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5 Tips for Buying Life Insurance in Canada
Make sure your
broker is independent
Buying life insurance is not something that should be taken lightly, especially when your family's financial future is at stake. There are so many things to keep in mind, but we've broken it down to the five essential tips so that you don't have to wander through the Canadian life insurance market without a compass.
1. Make sure the insurance advisor you're working with is truly independent. Many insurance companies employ a captive sales force e.g. Primerica, State Farm and Cooperators employ agents that only sell their particular products. In many instances, their premiums are completely incompetitive. An independent broker has the ability to shop the marketplace for the best possible value. Make sure you work with a broker who has access to a variety of carriers, not just two or three.
2. Make sure your policy does not have any exclusions. Many life insurance policies are issued with travel and recreational exclusions such as flying or scuba diving.
3. Make sure you're buying the right amount of life insurance. The first and most important step in buying a life insurance policy is determining the right amount of coverage for you and your family. You can find this information quickly and easily with our Needs Analysis Calculator.
4. Is the insurance company a member of Assuris? Assuris covers policy-holders under member companies for up to the greater of $200,000 or 85% of the face amount of your insurance policy in the event your insurance company becomes insolvent. With the current economic situation, it's no secret that in the 21st century even the largest, most reputable companies can be subject to financial failure. So far in Canada, three insurance companies have gone bankrupt:
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Les Cooperants on Jan. 3, 1992
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Sovereign Life on Jan. 18, 1993
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Conferation Life on Aug. 11, 1994
In each of these instances, Assuris was called upon to deal with the insolvency. Founded in 1990, Assuris is a non-profit organization that protects Canadians in the event their insurance company fails. Through the three insolvent cases above, Assuris has protected almost 3 million people-representing 10% of Canadians.
5. Are there any hidden costs or fees? Group Life policies and Creditor Insurance charge sales tax on top of your base monthly premium.
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You should also tell people about the contestability period for two years and to make sure they read everything that is written down and to request that the company read all medical records before issuing insurance ..I am a victim of an agent that just wanted his commission and left out pertinent information of my husbands illness that he was told leaving us with a false sense of believing we were covered when he died within 20 mos we were left hanging to dry!!! Please please get this information out to clients its so importatn ..I want to change this law …nopolicy should be issued with out a medical check at the doctors so the ins co cant use this as an excuse … failure to disclose information!!!
Thanks for the note.
Your point is well taken. Full disclosure is crucial when submitting a life insurance application.
In terms of getting a doctor’s report with each application this is likely not feasible. The insurance companies bears the costs of attending physician statements (i.e doctor’s reports) Requesting a doctor’s report when there are no underlying health issues well translate into higher costs which ultimately be passed on to the consumer.
I was sold a policy using an illustration with a GIC @ 3% plus a wealth bonus @ 1.5% totalling a 4.5% accumulation rate. 3 years later my statements were separating from this illustration.
I am now told the accumulation rate should not include the 1.5% wealth bonus. It is a huge difference in the policy.
Who is at fault?
Hi John,
Thanks for the note. If the policy bonus is stated in policy contract it can not be adjusted unless such a provision is made within the policy.
I would request written clarification from the insurance company. Regards … Lorne
Just over 5 years ago, I had skin cancer, for which I was treated and have since been given a clean bill of health. Do I need to disclose this when applying for term life insurance?