This comprehensive guide answers some of the most frequently asked questions about life insurance in Canada. Whether you're exploring your first policy or considering an update to your existing coverage, these insights will help you make informed decisions.
What Is Life Insurance, and Why Is It Important?
Life insurance provides financial protection to your loved ones in the event of your passing. It ensures that your family can maintain their standard of living, pay off debts, and cover future expenses such as education or retirement.
Key Benefits of Life Insurance:
- Financial Security: Replaces lost income for dependents.
- Debt Coverage: Helps settle mortgages, loans, or credit card debts.
- Future Planning: Supports long-term goals like education or estate planning.
Types of Life Insurance Policies in Canada
1. Term Life Insurance
- • Coverage for a specific period, such as 10, 20, or 30 years.
- • Affordable premiums, ideal for families on a budget.
- • No cash value; benefits are paid only upon the insured's death.
2. Permanent Life Insurance
- • Provides lifelong coverage with a savings component.
- • Higher premiums but builds cash value over time.
- • Can be used as an investment or estate planning tool.
3. Critical Illness Insurance
- • Provides financial support in case of serious illness.
- • Pays out a lump sum benefit upon diagnosis.
- • Helps cover medical expenses and lost income.
Frequently Asked Questions about Life Insurance
What is life insurance and why do I need it?
Life insurance provides financial protection for your loved ones in the event of your passing. It helps ensure that your family can maintain their lifestyle and cover expenses like debts, education, and retirement.
How much life insurance coverage do I need?
The amount of coverage depends on your financial situation, debts, income, and future obligations. A common rule is to have coverage that is 10-15 times your annual income.
What is the difference between term and permanent life insurance?
Term life insurance provides coverage for a specific period, while permanent life insurance offers lifelong protection and a savings component.
What is an MGA and how does it differ from an insurance advisor?
An MGA (Managing General Agent) is an intermediary that works with multiple insurance companies, while an insurance advisor typically works directly with clients to recommend policies.
Can I get life insurance quotes online?
Yes, many insurance providers offer online quote tools to help you compare policies and prices.