Life Insurance FAQ's

Life Insurance FAQ's - So you're thinking about life insurance. That's a smart decision! But do you know what it is? What it covers? How much you need? Don't worry, we're here to help. 

Is life insurance from my employer enough?

While so many people are blessed to have Life Insurance coverage through their Group Plan at work, it is not a permanent solution, because if you leave your job or employer, you do not have the opportunity to take your coverage with you. You are merely renting the insurance while you are there, and that may put your family at risk if your new employer does not offer the same benefits.

 

When should I get life insurance?

The most important factor in getting life insurance is your age and your health. The younger you are, the bigger the benefits or the cheaper the cost, so do not delay, each day your insurance coverage gets more and more expensive. And the most important note, is that you must apply for Life Insurance while you are still healthy, because money does not buy Life Insurance, Health does

What are the benefits of having a life insurance policy?

With the right coverage in place, you can help protect your loved ones from inheriting your debt when you’re gone. The cash amount could be used to help cover bills, the mortgage, final expenses and outstanding debts. It could also simply be used as a gift to help keep life on track for your family if the worst should happen.

Can I get life insurance if I’m a smoker?

Yes, it is possible to get life insurance if you are a smoker. However, life insurance could potentially be more expensive if you are a smoker. This is a direct result of the higher risks of contracting disease associated with smoking. If you casually smoke cannabis, you may also be exempt from smoker premiums, so disclosing your usage does not generally affect your ability to get Life Insurance.

Do I have to list my spouse as my beneficiary?

You can name anyone you want as your beneficiary – your spouse, children, a friend or even a charity – as long as they have an insurable interest in your life. Married people routinely make their spouses and children their beneficiaries. That’s because they will be most affected financially by their spouse or parent’s death. You can also change your beneficiary in the future as your life or priorities change.

Does life insurance cover COVID-19?

Yes, it can. In 2020, Canadian insurers paid $154 million in individual and group life insurance claims from deaths related to COVID-19. That’s according to a report from the Canadian Life and Health Insurance Association (CLHIA). In total, Canadian insurers paid $14.3 billion in individual and group life insurance benefits that year. Getting COVID or any related issues from it, will be covered in the event of your death while insured.

Am I too old to get life insurance?

Generally speaking, the older you are, the more life insurance costs you. That’s because over time, your chance of death increases. Term policies typically have purchase-age limits that correspond with the length of the term.
For example, you may be able to buy:
a 10-year term policy up to age 75, or
a 30-year term only up to age 55.
Why might you want life insurance when you’re older, if you no longer have dependents or a mortgage? You might still want to buy life insurance to pay for your funeral. Or you may buy a policy because the tax-free death benefit can help your children manage your estate expenses. You can buy permanent life insurance in your 50s, 60s or even 70s.

What happens if I outlive my term life insurance?

Term life insurance covers you for a set term (or amount of time), like 20 or 30 years. At the end of the term, the coverage stops. (That is, if you don’t renew it or convert it to a permanent policy.) People often buy term policies because they feel they only need insurance for a limited time. That could be for the length of a mortgage, or until their children grow up.

When would my beneficiary get the money?

As the beneficiary of a life insurance policy, you can file a claim as soon as you get the proof of death certificate. A funeral home will usually provide several of these within two or three days once you’ve made the arrangements. If your claim is straightforward, you can expect a payment as soon as 10 to 14 days after filing it.

I have Mortgage Insurance from the bank. Isn’t that good enough?

While the mortgage insurance from the bank is a start, it certainly is not a very solid insurance option. This type of insurance only pays off the mortgage balance upon death, and decreases in value every month, just like your mortgage balance. It is important to understand that this insurance can be substituted with your own individual term policy with a fixed price and fixed payout for the entire term of the mortgage. This is a much better option, because your Family becomes the beneficiary, not the Bank. There is no requirement for you to have Life Insurance from the Bank on your Mortgage, no matter how much pressure they put on you.

Does my benefits package at work cover me for life insurance?

While most employee benefits packages include life insurance, the coverage is usually very low (usually 1 or 2 times your annual earnings). This may not provide adequate coverage and your plan may be changed at any time. The insurance protection ends if you change employers with no insurance protection, and no other options.

I have been Smoke-Free for 1yr, can I qualify for Non-Smoker Rates?

Yes. Many life insurance companies consider you a non-smoker once you’ve been smoke-free for 1 full year. The cost differences between a smoker and non-smoker are significant, so use this as another motivator to quit.

What is Underwriting?

The underwriting process is when an Insurance company evaluates an application and decides whether or not to accept the risks associated with the application and determine the appropriate premium to be charged. An applicant is deemed insurable if he or she is able to meet an insurance company’s underwriting standards for risk, including being able to meet medical and other criteria for insurance coverage.

What is the difference between Underwriting at application or claims time?

It is very important to have insurance that is underwritten at application time and not at claims time. Such Insurance products offered by Creditor Insurance are underwritten at claims time, and this puts your family at a serious risk. If an insurance company has any questions about your health or application, it is best to satisfy those questions while you are still able to speak for yourself. Many Insurance scandals of the past have almost always come from underwriting at claims time. All of our policies are fully underwritten before they are issued, making sure there are no surprises for your family when they are dealing with your loss.

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