How to choose life insurance

First, look at your overall situation.

Major factors to consider: your family situation, ownership of a business, your age and general health.

If you're single: Life insurance isn't just for people with children or in a relationship. Upon your death, even if you're single, your loved ones will have to bear the costs of your funeral arrangements and financial obligations.

If you have children: It's imperative to have life insurance so that you can meet your children's needs when you're no longer there to watch over them. Having life insurance will also ensure your debts do not become a burden on your family.

If you're in a relationship: After your death, your partner should be able to take on your shared obligations and the costs associated with your death (i.e., credit card, rent, auto, mortgage, student loans, or other expenses).

Now think about your goals.

Your personal, family and professional goals are determining factors in choosing life insurance. For example, do you want to have children? How do you see your career and income developing? When do you plan to retire? How much do you hope to leave to your loved ones?

Ask yourself the following questions:

• Do I need short-term or long-term protection?
• Do I want my insurance to have surrender values so that I will be entitled to a lump sum if I decide to terminate my coverage?
• In addition to my life insurance, do I need a tax-free investment option? Have I reached the maximum RRSP and TFSA contributions?
• Do I want to pay my premiums for a preset period such as 10 or 20 years or up to age 100?

Now that you've identified your needs and goals, move on to step 2 to look at your options.

There are 3 main types of life insurance:

• term life insurance
• permanent life insurance
• universal life insurance

Each has its own features and advantages.

Term life insurance

• Provides coverage for a set period of time (e.g., 1, 5, 10 or 20 years).
• Meets short-term needs (e.g., while your children are growing up or you're paying off your mortgage).
• Premiums are fixed until the policy ends.
• Doesn't include a savings component to help reduce your insurance costs or invest on a tax-free basis.
• Can be renewed at the end of the policy period. Cost is then adjusted for a new term.
• Can often be converted to permanent life insurance.
• Can be combined with health insurance.

Permanent life insurance

• Provides lifetime coverage more affordably than term life insurance.
• Meets long-term needs, such as leaving your loved ones an inheritance.
• Premiums may be fixed for the duration of the policy, evolve based on your age or be payable in full over a set period of time (e.g., 10 or 20 years).
• Doesn't include a savings component to help reduce your insurance costs or invest on a tax-free basis.
• Lasts your whole life so you don't need to renew it.
• Can be combined with health insurance.

Please note: With this coverage, you can be insured even if you have health problems, as certain products do not require a medical exam or questionnaire. This way, you will be sure that your death will have no negative financial consequences for your family. Over and above funeral costs, the indemnity will also leave some money for your loved ones.

Universal life insurance

• Provides coverage for the period that meets your needs (e.g., for 20 years or for your lifetime).
• Includes a savings component to invest your savings tax-free. Subject to the restrictions of tax legislation, you choose how much you want to save. This amount is deposited into the investment options you've selected.
• Suitable for your needs if:
  • you want to leave your loved ones a more generous inheritance
  • you have reached the maximum RRSP and TFSA contributions
  • you are a businessperson and want to protect the value of your business
• Lets you add or change coverages as your needs change.
• Can be combined with health insurance.

Now that you understand the basics of life insurance, it's time to move on to step 3 and take action!

First of all, make an appointment with a financial security advisor.

Our advisor will provide more information on the type of life insurance that interests you, help you assess your coverage needs and guide you in selecting the product best suited to your situation and goals.

Then, make sure you maintain appropriate coverage.

You should rethink your personal insurance in any of the following situations:

1. Your coverage hasn't changed in 5 years.
2. You have new family and financial responsibilities (e.g., new child or purchase of property).
3. Taking into account the economy and inflation, the revenues from the death benefit of your life insurance are no longer sufficient for your loved ones to maintain their lifestyle after your death.