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Life Insurance
Life Insurance Broker, Agent, Advisor: What's The Difference? (Canada-Specific Guide!)
August 31, 2023
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6 minutes
Life Insurance
Life Insurance Payout in Canada: What Is It and How Does it Work? (2023)
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Key takeaways:
Life insurance is worth it in Canada for anyone that:
As a rule of thumb, term life insurance is generally worthwhile for the average Canadian's financial needs. To start, here's how much more affordable term would be versus whole life insurance.
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If you're not sure you need life insurance, think about this: can your loved ones take care of themselves if you're gone? To help you out, start with the image below:
Life insurance might be worth it for you if you answered "yes" to most questions. But if you want to talk this through with a real human, we've got you covered.
PolicyMe advisors are non-commissioned, so they're not incentivized to oversell you on coverage. Get genuine advice, the kind of advice we'd actually give our closest friends below:
It’s a good idea to get life insurance if someone relies on you financially. More specifically, here's a look at who should consider coverage:
Your dependents could be left struggling financially if you pass, but life insurance coverage can help ease that.
For example, this is a breakdown of the economic situation that your loved ones would need to navigate if they lost your income:
These are example questions you should ask yourself when considering life insurance:
You probably don’t need life insurance if there is no one that will shoulder your financial responsibilities if you pass away.
But consider this: you may have enough to cover immediate obligations, but what about things like your spouse's retirement or the kids' education?
If your income was lost, could your family maintain the existing savings schedule? If you don't think they'll be able to cover all future expenses, then life insurance would be worth it.
The best age to get life insurance is when you first have a dependent. "New" dependents are usually the catalyst behind most life insurance purchases.
That can be a spouse, kids or any other family member that relies on you. And the age at which you buy your policy can also have significant benefits. The younger and healthier you are, the cheaper your life insurance will be.
Just how much more worthwhile is it to lock in your rate sooner? Here's a comparison of the cost of life insurance by age:
The age at which you don't need life insurance depends on your financial situation and the needs of your loved ones. Remember: the point of life insurance is to protect your dependents from financial burden if you were to pass prematurely.
You may no longer need coverage if you've reached an age where:
For most, this happens sometime around the time that we retire. The average age of retirement was 64 years old in 2022, says Statistics Canada.
This is a good milestone to help you plan for the end of your life insurance needs.
Not sure if life insurance is actually worth it for your specific financial situation? Chat with a non-commissioned PolicyMe advisor for genuine, impartial advice. We'll even tell you if you don't need life insurance right now.
Life insurance is generally worth it for many Canadians, but specific types of policies are more suitable than others, depending on your situation. We'll be looking at:
Term life insurance is worth it for most average Canadian families that need life insurance to cover financial obligations and dependents.
“[It] provides cost-effective, temporary coverage over an insured's younger years," explains the CLHIA.
Permanent life insurance can be a worthwhile option for Canadians with extremely high income. But it's likely not worth it for the average family. Here's what you need to know if you're asking yourself if a permanent life insurance policy is worth it for you:
Group life insurance is usually a good supplement to a term policy, but it's often not enough to cover all of a family's financial needs. Here's a breakdown of group policies:
Here are some examples of real-life Canadians wondering, "is life insurance worth it?". Life insurance advisor Stephanie Roux shares her recommendations:
Life insurance is a smart investment for Canadians with people that rely on them financially in the sense that it's a wise purchase. It's usually not a good idea to use life insurance as an investment vehicle for cash value, as it isn't the most efficient way to invest (versus things like the stock market or an RRSP).
Here's a look at whole life insurance as an investment account compared to other types of investments:
But there are scenarios where a whole life insurance policy might be a worthwhile investment vehicle, but for the average Canadian family, this isn't the case.
The main reason you would use life insurance as an investment tool would be for tax benefits. But if your TFSA and RRSP accounts aren't maxed out, you're better off putting your money there.
Life insurance helps to financially protect your family when you pass, and it's a good idea for many people.
But there are other ways to support your family. Let's take a look at some options:
The main reason for having life insurance is to protect your loved ones from financial issues if you were to pass away. Buying a life insurance policy makes sure that the people that rely on you for financial support don't have to face monetary losses if you pass away. A death benefit would give them the gift of financial security in a difficult time.
Life insurance is a good idea if someone financially depends on you, like your spouse/partner, kids or aging parents. Only some Canadians need life insurance. If you're single, financially independent and don't have large debts like a mortgage, you can probably skip a life insurance policy.
But if your financial situation has changed recently, it may be time to reevaluate your need for a policy. If you're unsure how much CI coverage you need, visit PolicyMe to determine how much critical illness insurance do I need.
You need life insurance for as long as you have someone financially dependent on you. That length of time is different for everyone, but your answer likely won't stay the same forever. That's why we tend not to recommend permanent life insurance.
Term life insurance lets you choose the term length that suits you and your family the best. So you can save money by only getting the amount of life insurance you need.
Your life insurance policy's worth will depend on the type of life insurance you have. Permanent and universal life insurance tends to have a cash value component, which will change over time.
If this question is in the context of selling your life insurance policy to someone else, take note that you are only able to sell your policy in Quebec and Saskatchewan.
No, life insurance is not a scam. It’s a valuable service that fills a real need in Canadian society by offering peace of mind and financial security for those left behind when a loved one dies. But not all life insurance policies will be worth it for everyone, and making payments toward a policy doesn’t always have an upside.
In the event that you do need life insurance, your loved ones will be thankful you made the investment. The key to maximizing the benefit of life insurance is to find the policy, rate, and coverage that makes the most sense for you and your family, and doing your due diligence to ensure that you work with a reputable life insurance company.
Life insurance is important because it looks after your family's financial future in the event that you're not around. Imagine if you were gone and couldn't provide for them anymore – life insurance steps in to help. When you purchase life insurance, it makes sure your loved ones can still afford things they need, like housing, final expenses, time off work and childcare, even if you're not there to support them.
Having life insurance gives you peace of mind, knowing that your family has financial protection to take care of themselves if something happens to you. It's like having a safety net for your loved ones so they don't have to worry about money during tough times.
Life insurance is a good idea for some, but not everyone needs it. You should think about purchasing life insurance if you have a family that depends on your income, like kids or a spouse. If something happened to you, life insurance would help make sure they can still pay for important things.
But if no one relies on you for financial support, paying premiums toward a life insurance policy might not be necessary. Remember, the goal is to protect those who depend on you, so if that doesn't apply, you might not need it.
If you are interested, get an insurance quote through PolicyMe for some of the best rates in Canada.
Sources:
Canadian Life and Health Insurance Association. Canadian Life and Health Insurance Association - Canadian Life and Health Insurance Facts, 2022 Edition. https://www.clhia.ca/facts
Canadian Life and Health Insurance Association Inc. https://www.clhia.ca/
Government of Canada, Statistics Canada. Retirement age by class of worker, annual. https://www150.statcan.gc.ca/t1/tbl1/en
/tv.action?pid=1410006001
Payment Delinquencies Increase, Credit Card Demand and Balances are Rising. Equifax.com. Retrieved March 14, 2023, from https://assets.equifax.com/assets
/canada/english/consumer-trends-q3-report-en.pdf
Statista. Average value of new mortgage loans Canada Q3 2021-Q3 2022, by metropolitan area. https://www.statista.com/statistics/1202954
/average-value-of-mortgage-loans-canada-by-metropolitan-area/
Walker, A. Funeral Costs in Canada: Questions and Answers. https://eirene.ca/blog/funeral-costs-questions-and-answers
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