Life Insurance
Plan Ahead, Your Family’s Safety Depends on It
Life insurance is a contract between you and an insurance company that provides financial protection for your loved ones if you pass away. In exchange for regular premium payments, your beneficiaries receive a one-time, tax-free lump sum payment, known as the death benefit, upon your death. This payout can help replace your income, maintain your family’s standard of living, and cover immediate expenses such as funeral costs, debts, or children’s education. Life insurance offers peace of mind, ensuring your family’s financial stability during a difficult time.
There are two main types of life insurance in Canada:
Term Life Insurance:
- Provides coverage for a set period (e.g., 10, 20, or 30 years).
- Pays a tax-free lump sum to beneficiaries if you die during the term.
- More affordable than permanent insurance, ideal for covering temporary needs like a mortgage or raising children.
- No cash value: coverage ends when the term expires, or premiums stop.
Permanent Life Insurance:
- Covers you for your entire lifetime, if premiums are paid.
- Includes types like whole life and universal life insurance.
- Builds cash value over time, which you can borrow against or withdraw.
- More expensive than term insurance but offers lifelong protection and potential savings growth.
Term life insurance is best for short-term needs and affordability, while permanent life insurance offers lifelong coverage and cash value benefits. Both play important roles in securing your family’s financial future and achieving major financial milestones.
Frequently asked questions (FAQ)
Yes, you may still be eligible for life insurance, though factors such as the type of condition, its severity, and how long it’s been since your last treatment will affect your options and premiums.
No, the death benefit paid to your beneficiaries is generally tax-free in Canada.
Yes, you can own multiple life insurance policies from the same or different insurers, which can help you tailor coverage to different financial needs or life stages.
Term life insurance covers you for a set period and is usually more affordable, while permanent life insurance provides lifelong coverage and builds cash value over time.
Most policies offer a 30-day grace period to make a payment. If you don’t pay within this period, your policy may lapse, but some permanent policies have built-in safeguards like using cash value to keep coverage active.
Yes, you can often update your policy and potentially qualify for lower premiums if you quit smoking or improve your health, but you’ll need to notify your insurer and provide proof.
