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Life Insurance in Ontario: How It Works

If you’re wondering how and where to get life insurance in Ontario, then this article is for you. In this article, we’ll talk about the different types of life insurance available to you and how to get the right one that fits your needs and situation.

Buying life insurance is a great way to secure your family’s financial future in case of a breadwinner’s death. A well-designed life insurance policy has the ability to replace a person’s income, so your dependents can continue on with the same lifestyle, and future even if you’re no longer around to provide for them.

For other Canadians, life insurance can provide them with the peace of mind in knowing that their loved ones will not be burdened by the expenses that may arise as a result of their passing.

How does life insurance work in Ontario?

If you’ve never purchased life insurance before, you may be wondering how it works. First of all, it’s a legal contract between you and the life insurance company that pays a death benefit to a named beneficiary (or beneficiaries) if you die while the contract is in force. The death benefit is a tax-free, lump-sum payment that goes directly to whoever you name as your beneficiaries. As such, it’s completely private and doesn’t have to go through your estate or any probate proceedings.

In exchange for this death benefit, you agree to make regular contributions to your policy. This monthly contribution is usually called, a premium or premium payment, which can be made either monthly or annually.

You may choose to buy insurance for yourself, your entire family, friends, or even business associates. However, you must first get their consent, and each life insured is required to sign on the life insurance application. This means that you can’t just get life insurance for anyone without their full consent.

Types of Life Insurance in Ontario

types of life insurance

There are two types of insurance policies in Ontario. Term life insurance and whole life insurance.

Term Life Insurance

Term life insurance is the most basic type of life insurance. As the name suggests, it provides coverage for a certain term (or time period) – usually 10, 20, or 30 years. If you die during the term of the policy, your beneficiary will receive the death benefit. However, if you outlive the term of the policy, the coverage expires and you will not receive any death benefit.

You can learn more about term life insurance here.

Permanent Life Insurance

Permanent life insurance is a policy that provides coverage for your entire life, as long as premiums are paid. It also has a savings component, which accumulates cash value that you can access if you need it. This type of insurance is a good option for people who want coverage that will last their entire lives, and who want the security of knowing that their loved ones will be taken care of financially if they die.

Three Types of Permanent Life Insurance

There are three types of permanent life insurance, whole life, universal life, and term to 100.

three types of permanent life insurances

Whole Life Insurance

Whole life insurance is the most traditional type of permanent life insurance. It has level premiums, meaning that your premium will stay the same for the duration of the policy. The death benefit and cash value of the policy also stay the same. This makes whole life insurance a good choice for people who want stability and predictability in their coverage.

Universal Life Insurance

Universal life insurance is a more flexible type of permanent life insurance. UL is life insurance with an investment component. Unlike whole life, your cash value amount can fluctuate, depending on the performance of the investments in the policy. The death benefit and cash value can also fluctuate. This makes universal life insurance a good choice for people who want more flexibility in their coverage.

Term to 100 Life Insurance

Term to 100 life insurance is a type of permanent life insurance policy that provides coverage for a set period of time, which is until you turn 100 years old. The premiums are level, like whole life insurance, but the death benefit and cash value of the policy decrease over time. This makes term to 100 life insurance a good choice for people who want coverage for a set period of time, but don’t need as much coverage as they would with whole life insurance.

How to Get Life Insurance in Ontario

The best way to determine your coverage needs is to speak with a financial advisor. While it’s easy to get a term life insurance quote online, working with a licensed insurance advisor helps you plan your coverage well so you got both your current and future needs covered and do not run the risk of running out of coverage at old age.

Working with a financial advisor nowadays, can all be done online via web conferencing tools like Zoom, so we need not necessarily meet in person. 

You can easily book an appointment with us here. We have fully licensed life insurance agents in Ontario and can help you implement a life insurance policy that works for you and your loved ones.

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