What is life insurance and how does it work

Reasons to buy life insurance

Often, you hear someone say how important having life insurance is. Perhaps now you have a home or family of your own and you are beginning a new stage in your life. You may be wondering if life insurance is for you.

What exactly is life insurance?

One way of describing it is: life insurance is financial coverage to be paid to a beneficiary upon the death of the policyholder. There are countless types of policies, and it is a good idea to do your homework to see which one is right for you and your situation. Three things to consider when searching for life insurance are income, dependents, and financial obligations.

Now you may ask, “Why should I get life insurance? Are there any benefits to such a policy?” Below are four reasons you should buy life insurance.

• Income Supplement: Life insurance creates financial security for loved ones, especially if the policyholder was the sole provider. The insurance helps the beneficiary by supplementing the deceased’s lost income.
• Final expenses: Having life insurance can assist the beneficiary with costs such as medical bills, funeral costs, and other “end-of-life” expenses. Burial costs can be less of a burden as life insurance can guarantee money is available for such things.
• Costs that will be ongoing in the near future: Life insurance can help cover mortgage and education payments and supplement student loans. Having life insurance gives security with ongoing financial obligations. Perhaps you have debts that will need payment or creditors will come knocking. The beneficiary gets the remainder of the policy.
• Equity and business: Depending on the policy, you may be able to withdraw funds that have built up over time by paying premiums. Life insurance is often used for emergencies. If you have a business, it’s financial responsibilities can be covered if something happens to you.

Everyone has different financial needs, and it is important to find a policy that suits you the best. There are policies for everyone, even those who think they can’t afford life insurance. No one really thinks of getting life insurance when they are young and full of health, but that is the best time to take charge and get some. Life insurance brings peace of mind, even with the smallest policy. It will comfort you knowing your loved ones are taken care of, no matter what, in the future.

How does it work?

To understand how a life insurance plan would work for you, we will have to first understand what are the kinds of life insurance plans available.

1. Term Life Insurance:

A term life insurance provides coverage only if the person passes away within a specified period of time. With this policy, the end of the term insurance can be set depending on a time duration or as an age limit.

It involves a consistent requirement of premiums and will be considered void if even one is missed. Term Life Insurance also works only if the event happens within the specified time period. If not, the beneficiaries do not receive any payouts.

2. Whole Life Insurance

The second type of coverage works without an age limit or a time period specification. The beneficiaries will be eligible to receive payments as long as you have ensured that the payments are being made at the right time for it.

Another thing whole life insurance has is the cash value. If you were to sell your whole life insurance, you would be able to get money instead of it. It builds up over time according to your premium payment.

3. Universal Life Insurance

Universal life insurance combines the benefit of an investment account with an insurance policy. The value of the policy may wax or wane depending on the kind of investments you have made.

This type of insurance also holds cash value and it can be used as collateral for a loan.

The insurance market has a variety of plans that help you curate one which suits your family the best. Taking help from an insurance broker from Canadian LIC Inc and can help you find the right one at the right price with more ease and comfort. They are experienced individuals who know the market like the back of their hand.

Get in touch with an expert and get your peace of mind. Connect with Canadian LIC for your life insurance today.

Life Insurance for Children

Life insurance is for everyone, even children. Although we don’t seem to talk about children needing life insurance, it is a way of protecting an act of love. Even if your children are still dependant on you, there are reasons why such a policy is a good idea. So, let’s see how important children’s life insurance is, and see if it is a great idea for your family.

As with all life insurance policies, life insurance policies for children are contracts with insurance companies. However, children’s policies are more focused on providing financial protection for the life of the child, but still include protection if the child pre-deceases you. This kind of insurance guarantees long term financial security to a dependant’s child. If your child has a hobby involving risky, such as scuba diving, motocross, or horseback riding, perhaps you should think about getting insurance.

The Benefits of Children’s life insurance:

• Child’s Funeral Expenses Coverage – However unhappy or uncomfortable thinking about it makes us feel, if something ever happened to your child, having this insurance would be beneficial. You would be able to pay for the child’s end-of-life costs. Any counselling would be paid for the whole family, and the family or guardians would be able to take time off work to grieve and recuperate after the loss.
• Future Investment and Savings for Child – children’s life insurance allows parents and other family members to leave a future financial tool for the child. This can go towards future houses, education, or even trips.
• Affordable Premiums are locked in – A child’s life insurance policy has cash value. The larger portion of paid premiums go towards the cash value, which takes time for cash to build.
• Child’s Insurability is Protected – child has guaranteed coverage even if he or she develops health issues at some point during life. Also, your child will be able to purchase or convert life insurance into permanent life insurance even more coverage in later years without having to get a medical exam.

There are several different types of Children’s Life Insurance. One is to have the child be a “rider.” The child “rides” on your policy and is called a term rider. This dependant is added to the parent’s policy. Term riders usually have less coverage, but because of that, are less expensive. Another type of life insurance for children is permanent or Whole Life insurance. Whole life insurance has lifelong coverage, and is an independent policy that does not have an expiry date. This policy is solely the children.

Getting life insurance for a child is a big and personal decision to be made, and it’s a decision that requires some discussion and research. To choose the best available option for your family, ask your insurance broker at Canadian LIC to advise you. Let your decision be comfortable knowing you have the best information available to protect your family.

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Tips to save on your life Insurance

Deciding on life insurance is a big decision. You may feel that you can’t afford to have a good policy, but don’t worry, there are ways to save money while getting the best policy for you and your loved ones. Here are some ideas to help save money on your life insurance.

• Permanent or Term Policy: While permanent life insurance is often needed if there are special needs dependants or an intricate estate needs, you can save by getting a term insurance policy. Term policies have a definite expiration date and no cash value element. This makes it less expensive at the beginning but can increase when the policy is renewed. Term policies are for a certain amount of time, between five and twenty. Whole life, or permanent life insurance is for your entire life. This type of policy may be cheaper for you in the long run. It really depends on your needs and plans.
• Paying annually and Premiums: Paying annually will save you money as insurers add fees on premiums when they are paid monthly. There are usually discounts for paying annually. Speaking of premiums, selecting a guaranteed level term premium is often recommended. With this policy, the paid premiums do not increase during the entire term.
• Stay Healthy, Quit Smoking and Get a Medical: This is no joke. Quit smoking and if you have any healthy issues, no matter how minor, now it the time to disclose By doing so, you will get the most accurate quotes. Be honest so your premiums won’t be effected down the road, and your Financial Advisor can better match you with the right insurer. Quitting smoking will save you money, as smoking has the most impact on life insurance premiums. Stay healthy. Try to maintain a healthy weight, drink little to no alcohol, and stop smoking. Getting a medical will also save you money. Non-medical policies will cost you. Premiums will be higher without the medical exam as insurers need to account for the risk of not knowing your health.
• Sooner is better than later: You aren’t getting any younger, and Life Insurance costs go up the older you get. Depending on your health, less insurers may be willing to take you on so it’s better to get Life Insurance sooner than later.
• Find that Special Insurance Advisor: Work with someone who can get multiple quotes, and don’t shop brokers. This will save you time because you won’t have to contact several insurance companies to get individual quotes. Insurance rates are regulated, so what one offers you here will be the same everywhere.

There is a policy out there for everyone, and these five simple points will guide you on saving money with your life insurance.