I am presenting to you a list of seven important points to consider when you are deciding for life insurance.
To try and make you part with your money, some unscrupulous brokers will try to get you to aquire extra or new policies which will give them extra income. Replacement often does make sense, as term costs have decreased across the board in recent years. If you have a whole life or universal scheme, be careful if you are contemplating cancelling them. With favourable rates given when you bought the scheme, these type of policies could have large surrender charges.
Non-medical life insurance plans often have higher premiums but lower face amounts than the standard life insurance policies. These type of plans are normally confined and only pay out the equivalent of the amounts paid plus interest if cashed in the first two years. If you have major health issues then these types of plans may be the best type to purchase.
Avoid accidental death insurance. Many Canadian life insurance companies heavily market accidental death insurance to unsuspecting consumers. Accidental death insurance is exceptionally advantageous to insurance companies, as below 3% of all life insurance claims are paid out because of death by accident. The corresponding term policy is often no more expensive than any of the accidental death plans for sale.
Be careful of agents that are only allowed to sell their own companies’ products: the so-called captive agents. Companies employing independent brokers often charge smaller fees than companies employing captive agents. Not being able to shop around, captive agents hardly ever find the best scheme to suit your needs and the best price.
The cheapest isn’t always the best fit. When examining your life insurance premiums, remember that the total cost is more important than the initial premium. Many insurance businesses try to lure customers with low initial premiums. Plans that start with lower initial premiums which increase with age are probably better for those customers who only need temporary insurance. The issue is that many businesses employ a one-size-fits-all philosophy. As individuals, insurance brokers need to look close at what the consumer needs.
Be conscious of policy exclusions. With a few exceptions, life insurance policies have a two-year suicide exclusion. Recreational pastimes and travel are sometimes excluded from your scheme if you are actively doing them when you put the application in. For that reason, pick a broker who is up to date on policy underwriting and can look around for the best offer, as each insurance company lays out their policies differently.
Keep away from any misrepresentations on your application. All Canadian life insurance policies have an incontestability period, generally of two years. Not telling the truth or keeping back information can be challenged by an insurance company if you try to make a claim in this time period.
If you are interested in more information from me, you can visit our website and review our profiles of over 25 Canadian insurance companies, such as AXA Life Insurance, or Great-West Life Assurance Company.
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