A sizeable percentage of Canadians – roughly 44% — don’t have life insurance coverage. Naturally, the reasons for this lack of coverage vary. Perhaps some people find the process too demanding, too involved, and they put it out of mind. Others (around 80%) believe that life insurance is too expensive. And then there are those Canadians who simply didn’t know that life insurance was an option.
Each of these setbacks is understandable. However, they don’t change the merits and value of a good life insurance policy, which is why this article aims to demystify the concept. Below, you’ll find a short guide to term life insurance in Canada – what it is, why it’s important, and how to manage common frustrations in the process.
What Is Term Life Insurance?
Fundamentally, term life insurance is assurance. It’s assurance for you and your loved ones that, should the unthinkable happen to you, they will be taken care of.
When you enter a life insurance agreement, you pay a premium each month to an insurance company. In the worst-case event that you pass away during the insurance term, the insurance company will pay your loved ones (the “beneficiaries” of the policy) a tax-free death benefit.
Why Do Canadians Get Life Insurance?
The vast majority of Canadian households rely on one or more incomes to thrive. The sudden loss of an earner can be majorly disruptive to a family, especially a grieving family. Therefore, most Canadians that enter a life insurance agreement do so with practical, analytical intentions; they want to see their family taken care of in their absence.
It can be challenging facing the prospect of your untimely passing. But many Canadians understand that it’s necessary to confront the worst-case scenario – if only to cultivate peace of mind at home. A death benefit can help a grieving family pay outstanding debts, make mortgage payments, shoulder funerary costs and more.
For other Canadians, the reason is a little simpler: They have life insurance through their employer. Roughly 2/3’s of Canadians with life insurance are covered through their work. This type of group insurance can be unideal, though, as it often pays out an inadequate amount.
Common Setbacks and Frustrations
Now that we’ve covered the basics, let’s delve into the frustrations and setbacks – the common roadblocks Canadians face on the path toward life insurance coverage.
Traditionally, the process was strenuous. It involved physical meetings and rounds of (sometimes invasive) questions, followed by weeks or months of waiting, unsure whether your application was successful. Moreover, insurance agents often recommended policies that earned them a higher commission rather than a policy that fit the owner.
Finally, there are those 80% of Canadians mentioned above who believe life insurance is too costly. And, in most cases, they aren’t wrong. In the past, there’s been a lot of bloat tied into the cost of term life insurance.
How to Find the Right Life Insurance in Canada
Despite those frustrations and setbacks, things are improving a lot here in Canada. Thanks to quick, streamlined policy companies that leverage online tools, the process is easier than it has ever been. And because these companies trim unnecessary operational costs, they pass on savings to the policy owner, making peace of mind less expensive.
Look for a company like PolicyMe that offers simple 20-minute applications with a quick turnaround for approvals. And try to find a company that values transparency and accountability – one that promises to offer a policy that’s right for you rather than an issuing agent. With a little research, you can save a lot of time and money.
In summary, term life insurance is an essential bit of assurance for Canadian families. And while acquiring life insurance used to be challenging in this country, it’s become much easier in recent years. Have the conversation with your loved ones and do some self-guided research to start the process.