Biggest myths with Life Insurance
You must buy Life Insurance
False. You don’t have to buy life insurance – there are no legal requirements in Canada. Most people buy life insurance because they love someone or owe someone. If there is anyone that would be financially impacted if you take your final limo ride then you may wish to call us.
I don’t have kids or a spouse – I probably shouldn’t have life insurance.
False. You may wish to lock in your insurability for the future when you do have a family or business partners counting on you. A small term policy is very affordable and once you qualify the coverage is guaranteed renewable and convertible. Also, who will pay for you funeral?
Life insurance need is based on income.
False. Income is only one factor in calculating an appropriate amount but your debts and legacy wishes for you children and plans for your funeral or celebration of life are also important factors. A good rule of thumb for an average family is – 10 x earnings + total debt + legacy wishes + funeral.
Term Insurance is the best.
False. Term Life Insurance is certainly the most common way to manage short term risk but each situation is different. Permanent insurance can be an excellent way to diversify a portfolio, transfer wealth, support a surviving spouse, pay final tax obligations on investment and recreational property, or move money out of a holding company to your beneficiaries in a tax efficient way.
After I buy I can forget my life insurance advisor.
False. For most Canadians, life insurance is their largest unmanaged asset. If you had a $1,000,000 in an investment account, you speak with your advisor at least once per year. Life changes and your insurance advisor needs to know the details to do the best job for you.
I quite smoking – my premiums won’t go down.
False. Once you quit smoking anything and not had any nicotine substitutes for at least 12 months, you can apply for non-smoking premiums – usually half the price. Let your broker know what’s happening so they can help reduce your premiums.
My spouse doesn’t work, we only need to cover me.
False. You are likely counting on your wife to raise children, take care of your home and handle the family’s affairs. Without your wife you will have to hire a nanny and you may not be able to work as much if there are children involved.
I just retired – I can’t get Life Insurance.
False. Life Insurance for seniors is available from a fully underwritten policy to a guaranteed issue with no medical questions. Always be sure to use a life insurance broker so you get to see all available options form the Canadian marketplace.
Term 10 means I have to pay for 10 years.
False. Term lengths are simply a guarantee from the insurance company that your rates will not change for the ‘term’. You can cancel at any time if you need to but as long as you pay the premium, the insurance company is on risk for the benefit amount. Term lengths are typically in years and the most common terms are 10, 20, 30 and Term to age 100.
Committing suicide voids my life insurance.
False. Every life insurance policy in Canada comes with a 24 month suicide clause. This means the carrier will not pay out if an insured person commits suicide in the first 24 months of the contract. After 24 months, the insurance company will pay the full benefit for the insured individual. *Note – if a policy lapses for non-payment, the insurer will reinstate this 24 month clause and it will start again.
If you have questions regarding your life insurance needs or an existing policy, please call us at 1.888.498.5288