Life insurance provides essential piece of mind, and is a vital part of a complete personal finance strategy. If you’re in the market for life insurance in Calgary, learning the differences between the main types of policies and understanding how your insurance needs change over time is a great place to start.
Why It’s Necessary
Beyond providing peace of mind, adding a life insurance policy to your portfolio provides four essential levels of protection:
- Financial protection for your loved ones in the event of your unexpected passing by helping replace income to meet household expenses
- Ensures that that your loved ones will have an inheritance
- Covers any debts or expenses you might leave behind
- Helps your children enjoy a more secure financial future
It’s never too late to get covered, and premiums are flexible. Even if you’re on a limited budget, there’s a life insurance policy out there that will provide these important benefits.
Life Insurance Calgary: Policy Types
Not all life insurance policies are the same, and some are better than others, depending on your situation. Among policy types, the main distinction is between term and permanent insurance.
Term life insurance pays out a fixed, specified death benefit if you pass away before the policy’s term expires. Terms are usually between five and thirty years, and your premiums remain the same for the life of the policy. Factors that affect your premium rates include your age, your health and the length of the term.
Permanent life insurance acts more like a bank account, allowing you to accumulate savings over time. The benefits are paid out regardless of how long you live, and premiums are not necessarily fixed. However, this flexibility comes at a cost: permanent life insurance policies are significantly more expensive than term policies, making term life insurance a better option for most people.
There are also several other types of life insurance policies, including interest-bearing whole policies, which have a guaranteed cash value and pay guaranteed benefits, and universal policies, which are similar to term policies but assign a percentage of your premiums to an interest-earning bank account.
Simplified vs. Guaranteed Issue
Some life insurance policies require the buyer to take a medical examination to determine his or her level of overall health. Others can be issued under simplified or guaranteed terms.
Simplified issue life insurance programs usually provide coverage of up to $150,000, but require only that you answer some questions related to your health. Guaranteed issue policies don’t require you to answer any health questions of any kind, and are usually capped at around $25,000 in benefits.
Plans for Life’s Many Stages
If you’re a single person with no dependents, chances are that a relatively simple policy that would cover your funeral is all you need. However, at other stages, your life insurance requirements will be more complex:
- Newly married couples often purchase life insurance while they’re still young and in good health to provide protection for their future family
- New homeowners may want to add insurance that protects the person paying the mortgage, as this gives other household residents added security
- Expectant parents have historically made up a sizable portion of the life insurance market, as life priorities change a great deal when a baby is on the way
- People in retirement age are often well-protected without life insurance, provided that they are in good overall financial shape; however, some choose to keep their coverage to ensure that family members don’t end up on the hook for their final expenses
Remember, too, that married people enjoy lower rates on many different types of insurance. If you get married, be sure to tell your insurance company about it to see if you qualify for premium reductions on your life insurance
Learn More About Life Insurance in Calgary
Life insurance can be a complicated topic, and if you have questions, the professionals at Lane’s Insurance of Calgary are here to provide answers and all the resources you need. Lane’s Insurance is a full-service Alberta-based insurance brokerage that works with the top carriers in the Canadian insurance industry.
Visit Lane’s Insurance today to get a fast, free, no-obligation quote for your life insurance needs.
