- Why do people get life insurance?
A: Life insurance is a way to make sure that your family and dependants don’t suffer financially when you die. Life insurance can be used to pay for a funeral, pay off debts (including your mortgage), pay for your children’s education and help your family maintain their standard of living when they no longer have you to support them. To learn more about what life insurance can do for you, visit Life Insurance 101: Getting Started.
- I don’t make a lot of money. Roughly how much does life insurance cost?
A: There’s really no magic number for this. A life insurance agent will make recommendations based on your individual needs by conducting a financial assessment to evaluate your current situation, your financial needs and responsibilities and your future goals. You can tell an insurance agent what you can afford and they can put forward solutions for discussion that suit your finances. There are a lot of different life insurance policies to choose from and you can usually arrange to make affordable monthly payments (premiums). You can also get quotes online from some insurers. To find a licensed insurance agent who can give you specific details, visit FSCO’s Agents Licensed in Ontario database.
- How much life insurance do I need?
A: There is no one-size-fits-all answer. The amount of insurance you will need is a highly personal decision. A life insurance agent will look at your assets, debts, personal situation, financial goals and your family’s needs so they can make recommendations tailored to you. Remember, your needs might change throughout your life, so it’s a good idea to review your policy at milestone events such as getting married or having a baby. To learn more about how your needs are determined, visit Life Insurance 101: Getting Started.
- How does life insurance work exactly?
A: Life insurance, like all types of insurance, works by spreading the financial risk among a large group of people, who pay into a pool or fund. This minimizes the costs for those who suffer an unexpected event like death. Think of it like depositing money into a safety net that will safeguard your loved ones and your investments, and repay your debts when you no longer can. To learn more about how life insurance works, visit Life Insurance 101: Getting Started.
- I am young and single. Do I really need life insurance now?
A: If you’re young and have no dependents, you may not need life insurance yet. But if you’re planning on getting married, having kids, or buying a home, you should probably start to think about it. You will want to make sure that your family is provided for, and can pay off your debts after you’re gone. Getting life insurance while you are young and healthy can result in lower premiums, as you pose a significantly lower risk. If you’re not sure whether you need life insurance, visit Life Insurance 101: Getting Started.
- Everyone keeps telling me that I should buy life insurance while I’m younger. Why?
A: One big benefit is that the younger and healthier you are, the lower your premiums will probably be. To learn more about the benefits of getting life insurance at an early age, visit Life Insurance 101: Getting Started.
- Where can I get life insurance?
A: You are unique, and when it comes to buying life insurance, you want to find the policy that meets your individual needs – for the rest of your life. Life insurance is a major financial commitment that deserves careful consideration. Just as you would shop around for the best internet provider or your first home, you should also shop around for life insurance and make sure you’re getting the insurance policy that’s right for you.
You can buy life insurance from an insurance agent or directly through an insurance company, both of which must be licensed by the Financial Services Commission of Ontario (FSCO). Find a licensed agent near you by visiting Agents Licensed in Ontario. You can also check to see if an insurance company is licensed by visiting Licensed Insurance Companies in Ontario.
For more information on purchasing life insurance, visit Shopping for Life Insurance.
- I live in Ontario. Is the life insurance death benefit paid to my beneficiaries tax-free?
A: You should discuss tax implications with your insurance agent or company and you can also check with Canada Revenue Agency (CRA) for more information about life insurance and taxes.
- Does my age affect my life insurance premiums?
A: Yes, your age can affect your premiums. Your insurance company is going to evaluate the risk that you pose to the company and place you in a ‘risk grouping’. Usually, the younger you are, the healthier you are, the lower the risk you pose, the lower the premiums that you have to pay. Keep in mind that age is only one factor, and the insurer will also look at things like your gender, medical history, physical condition and if you smoke. For more information, visit Life Insurance 101: Getting Started.
- Will life insurance cover 100 per cent of my funeral expenses?
A: When you buy your policy, your life insurance agent will work with you to make sure that important expenses are covered by your death benefit. Make sure your beneficiaries know how you want the death benefit used, including if you want it to cover your funeral expenses, or make provisions in your will to ensure your wishes are met. Be sure to keep the beneficiaries section in the policy up to date as the years go by. For more information about what life insurance can cover, visit Life Insurance 101: Getting Started.
- I have life insurance, but I am confused about my policy. What should I do?
A: We recommend calling your life insurance agent or company to answer any questions you may have. They should be able to provide you with answers in plain language so you can understand your policy. Consider using FSCO’s Questions to Ask about Life Insurance to help guide your conversation.
You can also read more about life insurance in the Canadian Life and Health Insurance Association’s A Guide to Life Insurance brochure.
- The life insurance agent I bought my life insurance policy from is no longer in business. What now?
A: If this is the case the policy has reverted to the insurance company that issued it. We recommend you call the insurance company that issued your policy to see if another life insurance agent can be appointed to your policy.
You may be interested in...
Working with a Life Insurance Agent or Company: learn more about your agent’s responsibilities and how they can help you.
Life Insurance 101 Getting Started: make sure you understand the terminology in your policy.
Types of Life Insurance: make sure your policy is the right one for you.
Shopping for Life Insurance: get details on how to select an agent and how to comparison shop for life insurance.
Financial Literacy Portal: learn more about a variety of financial topics.
Glossary: Life Insurance: to better understand common life insurance terms, refer to this glossary.