Life Insurance FAQ
Why do people buy life insurance?
The primary reason people secure life insurance is to provide for their family. The proceeds can be used to defray the cost of funeral expenses, pay other debts like mortgages, or to help with educational costs. For many people, insurance proceeds help them maintain the standard of living they were used to while you were their primary support.
How much does life insurance cost?
There are many different factors that determine the insurance premiums. Some of those are the type of policy, your financial needs, and future goals. Working with an insurance agent, and sometimes a financial advisor, you will be shown the types of policies to choose from and estimate the amount of premium payments that will be due monthly.
How much life insurance do I need?
The amount of coverage is a personal decision. A representative will be happy to sit down with you and look at your assets, lifestyle, goals and beneficiary needs. They will also be happy to work with you on an ongoing basis as your situation changes.
How does life insurance work?
Life insurance, like other types of insurance, spreads the financial risk among a large group of people. Each insured pays premiums into a pool or fund of money. This allows the insurer to minimize the risk for those who suffer a premature death versus those who live well into their 90s. An analogy would be a safety net to provide some financial relief for your loved ones.
Do I really need life insurance now?
Many young people don’t feel they need life insurance coverage because they are young, healthy and have no dependents. However, as their situation changes with marriage, children, mortgages, they often reconsider. Contracting for life insurance at a young age means lower premiums since you pose a lower risk. With the correct insurance structure, you can provide for cash value as time progresses.
Why should I buy life insurance when I am young?
Simply, the younger and healthier you are, the lower the premiums will be. Without any major illnesses or conditions, the less risk to the insurer.
Where do I get life insurance?
Life insurance is sold through an insurance agent or directly through an insurance company. In either event, that person or company must be licensed through the Financial Services Commission of Ontario (FSS). As you discuss your life insurance needs, be sure to consider that you are buying the right services and policy for your needs. It is best to shop around and visit with a number of financial advisors prior to making a decision.
How does my age affect my premiums?
Insurance companies group individuals by risk assessment. Younger, healthier insureds pose less risk than older persons with health issues. The lower the risk, the lower the premiums. They will also take into account a number of other factors like gender, physical condition, and detrimental habits like smoking.
Will life insurance cover all my funeral expenses?
When you work with a financial advisor and insurance agent, they will inquire about how you may want your death benefit allocated, including last expenses. You can make specific provisions and should also inform your beneficiaries of your desires. It is important to maintain up-to-date information on your beneficiaries with the insurer.
I have a life insurance policy, but I don’t quite understand it. What should I do?
Any time you have questions, contact your life insurance agent or the company. They should be able to explain all the principles and details. Keep asking questions until you are sure you understand.
The insurance agent I bought my policy from is no longer in business. What should I do?
Contact the insurance company directly. They will be able to recommend another agent in your area that you can call.