Frequently Asked Life Insurance Questions

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- Who may apply?
- How much insurance coverage can I purchase?
- Are insurance policies guaranteed and also fixed?
- Is the policy renewable?
- Is the policy convertible to permanent insurance?
- When does coverage begin?
- What if I change my mind after applying for coverage?
- What if I occasionally smoke?
- What if I quit smoking after I'm insured?
- When is the insurance premium due?
- How do I change the beneficiary?
- How do I cancel coverage?
- What is not covered under the policy?
- Can I reduce my coverage?
- Can I increase my coverage?
- Should I consider term life insurance as an alternative to mortgage life insurance?

Who may apply?

This depends on the insurance company, but usually people who are 18 to 80 years of age and who are resident in Canada are eligible to apply.

How much insurance coverage can I purchase?

This depends on the insurance carrier, but generally speaking term life insurance offers coverage ranging from $50,000 to a maximum of $10,000,000.

Are insurance policies guaranteed and fixed?

This depends on the insurance carrier, but generally speaking premiums are fixed (e.g. 5 year versus 10 year), and the carrier may offer both guaranteed (e.g. premiums do not go up for that term), and not guaranteed.  Note: non-guaranteed may be less expensive, but the future premiums for the given term may rise.

Is the policy renewable?

This depends on the insurance carrier, but generally speaking most policies are renewable, with a new premium for that next term.

Is the policy convertible to permanent insurance?

This depends on the carrier, with some policies being convertible while other policies are not. If you want convertible term life.

If a policy is convertible it will be explicitly stated in the contract, and you then have the right to convert the term life to permanent insurance of equal or lesser value without any medical questions asked.

Quote results indicate if a policy is convertible (e.g. will say "convertible", R & C - renewable and convertible).

When does coverage begin?

This depends on the carrier, but usually coverage will start on the date the head office approves the policy. In some cases you may receive a temporary insurance certificate, which provides limited coverage during the underwriting process.

What if I change my mind after applying for coverage?

Canadian insurance law stipulates that you have a 10-day right to examine any insurance policy purchased, and if not completely satisfied you can return the policy for a full refund of any premiums paid.

What if I occasionally smoke?

This depends on the carrier. Usually, to qualify for preferred non-smoker rates, most carriers require that there has been no smoking for a period of twelve months before applying for the term insurance.

What if I quit smoking after I'm insured?

This depends on the carrier. Usually, once the twelve month period of no smoking is up you can apply for an amendment that will give you preferred non-smoking rates at that point in time.

When is the insurance premium due?

Your premium is due on:

  • the date indicated on your premium notice, or:
  • on the first day of each month if you are paying monthly, or,
  • on the first day of each policy year if you are paying yearly.

How do I change the beneficiary?

The beneficiary can be changed by sending the carrier a letter of intent, or by submitting a beneficiary change form.

Note: if you have named a beneficiary as "irrevocable" then the beneficiary's signature will also be required.

How do I cancel coverage?

This depends on the carrier. Usually, written notice is required by the owner of the policy. However, some carriers do allow cancellation of a policy over the phone.

What is not covered under the policy?

This depends on the carrier, however, all carriers have a suicide clause that will void the policy if the insured dies by suicide within the first one or two years of the policy.

Can I reduce my coverage?

Absolutely, coverage can always be reduced.

Can I increase my coverage?

Coverage can usually be increased, but there may be medical requirements, and additional premiums will need to be paid.

Should I consider term life insurance as an alternative to mortgage life insurance?

Absolutely. Term life insurance can be used in lieu of mortgage life insurance to protect your home investment, and actually has many advantages.

For more information see the second page in the HomeOwners scenario.
 

 

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