Who Needs Life Insurance?

People with responsibility for others

If someone such as your spouse, children, grandchildren or a parent depends on you for support, life insurance can play a fundamental role in their continued financial well being. In addition to making up for the loss of your income, the proceeds from a life insurance policy can be used to take care of funeral expenses and other costs such as a mortgage, loans or credit card payments that may otherwise become their responsibility for settlement.

People without family ties

Even if you are single, or you and your partner both work but don't have a family, life insurance can still play an important role in your financial security plans. A life insurance policy can provide an efficient and cost-effective way to take care of any expenses or unpaid bills you might leave behind, such as legal fees and taxes, medical expenses, funeral costs, mortgage debt or a car loan. It can also be used to leave a gift to a loved one or a favourite charity.

People with estates to protect

Many people believe as they get older and become more financially independent, their need for life insurance decreases. However, over a lifetime, estate values tend to rise. Life insurance can help pay the inevitable taxes that are due on an estate upon death. This can ensure as much of your estate as possible is passed on to your beneficiaries.

Business owners

If you're a business owner, either on your own or with a partner, you probably have personal liability for the debts of your business. In case of death, it is important that you have adequate insurance. Otherwise, the claims of business creditors could significantly reduce your personal estate and leave your beneficiaries without the financial security you had intended. Equally important is the smooth transition of ownership of the business to a family member, partners or a key employee. A life insurance policy can make this possible. Your business is an asset that provides income for your family, both while you are alive and after your death. It is also likely your largest asset and will provide you with a retirement income. Life insurance can ensure your family receives fair value for this asset at your death.

People who want to leave a legacy

You may wish to leave money to a favourite charity. Life insurance can help you leave a more substantial legacy than would be otherwise possible.

Why Do I Need Life Insurance?

If you feel that it’s important to provide protection for your family then you may want to ask yourself the following questions: Would your family be taken care of if you were not there? What about your spouse? Would your business survive the financial burden of your loss?

Only you can decide if you need life insurance – but if you answer yes to any of the questions below - we can help.

  • Do you have dependant children?
  • Do you have a spouse?
  • Do you have a sizable mortgage that would not be covered?
  • Do you worry that your retirement savings would not sustain your dependants?
  • Do you have an estate that needs to be protected?
  • Do you have a business that needs to be protected?
  • Would you like your final expenses to be looked after?

How Much Life Insurance Do I Need?

Your income most likely makes up the majority of your family's income. It provides for the necessities in life, as well as all the creature comforts that you have worked so hard to attain. Accordingly, the amount of insurance you need will depend on your personal financial situation.

A commonly recommended amount of Life Insurance is anywhere from 3 to 10 times your annual income. There are several factors that should always be considered. These include your spouse's ability to earn an income, your savings and RRSPs, how many dependants you have and for how long they will depend on your income, and of course, how much you can actually afford. These are all important factors in determining how much you can purchase.

The insurance calculator is a good starting place to determine your insurance needs.

Are There Different Types of Life Insurance?

Basically, there are two types of life insurance that satisfy many different needs:

Term insurance - Term insurance products are well suited for meeting high, short-term protection needs at the lowest initial cost.

Permanent insurance - Permanent insurance products offer lifetime protection, can build cash value and provide a death benefit.

Term insurance

Term life insurance is well suited to meeting high, short-term protection needs for the lowest initial cost. For example, a couple with young children and/or a mortgage might select term insurance as an affordable way to obtain the full coverage they need today.

Most Term plans are renewable without providing proof of health. The price will increase to be appropriate for your age at renewal, and the increase in premium can become substantial in later years. Coverage ceases for term contracts once you reach the age of termination outlined in the policy.

Be sure to consider both the initial premium and the renewal rate when reflecting on the cost of term insurance. Also, consider whether evidence of insurability is required at time of renewal.

Some of the benefits of term life insurance are:

  • They usually have very affordable premiums
  • They can be used as temporary coverage while your expenses are higher
  • You can cancel penalty free at any time
  • There is no medical exam normally required to apply

Some of the drawbacks of term life insurance are:

  • Your premiums increase with age
  • There is no cash value

Permanent Life Insurance

Permanent insurance: insurance covers you for your entire lifetime rather than a pre-determined portion of your lifetime as in term policies.

There are many variations of permanent insurance offered in the market. However, for the most part they can be separated into two types of plans, Participating life insurance, and Universal life insurance.

Participating Life Insurance

When you purchase participating insurance, your premiums go into a separate account called the participating account (par account) with funds from other Canada Life participating policies. The assets in the participating account are managed by Canada Life.

