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HOW DOES LIFE INSURANCE WORK?

Photo of a life insurance form with a black pen on top.

Did you know that one-third of Canadians do not have life insurance coverage? This means that nearly a quarter of the Canadian population does not have the financial security to protect their spouse and children in the event of their demise.


Life insurance sets aside funds to cover your financial obligations if you die. Keep reading to learn more about the many benefits of purchasing a life insurance Calgary policy.


What Does Life Insurance Cover?

Depending on your life insurance plan, the death benefit can cover many expenses. When someone passes, their annual income and financial contribution can no longer be tapped to support your household expenses. This is where life insurance comes in.


These policies are designed to cover lingering financial obligations such as medical bills and funeral expenses. However, many individuals invest in more extensive plans to help their partner continue to manage more considerable expenses such as rent or mortgage payments.


Term vs Permanent Life Insurance

Understanding the different types of life insurance is essential when shopping around for a plan. The two main categories of life insurance are term life insurance and permanent life insurance. Term life insurance provides coverage for a set amount of time and guarantees the premium for the length of the term.


Terms range from 10 to 30 years. The premiums on term plans are usually more affordable when you are younger but can become expensive in later years. As well most term life insurance policies expire at age 80. In contrast, permanent life insurance does not expire at any time and is guaranteed to payout. Permanent life insurance is often more expensive.


Some permanent life insurance policies build up cash values that can be used to pay for the policy in later years or even let you borrow against your policy.


Life Insurance Cost

The cost of financing a life insurance plan can significantly vary. Depending on your overall health, family history, and type of coverage, you could opt into an affordable program with a hearty death benefit. Universal life insurance is usually more expensive and can cost you over $150 a month, depending on your health profile and desired payout.


Payout to the Beneficiary

When you build out a life insurance policy, you will be asked to name a beneficiary. This individual will be gifted your death benefit from your policy once you pass away. This individual is typically a spouse, sibling, or child- however, in some cases may be an organization, trust, or business partner.


In addition to naming your primary beneficiary, you may opt to list contingent beneficiaries. If your primary beneficiary passes away, the payout will default to another pre-determined beneficiary.


You must alert your beneficiary of their status because death benefits are not automatically paid out. Your beneficiary must file a claim with the life insurance policy and provide evidence before receiving a payout.


Invest in Life Insurance Calgary

No one plans on dying. However, in a disaster, you want to ensure that your loved ones are financially cared for and aren't left to manage your lingering debts.


Life insurance gives you peace of mind and ensures that your loved ones will be able to navigate life after your passing financially. Contact John Beal Insurance to pick out your life insurance Calgary plan today.


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