Key Takeaways
- What is life insurance?
- How does the insurance company set the price of life insurance?
- How much life insurance coverage should I buy?
- What type of life insurance should I buy?
- What term should I choose?
- When should I buy life insurance?
- How can I compare different life insurance quotes?
- Is it important to review my life insurance coverage regularly?
Emma's Life Insurance Guide
Life insurance guarantees a tax-free amount to your beneficiaries (spouse, child or parent) to help them cover your financial obligations if you pass away.
What is life insurance?
Life insurance guarantees a tax-free amount to your beneficiaries (spouse, child or parent) to help them cover your financial obligations, pay your funeral expenses and allows them to maintain the same quality of life after your death.
It is, therefore, a tool to financially protect your family in the event of premature death.
The cost of life insurance coverage
Life insurance to cover your temporary family financial needs usually costs between $20 and $30 per month. That's very little considering that it provides you with several hundred thousand dollars of protection.
When compared to other household expenses, it quickly becomes obvious that it represents a very small part of your monthly budget:
- Phone: $90/month
- Cable and internet : 120$/month
- Home and car insurance: $125/month
- Restaurant: $200/month
- Term Life Insurance: $30/month
How does the insurance company set the price of life insurance?
The price of life insurance depends on several factors. Each of these will affect the price of your life insurance. The insurance company estimates its prices based on the information below:
- Gender
- Age
- Amount of insurance
- Duration of the insurance contract
- Use of tobacco or marijuana
- State of health
- Lifestyle
Term life insurance is :
- A way to pay off the debts you leave behind;
- A way to cover your funeral expenses;
- A way to make sure your children have everything they need throughout their education;
- A way to make sure your partner needs for nothing;
- A way to leave a tax-free inheritance...
How much life insurance coverage should I buy?
Calculating your life insurance needs is important to protect your family.You can use the Life Insurance Needs Calculator we've built to quickly and efficiently identify your life insurance needs in just a few minutes.
👉 Discover my life insurance needs
What you need to understand with your temporary life insurance needs is that you need to use your coverage to cover the following:
- Your mortgage;
- Your personal debts;
- Make up for the loss of income in your family budget;
- Maintain your family's current standard of living;
- Pay your funeral expenses
It's important to make sure you have sufficient coverage, but more importantly, it's crucial that you not fall short. That's why we consider your investments, the government benefit everyone receives upon death and the insurance you already have in our calculator.
In some cases, your coverage may be insufficient and your life insurance policy too costly. This is usually the case when you don't have the right products in place to protect yourself properly at the right price.
What type of life insurance should I buy?
There are two main categories of life insurance: term life insurance and permanent life insurance. Both are very important, but they don't serve the same function.
Term life insurance:
Term life insurance provides protection for a fixed number of years. This means that you are only covered for a specific timeframe.
For example, if you buy only Term 20 insurance, you will be covered for 20 years. Once that time is up, your contract will end and you will no longer have life insurance.
However, it is possible to buy this type of insurance for different terms, such as 10, 20 or 30 years, and these contracts are usually renewable. This means you can choose to renew your policy when your term coverage ends. However, be aware that the price increases with your age. When you renew a term insurance policy, it will cost you more than the one that just expired.
On the other hand, if you purchase a new policy with proof of good health, the cost will be less than if you don't provide proof by renewing your old policy.
In the early years of a term life insurance policy, the cost is much less than that of a whole life insurance policy. However, if the insured lives for a long time, the cost of insurance will increase significantly more over time.
Source: Autorité des marchés financiers
Permanent life insurance:
Permanent life insurance is used to ensure a person for the rest of their life. As long as you are covered by this type of insurance, you can be sure that your heirs will one day receive the amount for which you are insured.
This type of insurance can offer a lot of flexibility in terms of premium payments. Some contracts may require payments over a fixed period rather than over your entire lifetime.
For example, you could pay off your life insurance policy in as little as 20 years.
In most cases, permanent life insurance is used to cover the same needs as term life insurance, in addition to leaving an inheritance.
Source: Autorité des marchés financiers
What term should I choose?
The length of your term life insurance generally matches the length of your financial obligations. As a general rule, you should select the longest of the following periods:
- The remaining term to pay off your mortgage.
- The youngest of your children reaching the age of majority
It is recommended to round up to the nearest multiple of 5.
For example, if you have a mortgage of $150,000 to be paid off over the next 12 years, you will choose term life insurance with a 15-year term.
However, for the same mortgage but with a newborn child in the equation, you'll opt for 20-year term life insurance coverage to maintain the same family standard of living until your youngest child reaches the age of majority.
When should I buy life insurance?
You've probably already heard that the cost of life insurance increases with age. The fact is, the longer you wait to buy life insurance, the higher the cost.
However, there are two types of life insurance needs: temporary and permanent.
In the case of temporary needs, these are present for a fixed period in your life. (Think mortgage and children). One day the mortgage will be paid off and the children will be able to take care of themselves.
Permanent needs, on the other hand, include funeral expenses, taxes payable upon death and the inheritance you wish to leave to your loved ones.
The right time to buy life insurance is therefore when you have a temporary need and/or when you have the budget to invest in a permanent insurance policy.
How can I compare different life insurance quotes?
Term life insurance is fairly easy to compare. Once you know the exact amount of insurance you need and the term you want, simply compare the prices of different insurers and choose the one that's best for you.
We've taken great care to select the best insurers in Canada so that you can purchase quality life insurance policies.
How can I analyze the quotes from different comparators?
All insurance comparators offer the same prices for each company. In fact, if you are looking for insurance with XYZ Company, you will not be able to get a better price by comparing it with any other insurance comparator. Insurance companies have to submit their prices to the regulators and everyone has to guarantee these prices. Offering a discount is, so to speak, illegal.
However, you can save money by comparing different companies to each other. Emma, therefore, offers you a comparison platform that allows you to find the right product tailored to your needs.
The difference between Emma and insurance comparators is simple: with Emma, you can complete your insurance application in just one visit to our website. We are the first and only website to offer this service in Canada.
What is the process for buying life insurance?
- Calculate your life insurance need
- Get quotes from insurers
- Choose your insurance product
- Completing the Insurer's Application
- Do the telephone interview with a nurse (if necessary)
- Do your free medical examination (if necessary)
- Waiting for the acceptance response from the insurer and the final cost
- Sign your insurance policy
Traditional life insurance purchase method vs Emma :
Is it important to review my life insurance coverage regularly?
Yes, it is indeed very important to review your life insurance coverage regularly, as your situation is constantly changing.
Chances are that one day you'll probably buy a bigger house, get a pay raise or change jobs, have more children or, who knows, become an entrepreneur.
As your life changes, so do your need for insurance. With our smart calculator, you can check your life insurance coverage in just a few minutes.
What's more, our friendly advisors are always available to answer your questions and guide you through the process. Visit emma.ca
