Buying life insurance is an important step to protect your loved ones in case of an unexpected event. Life insurance policies can help cover expenses like funeral costs, debts, and ongoing living expenses. However, with so many options and policies available, it can be overwhelming for Canadians to navigate the market and make the right choice. In this blog post, we’ll go over common mistakes when buying life insurance in Canada that you should avoid.
However, with so many options and policies available, it can be overwhelming for Canadians to navigate the market and make the right choice. On top of that, there is much conflicting advice from different agents, which makes things even more difficult.
In this blog post, we’ll go over common mistakes to avoid when buying life insurance in Canada.
In This Article
- Mistake #1: Not considering the amount of coverage you need
- Mistake #2: Choosing the wrong type of policy
- Mistake #3: Not reviewing the policy terms and conditions
- Mistake #4: Not shopping around for the best policy
- Mistake #5: Waiting too long to buy life insurance
- Mistake #6: Not disclosing all relevant information
- Mistake #7: Not updating your policy
- Mistake #8: Not working with a broker
Mistake #1: Not considering the amount of coverage you need
Many people make the mistake of vastly underestimating the coverage they require to protect their families. This can leave their loved ones with a large financial burden at death if they pass away unexpectedly. It’s important to take into account factors like debts (mortgage, credit cards, student loans, etc.), ongoing living expenses until children are financially independent, and funeral costs when determining the amount of coverage you need.
We also have a free online calculator, which you can use to help figure out how much coverage you need to have in place.
Mistake #2: Choosing the wrong type of policy
Another common mistake is choosing the wrong type of policy. Different types of life insurance policies are available in Canada, including term life insurance, whole life insurance and universal life insurance.
Each type of policy has its benefits and drawbacks, and it’s important to choose the one that best suits your needs. The majority of Canadians should be purchasing term life insurance as it fits the needs of most by providing affordable premiums with the highest amount of coverage. If your broker is pushing whole life or universal life insurance, you should more than likely get a second opinion from a reputable broker with many positive reviews.
Mistake #3: Not reviewing the policy terms and conditions
It’s important to review the terms and conditions of the policy before making a purchase. Many people make the mistake of not reviewing the policy terms and conditions, which can lead to surprises down the road. Ensure you understand the policy’s coverage, exclusions, and premiums before signing on the dotted line.
For example, some no medical life insurance policies do not pay out for the first two years of the policy. The insurance company will only return the premiums that were paid if death occurs in the first two years. This is why it is very important to understand your policy details and not be afraid to ask your broker lots of questions.
Mistake #4: Not shopping around for the best policy
It’s very important to compare policies and rates from different insurers before making a purchase. Not only will this help you find the best possible coverage for your needs at a price you can afford, but it could also potentially help save you thousands throughout your policy.
Beware of life insurance agents who are “captive agents.” This means that they only sell for the company they are working for, which limits the number of products that they are offering to you. Don’t settle for the first policy you come across – take the time to research and compare.
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Mistake #5: Waiting too long to buy life insurance
Too many Canadians make the mistake of waiting too long to buy life insurance. The longer you wait, the more expensive life insurance premiums can be, especially if you develop health issues before purchasing.
It is important to get coverage in place while you are young and healthy to get the best policy and rates possible.
Mistake #6: Not disclosing all relevant information
Be sure to disclose all information about your health and lifestyle to the best of your knowledge when submitting your application for life insurance. Although very rare, failing to do so can result in a denied claim in the future. It’s wise to be upfront and honest about any pre-existing conditions, tobacco or drug use, or dangerous hobbies or occupations.
Mistake #7: Not updating your policy
Life-changing events such as marriage, children or a new job can all affect your coverage needs and beneficiary designations. Don’t assume that the policy that you bought years ago is still the best option for you today. Even if it still suits your needs, you may need to update your beneficiary or make name changes. Make sure to review your policy on an annual basis with your agent.
Mistake #8: Not working with a broker
It is crucial to work with a life insurance broker who can show you various options from different companies. This ensures that you are receiving unbiased advice and not being sold a policy that suits the needs of the commissioned agent.
At Life Insurance Canada.com, we work with all of the top life insurance companies in Canada to ensure that you are getting the right advice to purchase the right policy for you and your family.
It’s essential to avoid common mistakes when purchasing a life insurance policy. By taking the time to understand the amount of coverage you need, researching different types of policies, comparing rates and disclosing all relevant information to the insurer, you can ensure that you get the right policy that meets your needs.
By avoiding these common mistakes and making informed decisions when buying life insurance in Canada, you can rest assured that your loved ones will be protected in case of the unexpected. Still unsure what what type of life insurance you need or how much? Reach out to one of our life insurance specialists today.