Life insurance

There are two main types of life insurance:

Term Life Insurance and Permanent Life Insurance.

Temporary Life Insurance

If you die during the specified term, this short-term insurance type pays out a tax-free benefit to the people or organizations you choose as beneficiaries.

Note: You can use the money to pay bills, the mortgage, your kids' school expenses or to keep your business going.

Your payments, called premiums, are fixed for the length of time you choose. They won't change during that time.

Term Life Insurance offers:

Low-cost coverage: During the specified timeframe, your payments won't change.
Short-term safety: You can choose a coverage period that works for you. Coverage terms range between 5 to 50 years.
Free of taxes: Your chosen beneficiary will get the entire insurance payout.

Permanent Life Insurance

This long-term plan type protects the people you care about for the rest of their lives. Permanent life insurance isn't just insurance, though. Over time, the value of your policy can grow so much that you may cash it in during your lifetime, though there may be tax consequences.

You can borrow money from your policy or take money out of it. When you die, your beneficiaries will get a tax-free payment, just like with term life insurance.

Permanent Life Insurance offers

The peace of mind that comes from knowing that the people you love most are safe.
A more promising future for your children.
A way to help you start putting money aside now in order to have the life you want later.

What’s the best time to buy life insurance?

There are often life events that motivate people to consider getting life insurance.

Marriage

You are now making joint decisions about money.

Having life insurance can financially protect a surviving spouse in the event of the death of the higher earner.

Life insurance is especially important if you are the primary breadwinner in your family or if your debts exceed your assets. Your beneficiaries are free to utilize the money from your insurance payout in any way they see fit, including paying for funeral costs, sustaining the household, paying off your mortgage and supporting your children's education.

Becoming a parent

Life insurance can help provide for your family if something happens to you. You may also consider buying life insurance for your child.

Buying a
home

Life insurance coverage allows you to make sure that your family can pay off the mortgage (and other expenses) if the unexpected happens.

Starting a business

When 2 or more people start a business, life insurance can provide funds that allow surviving partners to run the company. Business-owned insurance provides a one-time payout to your company if you, your business partner or other key employees die. It can help cover business debt, overhead expenses or a partner buy-out.

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How much
life insurance
do you need?

How much insurance you need depends on what you want to do with it. You may wish to use the insurance payout to replace your income, pay off your mortgage, pay for school, etc. According to the Canadian Life and Health Insurance Association in Canada, the typical family has a $442,000 insurance protection.

While it's true that everyone's situation is different, experts advise buying life insurance with a face value of at least five times one's annual income. Only 27% of Canadians, according to the 2021 Canada Life General Financial Awareness Survey, were aware of the minimum level of life insurance protection that should be maintained.

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