Today, we’re going to give you a summary of what you need to know about life insurance. We’re going over a lot of information here, so buckle up!
We’ll talk about:
- What life insurance is
- The 3 different kinds
- Who needs this
- The cost of insurance
- How your agent gets paid
- What happens when you pass away
- Who can’t get life insurance
Life Insurance is really just a contract. It’s a contract between you and an insurance company saying that, so long as you pay your bill, they’ll give your family a benefit when you pass away. It’s a simple a concept as that!
Of course, there’s more to the contract. But the terms of the contract are for your Insurance Agent to walk you through. Each Insurance Company’s terms will be different.
There are 3 kinds of Life Insurance:
- Term Life Insurance
Think of it like renting a policy. It’s cheap and for a set amount of time, but it’s not worth anything at the end.
- Whole Life Insurance
This policy is more expensive but will cover you for your whole life. It also builds up a cash value that you can withdraw or use as collateral over time.
- Universal Life Insurance
This policy is a combination between a life insurance policy and an investment portfolio. It’s the most expensive option but can be a great option for someone who’s investment savvy.
- Term Life Insurance
Insurance isn’t for everyone.
If you have debt, are self-employed, or have someone who relies on you or your income, then it’s definitely something to look into.
If you’re not quite sure or have more questions, book a Quick Call with us and we’ll do our best to answer! Please keep in mind we are only authorized to talk about Canadian Insurance options.
How much does Life Insurance cost?
Honestly, it depends on too many things to give you a straight answer. I’ve seen policies that are $10 a month and others are thousands of dollars a month. It depends on the insurance company you choose, the benefit amount (how much you’d be paid), your health, which of the 3 types of insurance policies you chose, and a laundry list of other factors.
What I’d suggest is, regardless of your budget, sit down with an insurance broker that you trust. Having a policy should never take food off of the table, but it’s better to have a policy that you can afford than nothing at all.
When do I pay my insurance agent?
You don’t! Insurance agents are paid by the insurance company.
We’re paid by commission and bonuses. It doesn’t matter what insurance company, agency or broker that you choose, it’s entirely a back end deal. You will not get a bill for your insurance agent’s time.
When you pass away a process of things will happen.
This process is one of the top things you need to know about life insurance. First, the insurance company will look into the cause of death. As long as you weren’t doing anything suspicious or illegal when you passed, and the reason falls under the contract terms, your family will be paid the death benefit.
It’s as simple as that! However, it’s not as fast as that. Make sure that you always have an emergency fund set up that your family can access to help them financially until the insurance benefit is paid to them.
If you want to make sure the benefit is paid as quick as possible, put your loved ones as the beneficiaries on your insurance policy. If you leave this portion blank, the money will go to your estate. In that case, the benefit will get locked up in probate and not released until that process is finished. And it can be a long process.
Life Insurance benefits are TAX-FREE. Your family will not need to pay tax on the money they receive from your policy.
Who can’t get life insurance?
Honestly, very few people! The industry has really evolved in the past few years. But each company is willing to take on a different amount of risk. For example, one company might not have a problem with your health concern while another sees it as a red flag and refuses to cover you.
That’s why I always suggest sitting down with a broker. We’re able to look at plans from multiple companies and can find one that’s willing to take on whatever risk you might have… the insurance might just cost a bit more.
Remember, you’re in control of your financial future.
It takes time and effort to put in plans like this but it’s worth it to know that your family will be taken care of, even if you’re not there.
This isn’t everything you need to know about life insurance. But now you’re ready to call your agent and look into options.
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