Permanent participating insurance policies have potential for earning policy owner dividends. Favourable investment returns, mortality and expense experience generate a surplus in the par account. A portion of this surplus can be paid to policy owners in the form of policy owner dividends.

These dividends can be used to buy additional insurance each year on a tax-advantaged basis without proving your insurability. They can also be used to lower your out-of-pocket premium.

Universal Life Insurance

A universal life policy separates the savings and insurance components. Within limits set out in the contract, you can decide how much or how little you want to pay into the policy. You select an investment mix that is as individual as you are - taking into account the amount of investment risk you're comfortable with and your financial goals and circumstances.

A universal life policy allows you to accumulate cash values on a tax-advantaged basis. As cash values accumulate, you can withdraw cash from your policy or borrow against it. You can also use cash values to pay part or all of the cost of your insurance.

This type of policy is attractive for people who want to actively manage their life insurance policy.

You can use universal life insurance to:

  • Pay final expenses and any debts you may have
  • Ensure your family has the resources to maintain a comfortable standard of living
  • Pay any taxes owing on your estate so more of your estate is transferred to your children or grandchildren
  • Leave a legacy in your community or to your favourite charity
  • Provide your business with the money necessary to fund a buy-sell agreement
  • Protect your business against the loss of a key employee

During your lifetime, it can:

  • Build tax-advantaged savings which you can draw upon as needed for personal or business opportunities
  • Supplement your retirement income
  • Provide funds for long-term care or home care

Some of the benefits of permanent insurance are:

  • There is a guaranteed cash accumulation (investment component)
  • There are guaranteed level premiums
  • There is Level Death Benefit
  • You may be able to borrow against it
  • It generally meets peoples' long term needs

Some of the drawbacks of permanent insurance are:

  • The high initial premiums

For specific information about what permanent life insurance can do for you and how you can benefit from owning a policy, speak to your financial security advisor.

What If I Already Have Life Insurance?

You may already have some form of life insurance, but it is always a good idea to make sure that you are adequately covered. Important life events like the birth of a child or grandchild, getting married, purchasing a new home, or planning for your children’s education, can all change the coverage you need.

How Do I Apply?

Applying is easy - Click the Apply Now button and follow the easy to understand instructions and you can apply on-line immediately - or you can call toll-free at 1-888-859-9564 and ask for an application to complete. Canada Life's dedicated and informed Customer Service Representatives are available to answer your questions or assist you with your application.

What If I Change My Mind After Applying For Coverage?

Once your application is approved, you will receive your Certificate of Insurance in the mail. You will have 30-days to look over the certificate and review your insurance plan. If you are not completely satisfied - for any reason, then send it back to Canada Life within 30 days of receipt with a signed request to cancel. Any premium paid will be refunded - no questions asked.

What If I Smoke Occasionally?

Even if you only smoke occasionally you are still classified as a smoker. You will only be considered at non-smoker rates if you have not smoked any cigarettes, and/or used other tobacco products or nicotine substitutes in the past 12 months (as of the date your application is received by Canada Life). If you are already covered and you begin smoking, you must notify us so that we can adjust your premiums accordingly.

What If I Quit Smoking After I Am Covered?

Congratulations! If you have not smoked cigarettes, and/or used any other tobacco products or nicotine substitutes for over a 12-month period please let us know. We will be happy to provide you with lower non-smoker rates if available. These rates will begin on the 1st of the month following our approval of your non-smoker application.

How Do I Increase The Amount Of My Coverage?

You can apply for increased coverage at any time by completing an Additional Coverage Application form and mailing it to Canada Life. You can contact a Canada Life Customer Service Representative at 1-888-859-9564 and we'll be happy to send you an Additional Coverage Form through the mail.

How Do I Update My Mailing Address, Telephone Number or E-mail Address?

Please notify Canada Life by phone or in writing if you wish to update your address, phone number or e-mail address.

How Do I Change My Beneficiary?

You can easily change your beneficiary by completing a Change of Beneficiary form and mailing it to Canada Life. You can contact a Canada Life Customer Service Representative at 1-888-859-9564 and we'll be happy to send you a change form through the mail. If your current beneficiary is irrevocable, you will need your beneficiary's consent to make this change.

How Do I Cancel My Coverage?

You must inform us in writing to cancel your coverage. Contact a Canada Life Customer Service Representative at 1-888-859-9564 and we'll be happy to send you a Coverage Cancellation Form through the mail.

What If I Have Other Questions?

Canada Life's dedicated and informed Customer Service Representatives are available to answer your questions or assist you with your coverage needs. They can be reached toll-free at 1-888-859-9564 (Monday to Thursday: 6:30 am to 4:00 pm MST, Friday: 6:30 am to 3:30 pm MST).