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Candian Life Insurance News

Convert Your Term Policy Before It Expires

Convert an inexpensive term life insurance policy & avoid money in the long run.

Not converting and keeping an inexpensive term life insurance policy for too long can cost unprepared families lots of money in the long run.

While term insurance is a great way to protect your family from financial disaster, sitting on the same policy until it is too late to replace it with a permanent options can be a financial disaster.

Term life is temporary insurance. It pays a fixed death benefit if the policy holder passes away during a set period of time. For example, if you have a 20-year term policy and you die before the 20 years end, your beneficiaries will receive the face value of your policy.

Once the 20 years is up, the contract expires. The company keeps your premiums and you have to find new insurance, usually at a higher premium. Term insurance helps you to prepare for the unexpected.

Term insurance is the cheapest form of life insurance because it is temporary and not intended to pay out. Young families benefit from term insurance. In many cases, it is taken out to help support young children and a spouse in case the primary breadwinner passes away. That takes a large policy to accomplish.

Many young adults do not have substantial savings and investments yet. They have a lot of their money tied up in new mortgages and student loans. Term policies offer a cost-efficient solution.

But as families mature, the breadwinners grow older and the policies get closer to expiration. Situations change and families need to consider changing their term insurance into a more permanent option.

Many term insurance contracts have a clause that allows the policy holder to do just that.

You could think of it as leasing insurance with an option to buy. You can use the convertibility clause to convert without having to obtain a new insurance policy. For a price, families can transform their temporary insurance into permanent insurance without having to re-apply for coverage or have medical examinations.

Not all policies have conversion clauses. If you are buying term insurance, look for policies that include the clause. They are often more expensive, but well worth it.


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Candian Life Insurance News

Online Term Life Insurance Rates - Mistakes You Can Avoid

life insurance quotes online

Shopping online for a life insurance plan that fits your particular situation can be a daunting task. There are many companies that offer life insurance and each company has pros and cons. There are also different types of life plans with many different options.

In addition mistakes can be made when enrolling for a life insurance plan.


Please use the following to avoid the most common pitfalls when shopping for life insurance.


Note that we highly recommend talking to a Canadian life insurance broker. It is a broker’s responsibility to know the different life insurance plans available to Canadians, and to fit an appropriate plan to a client’s particular situation.


Mistake #1: Getting the Wrong Amount of Coverage


The purpose of a life insurance plan is to protect loved ones in case the insured passes away. In order to accomplish this, however, it is critical to know how much coverage is required to protect those loved ones.


A good estimate takes into account things such as:


•How many children you have.


•Is there money set aside for your children’s education?


•How many years of replacement income would you like your family to get?


•When is your spouse retiring (if applicable)?


•Value of all investments (e.g. bank accounts, RRSPs, TFSA savings, bonds, stocks, etc.).


•Amount still owing on mortgage(s).


•Amount of all other debt such as loans, leases, credit cards, etc.


•Monthly expenses such as clothing, utilities, fuel, food, etc.


•Funeral costs.




The best way to find out how much coverage you need is by speaking with an insurance broker and going through a needs analysis.


Mistake #2: Not Being Forthright When Applying


There are numerous stories where people have had a life insurance claim denied because of errors and/or omissions in their application.


Whether it is deliberate or unintentional, it is VERY IMPORTANT to be honest and forthright when applying for a life insurance policy! Most life insurance plans are medically underwritten (except for guaranteed issue plans), which means there will be an interview with a medical practitioner who may take some blood and urine for chemical analysis, depending on the amount of coverage you want. In addition the life insurance underwriters have access to your medical records. If something is in your medical records (e.g. things discussed with your doctor, any medical procedures you’ve had, etc.) then make sure you divulge these things when applying.


Some common things that people may be hesitant to be honest about are:


•Smoking and cigarette consumption.


•Alcohol consumption.


•Use of illicit drugs. Note that cannabis (e.g. marijuana) use does not preclude you from getting life insurance coverage. Occasional cannabis users get the standard smoking rates. All harder drugs will result in an application being denied, unless you have been clean for fiver (5) years.


•Depression: while everyone gets depressed at times, if you are taking anti-depressant medication, or if you have discussed depression treatment with your doctor, then it is advisable to disclose these things in your application.


Mistake #3: Not Getting Coverage While Healthy


It could be argued that this is actually the #1 mistake people make when it comes to life insurance!

Trying to get life insurance when you are getting older and/or when you have serious medical problems is difficult. Oftentimes the only option available in these circumstances is a guaranteed issue life plan, which offers much less coverage compared to plans that are medically underwritten.


Term life is particularly cheap right now, and getting a term life plan that has a long enough term for your situation while you are healthy is the recommended way to go.


Mistake #4: Getting the Wrong Type of Coverage


There are two main types of life insurance: term life and permanent life plans. Permanent life plans build up a cash value, and are often used for wealth and estate management.


Term life is simpler, cheaper and does not build up a cash value. It is only used for protection against unexpected loss, and is not designed for wealth management.


Oftentimes people are better off getting a cheap term life insurance plan, and then investing the difference in premiums (compared to permanent life) into other investment vehicles such as TFSAs (Tax Free Savings Accounts), RRSPs, etc.


Mistake #5: Illegible Application


Finally, be sure to fill out an application form carefully and legibly. Writing that is difficult to decipher can lead to delays in the processing of an application. It can also lead to misunderstandings if a claim is being made later on.



Candian Life Insurance News

Don't buy the bank's Mortgage Insurance in Canada

Mortgage Insurance Ottawa

Buying a home is a major investment, and usually this means purchasing mortgage insurance from either a bank or some other financial lending institution.

Most of the time the lending institution (often a bank) requires this mortgage protection before they will approve the application.


What is often not made clear by banks is that term life insurance has numerous advantages when compared to bank mortgage insurance!


With term life:

• The beneficiary is whom you choose (e.g. spouse), instead of the lending institution

• You own the policy, and not the lending institution

• Many policies can be converted to permanent life insurance for investment and tax purposes after the term is finished (dependent on the policy)

•Premiums are not taxable

Here is an example scenario:


Mr. and Mrs. Smith have purchased mortgage insurance protection from their bank when they bought a home. Unfortunately, a few years later Mr. Smith passes away. The bank immediately forces Mrs. Smith to pay off the entire mortgage with the proceeds of the policy, even though Mrs. Smith has other pressing needs for those funds (there are several tuition fees from her children to pay for, and renovations need to be done).


If they had purchased term life insurance then Mrs. Smith would be the beneficiary, and would receive the benefits. It would then be at her discretion whether or not to pay off the entire mortgage, or pay part of it and use the other proceeds elsewhere.


It would be especially advantageous not to pay off the entire mortgage if they had obtained it at a good interest rate.