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Life Insurance
Having a life insurance cover means your family or loved ones would be able to take the fiscal effect of your passing.
A tax-free, single large amount called death benefit from your life insurance cover can help your family to live the way they used to when you were alive, pay off debts, and meet other expenses.
Term life insurance – for an individual
This cover’s death benefit is paid if:
- The insured dies within a specific time period
- Before the insured reaches a specific age
The coverage’s length can be:
- For a fixed time period
- Till the insured reaches a particular age
Also, note that:
- Your premiums are set by the policy company.
- If the premiums are not paid, the policy may get cancelled.
Term life insurance – for couples
If you want to buy life insurance as a couple, first check your existing coverage and study all available options, keeping the advantages and disadvantages in mind.
There are two options:
- Joint first-to-die term insurance – in this policy, each partner gets the same coverage and the death benefit is paid when the first partner dies.
- Single term insurance – in this policy, each partner has their own policy and coverage amount.
What is Permanent life insurance?
This type of insurance means you are covered throughout your lifetime till your death. In case you die while the policy is in effect, the payment shall be made to the beneficiaries.
Types of Permanent life insurance
These are of two types.
- Whole life insurance
In this type, you are covered for your entire lifetime.
- Universal life insurance
In this type, life insurance is combined with an investment account.
Beneficiary
Naming one
A beneficiary is the one you name to receive the death benefit from your policy post your demise. You can name more than one beneficiary, in which case the amount is divided among them.
- Revocable beneficiary – in this type, you can change the beneficiary whenever you want without informing them.
- Irrevocable beneficiary – in this type, you have to gain the beneficiary’s written permission before making any changes.
Naming an under-age beneficiary
If you want to name a beneficiary that’s below the legal age, you have the option of setting up a trust and designating an administrator/trustee who can hold the death benefit in the trust on the minor’s behalf. In case you don’t name one, the province or territory shall do so and pay it to the beneficiary once they reach the legal age.
Naming your estate as the beneficiary
In this case, the estate will check your will’s details and distribute the death benefits accordingly.
Naming a beneficiary
It is vital to name a beneficiary for each policy. Otherwise, your estate shall be assumed by default to be your beneficiary by the insurance company.
Review your designated beneficiaries time and again and, if the need arises, update them.