You know that life insurance is important, but you’re not sure where to begin. This article helps explain the basics
A guide to life insurance
The concept of life insurance brings up questions such as
“What exactly is life insurance?”,
“How does it work?”,
“Which type is the best?” and maybe even
“Do I really need it?”.
On this page, you’ll find information about the basics of life insurance without any jargon or confusing language.
While life insurance has many facets, it’s a good idea to begin by defining what it is?
What is life insurance and how does it work?
A life insurance policy is a contract between you and your insurer. The insurance company agrees to pay a specified amount to the person or people chosen as beneficiaries in the event of the insured person’s death. You pay a certain amount of money to the insurer for this coverage. This is known as the premium. When an insured person passes away and an eligible claim is made, a lump-sum tax-free death benefit amount is paid out to the chosen beneficiary. It’s a way to help provide future financial security for the people you care about in the event of your death.
Do you really need life insurance?
There are people in your life who depend on you. Life insurance can be a part of your plan to help provide financial support to loved ones when you pass away. The money they receive can be used however they like. For example, it can be used to replace lost income, fund post-secondary education, or pay for final expenses. A life insurance policy can be a way to help give back to your loved ones.
When is the right time to apply for life insurance?
Once you’ve determined that you need life insurance, you should consider the following:
- Life insurance typically costs less when you are younger.
- As you get older, your health could deteriorate, which would make premiums more expensive.
With these reasons in mind, you may want to think about getting life insurance sooner. Major life events such as getting married, having children, retirement or buying a home can be reasons to start considering your life insurance needs.
How to get a life insurance policy?
One of the first things to consider when buying life insurance is the amount of coverage you will need. You then choose a product, get a quote, and complete the life insurance application. You could get automatic approval and instant coverage if this is offered by the insurer and you meet the eligibility requirements. Automatic approval means no medical exam is required.
If automatic approval is not available, your application will be assessed by an underwriter, who will determine if a medical exam is required. The purpose of the information requested is to confirm your health and lifestyle status, which is used to make a decision on your application. On approval, a policy is issued, and coverage begins immediately.
What are the factors considered in calculating premiums?
Insurance companies take into consideration a variety of factors when calculating the premium. It’s important to understand these factors, which may include your overall health, lifestyle, age, sex, and smoking status.
What are some of the different types of life insurance?
Although there are various types of life insurance, in this article we will briefly discuss two categories – temporary and permanent life insurance.
Temporary life insurance:
Temporary life insurance expires and may end before the insured individual passes away. The premiums remain the same for the entire duration of the term you select. At the end of each term, the policy automatically renews at a higher premium to reflect your age at that time. Term 10 and Term 20 are examples of temporary life insurance plans. Temporary insurance can be used for temporary needs such as a mortgage or to replace lost income to support your children if you were to pass away.
Permanent life insurance:
Permanent life insurance does not expire and provides you with coverage for as long as you live and pay your premiums. Some types of permanent life insurance are Whole Life, Universal Life, Term-100, and Guaranteed Acceptance Life Insurance.
With Whole Life and Universal Life, a portion of your premium can go towards investments to build a cash value. While premiums are higher, you get coverage as well as the potential to build up the cash value.
Whole Life Insurance:
A form of permanent life insurance, Whole Life Insurance provides coverage for as long as you live. It has an investment component managed by the insurer from which the cost of the insurance is paid. The premiums are also fixed.
How much life insurance coverage do I need?
Life insurance is different for everyone. The amount of coverage you require depends on your family’s needs, debts, and other obligations. It’s important to understand how much money your loved ones would need if you were to pass away. Consider factors such as lost income, outstanding loans and debts, your children’s education costs, and your family’s lifestyle. The Flipping Finance Life Insurance can help you calculate how much Flipping Finance Term Life Insurance you may need for you and your family.
Take your first steps towards applying for TD Life Insurance:
- Visit Flipping Finance Life Insurance online
- Choose the type of coverage you need
- Enter your province of residence
- Get your quote in less than 60 seconds
LEGAL:
Flipping finance Life Insurance is an individual life insurance plan underwritten by TD Life Insurance Company. See Insurance Policy for coverage details, including limitations and exclusions.
The content on this page is for general information purposes only and does not constitute legal, financial, or insurance advice. Speak to a life-licensed professional advisor regarding your specific situation. The information contained herein, is subject to change without notice.
