it would be worth it to buy into another policy. Ideally, you may want to do that before your current policy expires so you’re not left with any gaps in coverage. You can either buy additional coverage by applying for a new term policy or convert your current policy into a permanent one.

Just keep in mind that if you do decide to take out a new policy, your premiums will likely be higher than they were before because you’re much older than initially took out your first policy. 

Otherwise, if you don’t need life insurance coverage after the policy expires, you can simply let it expire. 

Final Thoughts

Having life insurance can give you peace of mind knowing that your family will be taken care of financially if you pass away while they are still dependent on you to pay the bills. And while that may be just another bill to pay, you can keep costs lower by investing in term life insurance, which will cover you during the important years when your family needs you most. 

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