Alberta Life, Disability, and Health Insurance Since 1983

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Posted: 1 Aug '22

Answers to the Most Common Questions Your Life Insurance Broker is Asked

Answers to the Most Common Questions Your Life Insurance Broker is Asked

The life insurance industry in Canada was started in 1849.  This is one of the oldest industries in Canada and yet there is yet so much confusion about the industry and its products.

Some of the most common questions we get at the office include:

  • Do I need life insurance?
  • Which life insurance products should I own?
  • How much life insurance should I buy?
  • Which companies should I buy life insurance from?

Read on for the answers to your burning life insurance questions or call us to speak to a Vistaplan advisor.

Do I Need Life Insurance?

If we think about all the things we insure these days, everything from our cars and homes to our computers and even our cell phones.  Why do we insure all these things? The answer is simple, the loss is too great to risk the premium required to insure these items. Well, why not your life?!

The short answer is yes, and in almost every case the amount of benefit to your beneficiaries in relation to the premiums paid is many multiple times greater than any other insurance you can own.

We all know of situations were someone passed away and then we hear of go fund me pages for the family, neighbours get together and raise some money to help the family, sometimes even donations are as requested for the surviving family.

There are a lot of reasons for owning life insurance, but let’s keep things simple.  Take a look at your savings account.  Now, no complicated math, just divide what’s in your savings account by the amount you need for your family each year and determine how long that money will last. 

Ask yourself:

  • How long will my family be able to live on my savings account?
  • Will the saving pay off any mortgages or loans?
  • Will the saving be able to pay my children’s education?

If that savings account will not pay for the things you need, you need life insurance.

Which Life Insurance Products Should I Own?

This is one place the life insurance industry has done it’s very best to confuse the consumer.  You know how car companies have names for their cars, such as EcoSport, Escape, Bronco, Edge, Explorer, Mustang…  you get it. These are all just Ford by the way. It varies from brand to brand. The life insurance industry is no different.  Manulife Financial has over 30 different products, Ivari has over 40 product names and the list goes on.  What do all these products names mean? 

In today’s life insurance industry, all the product names can be broken down into 3 large categories:

In this post we will concentrate on Term life insurance.  Term insurance comes in a bunch of different terms.  It might be term 10, term 20 or longer, meaning that is the length of time (or term) that the premiums stay level.  But regardless of all the different terms it is all term insurance.

The characteristics of term life insurance:

  • Premiums are determined by your age, sex and the term chosen.
  • There is no cash value in term insurance policies.
  • You are paying the insurance cost only.
  • You can cancel the policy at any time with no penalty.
  • The death benefit is paid to the beneficiary’s tax free.
  • Will have the lowest premiums when the plan is started.
  • Term life insurance products are convertible to the permanent products without any further medicals.

At the time of this post, a male age 35 wanting $1,000,000 of coverage might be as low as $41.00 per month.  That is $1.36 per day.  If this 35-year-old passed away leaving $1,000,000 to his family, divide that by your family’s annual budget and see how long this money will last.  It might be longer than your saving account and the cost is less than one Starbucks coffee per day.

Sometimes I see individuals agonize over which product they should own.  Although it is important to make sure you understand the different products available, you can not make a mistake with any term life insurance product. 

Term life insurance can be used in a full spectrum of situations, such as:

  • protect the family by providing cash on death
  • pay off mortgages
  • pay off loans
  • in business situations, buy out a deceased partners family
  • pay off bank loans
  • equalize estates between family members
  • provide funds for children’s and grandchildren’s education
  • provide funds to support aging parents

There is no situation where term life insurance won’t be helpful.

The only thing to note here is that age might require some discussion if you happen to be over 55 years old. As you get older, term life insurance starts to get more expensive and having an open discussion with an agent about your needs might bring up the other product categories to better utilize your budget.

How Much Life Insurance Should I Buy?

A simple rule here might be to have at least 10 times your annual income if you are providing for your family.  If you are also covering a mortgage or a bank loan that might need to be added to the total amount.  In business situations you might need to insure the value of the business.  Again, an open discussion with a qualified agent will help determine the amount of coverage that would be appropriate.

I’ve had situations where I delivered a cheque for a little as $50,000 to surviving family members and they say, “this will be helpful,” to where I delivered cheques for more than $3,000,000 and the families have said, “we will need all of this to survive.”

So, the amount is another spot not to agonize on.  Know your budget and the amount your budget will purchase will be the right amount for you.  Never has a surviving family member said to me, “this is way too much money, I wish my partner would have just saved the premiums.”

Term life insurance is not expensive.  Starbucks is expensive.  Cars are expensive.  Raising a family is expensive.  Owning a boat that you use 5 times per year is expensive.  Term life insurance is one of the most inexpensive products you can own for the family you love.

Which Companies Should I Buy Life Insurance From?

Over the last 20 years in Canada smaller life insurance companies have been purchased by the large companies.  Manulife Financial has purchased or acquired about 16 life insurance companies over the years.  RBC insurance has purchased some 14 life insurance companies.  There is a lot of competition amongst these companies for the lowest premiums.  If we look at the top 5 life insurance companies, the premium difference between the company in first place and the company in 5th place might only be 1 to 2 dollars per month. Because of this, buying your life insurance from one of the larger companies is recommended. 

Bonus Question: Why Choose Vistaplan Financial?

When it comes to life insurance there is a lot you can think about.  The products, the amount, the company to deal with and the agency to deal with.  At Vistaplan Financial we have been servicing clients for 35 years and are setting up with younger agents to continue for another 35 or 40 years.  When you purchase life insurance, in most cases, it is not only done once in your lifetime.  You might have to review it every 8 to 10 years throughout your entire life, so choosing an agency that will be around to help you answer your questions might be the most important decision you make.

The life insurance industry is complicated by design but that should not stop you from protecting your family for pennies on the dollar against one the worst tragedies that can happen to them.

If you are healthy and can enjoy Starbucks now and then, start shopping for term life insurance with Vistaplan Financial today.


About the Author - David Motkoski

David Motkosk At the Helm of Vistaplan Financial Group

David is a well-respected insurance advisor with over 30 years of experience helping healthcare professionals, business owners, and their families secure their financial futures. He takes the time to make certain his clients understand the life, disability, and health insurance products they are purchasing, so they can make the right choices for their budgets, plans, and futures. CONNECT WITH ME ON LINKEDIN

Life & Disability Insurance for Alberta Health Care Professionals, Business Owners, and Their Families Since 1983