Many people consider life insurance to be a waste of valuable income, but it can actually help you reach your financial goals and protect your loved ones in case you are injured or suddenly pass away. However, it can be difficult navigating the many life insurance options. Luckily for you, we put together the ultimate guide to Canadian whole life insurance to help make your decision that much easier.

 

What is Life Insurance?

Whether or not you want to admit it, life insurance is vital in protecting not only your personal finances but also your priceless assets. We aren’t talking about houses, yachts, or cars,  we are talking about your family — the people that depend on you for their livelihood. Life insurance replaces your income if you are injured or suddenly pass away, which means your family can sustain their standard of living while adjusting to this hardship. Life insurance also helps pay off your expenses and debts. After all, do you really want to leave your financial burdens on the already fragile shoulders of your spouse, parents, children or other loved ones while they are grieving your loss? We didn’t think so. Although there is no amount of money that can compensate for such a tragedy, life insurance will bring you and your family some much-needed peace of mind.

family
Credit: Stephanie Pratt from Pixabay

Although life insurance is such a critical necessity for protecting the future of those closest to you, it is rather confusing. Should you go for term life insurance or whole life insurance? What are premiums and how much is too much to pay? We have you covered with the ultimate guide to Canadian whole life insurance.

 

Term Life Insurance VS Whole Life Insurance

The first hurdle you have to make it over when trying to figure out which life insurance is right for you and your family is deciding between term or whole life insurance. Life insurance is much more flexible than people think. You can meet your financial objectives, emphasis on the plural, while providing security and financial assets to your loved ones. Choosing between the two types of life insurance is a very personal decision and should be based not only on the financial needs of your beneficiaries, but also on your financial goals. Now let’s get into the differences!

When it comes to life insurance, term life insurance is one of the easiest and most affordable options. But there’s a catch. Term life insurance only provides death benefits which means your family is only paid benefits if you die while the term of the policy is in effect, hence the name. You can purchase it for a specific time frame, anywhere from five to 30 years or more. You can also renew your coverage if you would like to extend it beyond your chosen term length. However, the faster you act the better because your premiums get more expensive as you get older. You can also convert term life insurance into whole life insurance or use to as temporary coverage in addition to a permanent policy.

Whole life insurance is a little harder to get than term life insurance and the cost is higher, but once you purchase your whole life policy, you are covered for life. Not only is your family provided death benefits but during the life of the policy, there is a cash value that accumulates and can be withdrawn or borrowed against. While the initial premiums are more expensive than term life insurance, this policy can actually save you money over the course of your life as the premium locks in and doesn’t increase as you age, the way term rates do.

 

How do I qualify for and buy whole life insurance?

Whole life insurance typically requires you to pass a medical examination. This is because your current health will determine whether or not you qualify. There are three health classes that an individual may fall under:

  1. Preferred Plus/Preferred: an individual with no medical conditions, no family history of serious illness, and an ideal build will qualify for the absolute best monthly premium possible.
  2. Standard Plus/Standard: an individual who has a family history of illness, existing medical conditions, or concerning build will still qualify for whole life insurance however the rates are not as inexpensive as those of the preferred class. They are however still very affordable, and the majority of people fall under this health class.
  3. Substandard: an individual under this class can fall into multiple tables and each table is a 25 per cent increase in the premium charged. People who get a substandard rate are usually considered higher risk and will typically pay a lot more for their policy.

It’s important to shop around before purchasing your policy. The key to successfully obtaining a whole life insurance policy is to work with an experienced broker who has access to multiple insurance companies. If you participate in any risky activities or have health problems, then you will want to recruit the services of a broker familiar with high-risk clients.

If you aren’t sure whether or not you need whole life or term insurance, you can visit LSM Insurance’s website. Not only are they a whole life insurance quote provider, they also have a great variety of helpful articles about different policies. You can also check typical rates in your province and read reviews which can be extremely helpful in guiding you to the right decision.

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