Life Insurance

Is Your Family Protected?¶

As a basic guideline, the Financial Consumer Agency of Canada recommends a level of coverage that will provide the equivalent of about seven to ten years’ annual salary to your beneficiaries. But the exact amount will vary depending on how much debt you have, whether you want to pay university tuition for your children, what type of lifestyle you want for your family, and other important factors.

A Palladium Insurance professional will take the time to help you understand the pros and cons of all the options, and will find a life insurance policy that works for you.

Why Buy Life Insurance?¶

Should the worst happen, your tax-free, lump sum life insurance benefit can be used to:

• Pay your debts, especially if someone else has co-signed on a loan with you. 
• Cover your funeral costs, which can be $8,000 to $15,000 — or more.
• Cover capital gains taxes on a property you own.
• Protect the financial health of your spouse and children. 
• Provide for ageing parents.
• Leave money to a charity that’s important to you.

While you’re alive, some types of life insurance can provide:

• Collateral for loans.
• A source of cash when you need it.
• A tax-advantaged vehicle for investments.

It all depends on the type of insurance you purchase — we can help you decide once we know what’s important to you.

Why Life Insurance is a Better Deal than Mortgage Insurance
¶

When you buy mortgage insurance from your bank, you are only covered for the mortgage amount. As your mortgage is paid down, the coverage amount decreases but the monthly premium payments remain the same. A life insurance policy gives you more control and provides more for your family.

Life Insurance FAQ ¶

I’m Already Insured Through My Employer. Is That Enough?

The life insurance that most people get with their employee benefits package is a great start, but often won’t meet their full financial needs. Your insurance broker should review your policy with you to decide if you need additional coverage.

I’m Under 30 Years Old. Do I Need Insurance?

The best time to buy life insurance is when you’re young and healthy.

• Your premiums will be lower.
• It’s much easier to get approved than if you start later in life, when most people develop medical conditions.
• Buying when you’re young can reduce the total amount that you pay for insurance over your lifetime.
• If you want to buy a house, some types of policies can become an asset that you can borrow against.

Choose coverage that allows you to make changes as your life progresses, for example, switching from term to permanent insurance (see below for definitions), or expanding the amount of coverage if you marry and have children.

What Type of Life Insurance Should I Get?

Life insurance is one of the most flexible financial assets you can own; there is a policy for almost everyone. But because there are so many options it’s important to discuss how you’d like to use your life insurance with your advisor. That being said, on a very high level, here are the major life insurance classifications in Canada:

1. Term life insurance is “rented” for a fixed term, for example 20, 30 or 40 years. It can also be set to last until you reach a certain age. Some term policies can be renewed or converted to permanent life insurance.
2. Permanent life insurance lasts for your entire life, and if you cancel your policy you can get part of the cash value. There are two general types of permanent insurance.
   • Universal life insurance has a flexible investment component, and you can choose the nature of the investment.
   • Whole life insurance also has an investment component, but the insurer decides the investment.

There’s a lot more to insurance, and exact coverage and terms vary from policy to policy. That’s why it’s so important to have an expert on your side to help you balance the options against your goals.

Have more questions?