Life Insurance in Canada

With the title above, it might look like we’re shooting ourselves in the foot as a life insurance brokerage that specializes in the online marketing of life and health insurance. We have thousands of people visit our Internet page daily, and many visitors often approach us about whether they can purchase an insurance policy directly through our website. After pondering on this idea for a long time, we came to a conclusion that purchasing life insurance via the Internet would mean a disservice to our customers.
We have found the following few reasons why it’s not such a smart idea to purchase a life insurance policy online:

1. Life insurance policies should be always regarded as a part of an overall financial portfolio, which is not possible to do when you purchase it directly via a website as a single product. When considering life insurance, careful planning should be put into consideration why the insurance is needed, how much is needed and what’s the optimum type of life insurance for a specific person. It is quite difficult to do this without speaking to a broker over the phone or in person.

2. When you decide to purchase your life insurance via the Internet, you can get only a limited product offer. Most companies offering life insurance online limit their selection to a few carriers and in some instances, just one carrier with only a few of their products.

3. When you purchase your insurance online, there is a risk that you might not fully understand all its characteristics. When you purchase your life insurance online, you may be surprised later about some nuances - for example certain ten-year term policies are not renewable or convertible, or may have a higher than usual renewable premium, and so on.

4. Certain things are just too complicated to be sold online, and life insurance is one of them. There are too many features in some policies (for example Universal Life or Whole Life insurance) that cannot be disclosed when the policy is sold directly online. BMO’s Universal Life policy offers over 400 investment options. The product is too complex to be sold online.

5. If you wish to get in touch with someone from the insurance company, it would be most probably with a call centre and not a broker.

Do not get us wrong, we are not suggesting that the Internet is not a useful resource when purchasing a life insurance. Some websites can offer a lot of useful information concerning life insurance. You can find many useful web tools, for example our Instant Quote Calculator or Needs Analysis Calculator, which can help you a lot. But it is one thing to look for information and another one to actually purchase an insurance.

You many believe that Canadian Tire is company that deals with furniture, tools and outdoor living, but it is life insurance. After making improvements their term life insurance scheme the home hardware firm rolled out their new plan. A marketing strategy was created by this firm whose underwriters are Canada Life. So now we will go through some of the small print of this kind of scheme. Applying for this policy is very simple. You have the choice of applying online, by phone or mail. You will be queried about your health. There are seven of these inquires. Answering ‘yes’ to any of the questions need more medical details and the possibility of a medical visit. The schemes face value is $250,000 with premium increases after the first five years. What’s the trouble? This all looks fine to me. Let’s consider this type of policy against Canada Life’s individual term life policy. If we examine a 40 year old male smoker. On the Canada Life policy the fees are $40 cheaper. The Canada Life plans are greatly less expensive. The versatility and customization of these types of schemes are not available on the Canadian Tire policies.The disadvantages to the Canadian Tire plan include curbed benefits of only $250,000 and a term of no greater than 5 years. A Canadian Tire Scheme also charges you PST. Joining plans or affixing a rider for additional benefits is an bonus of individual life plans. Exclusive advise from your broker which leads to a policy worked on your individual requirements are another advantage rather than a standard group policy which is offered by the Canadian Tire Term Life Insurance plans. So taking the contrast in cost, the benefits proposed, the fees charged and the inflexibility of the Tire Term policy, you will be better off with an Individual Life policy from your broker. To find out more about the Canadian Term Life Insurance, please refer to our more detailed article.

Photo source: Mikey G Ottawa

Regarding the commission payment for the insurance brokers, it doesn’t make a difference whether they are captive (working for only one company) or independent (for more companies), as all of them get their commission when an insurance policy is activated. Two advantages of working with a broker are that they can advise you on the best type and amount of coverage and they can search the market for the best premium. Of course, the agent receives his/her commission paid from the insurance company. Nevertheless, the media and consumer scepticism has done a lot to create misunderstanding. The main points regarding the payment process that are most commonly misunderstood will be described in the following paragraph.

“Life insurance commissions drive up the price of the policy.” Life insurance policies, whether sold by salaried employees or self-employed advisors, have distribution costs. The insurance company includes the price of distribution inside the price of their products. It usually doesn’t make any difference how the consumer buys the product. Some companies, for instance RBC Insurance or Manulife, charge the same premiums for the same life insurance sold via multiple distribution models. If you buy a $200,000 Term 10 policy from Manulife, you will always pay the same price - whether you get it via their call centre, website or use the services of an independent broker. “It is possible to negotiate the life insurance commissions.” That is not true, they are not. The situation is different from when you are buying a car or a house. Once again, the commissions are built into the distribution costs of the policy and cannot be changed.

“The commissions for Whole Life or Universal Life insurance are higher than for Term Life insurance.” In reality, the price of a life insurance policy influences the height of the commission for the agent - the higher the premium, the higher the commission. Whole and Universal policies have higher initial premiums than Term policies, but the Whole and Universal policies are bought once. Term policies increase in cost as the insured gets older, so they will buy multiple term policies over their lifetime. A commission is paid for each new policy, but what is crucial for the consumer is that each time he/she purchases a new policy, he/she is also older, so the policy price is therefore higher. The insurance rate also depends on the health status of the applicant - in case it has changed, the insurance rate will increase or the coverage won’t be available. For the applicants it is really crucial that they understand the difference between all the life insurance policies and that they know which one is the optimum choice for them. “The commissions paid by some insurance providers is better than from others.” It is true that one carrier might pay a slightly higher commission than another one, but the differences are only small. And the customer doesn’t need to care about this anyway, since the commissions are a fixed cost within the policy. It is however very important that your adviser has access to insurance from multiple carriers, as some of them, while independent, work only with two or three. Our advisors have access to 15 different life insurance carriers, ensuring you get the a best possible price.

Photo source: Tim Dorr

Life insurance forms the foundation of the majority of financial plans, yet so many continue to put it off and, for the past two decades, we have been dueling with that million dollar question, “Why?”

Canadians consider themselves too old. Many don’t notice that most Canadian insurance carriers~companies insure individuals Really, there is no need to hesitate because of your age.

They consider own health too weak. However, many life insurance Canada policies are accessible without a medical test and many other policies only require a handful of basic medical questions. Moreover, many clients who have a history cancer, heart attack or stroke in the family can still obtain life insurance in Canada. You can visit our Non-Medical Life Insurance Page for for more questions.

It’s too expensive. Wrong, life insurance premiums don’t have to extend $15 a month

What’s the point of life insurance?. Believe me, even in situations where you have no debt burden with no dependents, Life insurance can have a meaning for you to deal with final expenses. When you do havewith no dependents and/or debt, life insurance is a great way how to create instant cash when you and your dependents need it crucially.

I can’t understand all those terms and conditions. I completely understand this problem. Life insurance can be pretty confusing, but with my team of professional brokers we will help simplify it for you. You can also visit LSM Instant Life Insurance Needs Calculator to find out exactly what amount of life insurance you need.

Buying a life insurance policy is important step in your life. Everybody should be careful, on the other hand all information should be considered.