Shopping for Life Insurance

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Can you purchase life insurance completely online?

 

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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. It’s 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. Where to start? If you choose to purchase life insurance, our checklist will help guide you through the process.

 

What to do before you buy

 

Review your employee policy. If you have group insurance through your employer, review your policy to see what kind of coverage you have, and see if the policy coverage can be modified. If you need more coverage and your group policy does not allow for any changes, you might need an individual life insurance policy.

 

Ask your family and friends for recommendations. If they’ve already purchased life insurance, they can help you find a trusted life insurance company or agent.

 

Go online. There are many useful sites that can help you compare insurance products before you buy. Remember, online comparisons are not the same as personal advice from a trusted and licensed agent or company. It’s a good idea to speak with an insurance agent or company who can assess your individual needs, answer your questions, and provide ongoing advice over the life of the policy.

 

Select an insurance agent or company. Finding a professional to work with is an important step. Ask friends and family for recommendations or referrals. Other trusted advisors like the family lawyer or your bank manager can help too, and you can also check the Yellow Pages, professional associations, articles from the media and annual reports from the companies themselves online. You could even do a search of one or more of FSCO’s licensee databases as a start. Make sure you call at least two or three agents or companies and see if you feel comfortable with them. Focus on getting sound advice rather than the lowest premium.

 

Verify that the life insurance agent or company is licensed by FSCO. Visit FSCO’s Licensed Insurance Companies in Ontario or Agents Licensed in Ontario.

 

Verify that the life agent or company is in good standing with FSCO and other regulators. Prior to working with a life insurance agent or company check FSCO’s Enforcement Online [New Window] database to see if any enforcement action has been taken against an agent or company in Ontario. Enforcement actions, like having a license suspension, or the imposition of a fine (Administrative Monetary Penalty), may indicate issues in regards to compliance with legislation that was remediated through these sanctions. If a life insurance agent or company has had an enforcement action taken against them you should ask what it was for and how they fixed it. You might also want to check out the Canadian Insurance Regulators Disciplinary Actions [New Window] database that offers public access to regulatory decisions issued by insurance regulators across Canada.

 

Complete a financial needs analysis. This will help you get an idea of your assets, liabilities (debts) and income needs. When you provide accurate information to your insurance agent or company, they can make better recommendations for a policy that will fit your financial needs. One option is to use Canadian Life and Health Insurance Association's Financial Needs Analysis [New Window].

 

Make a list of your financial goals. Your life insurance policy is a big investment, and you and your agent or company need to know how it fits together with your other financial obligations and dreams for the future.

 

What to do when you buy

 

Meet with your life insurance agent or company. Once you’ve chosen potential parties to work with, you should sit down together and discuss your current situation and your financial goals. Consider multiple solutions to your life insurance needs and avoid anyone who tries to sell you a particular plan and won’t suggest alternatives. Decide on the type of life insurance policy you want and then ask them for quotes on that type of policy. Make sure you ask at least three insurance agents or companies to provide quotes and/or policy illustrations to you for the same type of product so you can make true comparisons and select the one that best suits your needs.

 

Compare different policy quotes. When you receive the quotes, compare them and see which one is more suitable to your life needs and future financial goals. You should compare features such as premiums (current and future), renewal increases (on term policies), investment options (on permanent policies), dividends, death benefits, policy loans and tax implications. Ask which features are guaranteed and which are not. Use FSCO’s Questions to Ask about Life Insurance checklist so you make an informed decision. It should be clear why the agent or company is recommending one policy over the other, and what the associated risks are.

 

Understand how the policy illustrations work. Ask for two policy illustrations on the same policy so you can see how well each policy may perform based on different interest rates. Ask for one illustration at the current interest rate throughout the life of the policy, and ask for a second illustration at an interest rate two or three per cent lower than the current rate. Compare the two policy illustrations to see how the interest rate affects long-term performance but remember, interest rates fluctuate so there are no guarantees. Then ask the same from another insurer. Compare policies to see which one best suits your lifestyle.

 

Submit an application. When you decide to apply for a life insurance policy, your agent or company will submit the documents to the underwriter. Make sure all information is accurate before signing the application, and ask for a copy of the completed form for your records. Also remember that failure to provide accurate and complete information can invalidate your policy.

 

Complete a health questionnaire or medical exam. To establish your eligibility, coverage, and premiums, the insurance company may require you to take a medical exam or complete a health questionnaire. Make sure the information you provide is accurate and complete. Misleading or incorrect information can invalidate your insurance policy.

 

Review your policy. You should receive your policy within 30 days. You will have at least 10 days and in some cases up to 20 days to review it and change your mind. This is called the rescission right. Use FSCO’s Eight Tips on How to Read Your Insurance Policy to understand what to look for.

 

What to Do After You Buy

 

Keep your life insurance policy in a safe place such as safe box, along with other important documents like your will. It is your responsibility to know where your policy is so you can refer to it.

 

Inform your beneficiary about your policy. They need to know the details of the plan, where you store the policy, how to contact your insurance agent or company and how to make a claim.

 

Inform your lawyer. They will need to know the details of your life insurance policy, and can advise you on how to complete your will and estate planning.

 

Review your financial needs at milestone events. When you get married, have kids, or buy a home, your financial and personal situation changes. It’s the perfect time to check whether your life insurance policy still meets your needs, and make adjustments if necessary. Speak with your life insurance agent or company to see what the options are.

 

Purchasing Life Insurance to Cover Someone Else

 

In Ontario, you can purchase a life insurance policy to cover a family member or a close business associate, such as a business partner. You will need their written consent to do so, and will likely have to go through the process of obtaining a life insurance policy with them.

 

You may be interested in...

 

Life Insurance 101 Getting Started: Learn more about how life insurance works.

 

Types of Life Insurance: find out what types of life insurance are available.

 

Questions to Ask About Life Insurance: use our checklist to ask the right questions.

 

Financial Literacy Portal: your one-stop shop for other kinds of financial information.

 

Glossary: Life Insurance: to better understand common life insurance terms, refer to this glossary.