How Life Insurance Works In Canada?

Life Insurance Agent - Canada

There are a few variations as to how life insurance work in Canada as compared to other countries. For example, if you’re an immigrant and have had insurance policies from your home country, you’ll be surprised as to how different life insurance works in Canada as compared to the ones you’ve had in your home country. Each country have their own sets of rules and regulations when it comes to the insurance industry and honestly, I’m not quite familiar with all of them but what I can tell you about is the insurance policies in Canada. The basics of life insurance, however, are technically the same.  What is Life Insurance Life insurance is a contract between the insured and the life insurance company, where the insured pays a certain amount of contribution toward the policy in exchange for a certain amount of death benefit that the policy beneficiaries will receive in the event that the life insured passes away during the term of the life insurance contract. As long as the insured fulfills his or her part of the contract, the policy will stay in force and will cover the beneficiaries in case the life insured dies. To personalize this definition, here’s what it means to you and your loved ones… Life insurance is an effective financial risk management tool that can guarantee your loved one’s lifestyle and future in case of premature death of any one of the breadwinners, or at least pay for funeral expenses so your loved …

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How Much Life Insurance Do You Need In Canada?

how much life insurance do i need in canada

One of the major questions we get asked in our financial advisory practice is: “how much life insurance do I need in Canada? While death is a topic that most people turn away from, it is as certain as the sunset; sadly, death is an inevitable path that all living beings will have to pass through at some point, hopefully not prematurely, yet such an event isn’t a matter of “if” but of “when”. The financial impact that comes with premature death can be devastating to our loved ones or dependents when a solid financial plan for such an event isn’t implemented, as not only will it affect the survivors emotionally but financially as well. One of the best ways we can safeguard the financial security of our loved ones is through a well-thought-out life insurance policy that has the ability to replace a person’s income. As you may know, a life insurance policy is a contract that transfers the financial risk of one’s death to a life insurance company. In exchange for premium payments, the insurance company agrees to pay a lump-sum payment to beneficiaries upon death. This is essentially a guarantee that the dependents of the policyholder will be taken care of upon the person’s demise. Ideally, the amount of life insurance a person should have must reflect the person’s economic value to his or her loved ones, hence, the value of a person’s life at death. This seems paradoxical considering the fact that a price tag can’t …

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The Cheapest Life Insurance in Canada

cheapest life insurance canada

What Is the Cheapest Life Insurance in Canada? Generally speaking, there are two main types of life insurance. Permanent life insurance and term life insurance. Permanent life insurance provides coverage for your entire life. The monthly contribution is higher as compared to a term life insurance policy but it does come with added benefits such as the opportunity to build equity (cash value growth), earn dividends, and of course, lifetime coverage. Term life insurance, on the other hand, is simple and straightforward. As long as you pay the monthly contribution for the specified term of the policy, you’re covered for the term, with the option to renew for another term each time the policy term comes to an end. Three Primary Elements of Term Life Insurance  1. Term  The term is the predetermined amount of time the policy will remain active for. It is a set period, usually 10, 20, 30 years or up to age 65, and 40 years. 2. Premium The premium is the contribution you make to keep your policy in force. Usually, you have to contribute either on a monthly or an annual basis. The amount of your contribution stays the same for the whole term of the insurance policy.  3. Death Benefit A pre-determined amount of money that the insurance company is obligated to pay the life insured’s beneficiaries in case he or she passes away during the term of the policy. Generally speaking, term life insurance is the simplest form of life insurance you …

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Understanding Joint Life Insurance

joint life insurance canada

The most common form of life insurance coverage is single life or individual life insurance, and while there are many types of life insurance options, many Canadians are unaware that joint life insurance could be their best option for personal or business income protection needs as well as estate preservation. Understandably so, no one wants to think about their own demise or the chances of premature death ever occurring, hence, no one really likes to talk about life insurance planning. Unfortunately, it’s a fact of life that people die, hopefully not during our active working years, but yes, everyone dies at some point, hence, financially planning for it is of vital importance. Premature death often affects the financial well-being of the bereaved household that results in not being able to afford the same lifestyle and future than when the deceased was alive. Life insurance is an effective risk management tool that offers a safety net against this financial risk. What is Joint Life Insurance? Joint life insurance is a life insurance policy that covers two lives insured (two people) in one insurance coverage. This is like multi-life insurance where there are various lives insured, the difference is that a joint life policy only pays out once, when one of the lives insured pass-away.  Typically, joint life policies are taken out by couples to protect their household’s income or to leave a legacy to their next generation. Business partners, on the other hand, have also been known to take out joint …

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Furniture Financing: A Good Idea or Potential Disaster?

is financing furniture a good idea?

If you’re in the market for new furniture, then you probably know that there are a multitude of decisions to make. From size, quality, color, and more… you just have so many options that it’s really hard to make the right decision, but is financing furniture a good idea? To finance or not is the most important decisions among all your furniture purchase decision making road blocks. Furniture in Canada can be quite expensive compared to the rest of the world, especially if you’re buying high-ticket items like couches, beds, and dining tables. And since, it’s such an expensive purchase, most Canadians won’t have cash readily available for outright furniture purchase. Knowing this fact, the furniture stores came up with furniture rent to own schemes to “help Canadians buy the furniture of their dreams”. For many, this may seem like the best option as it allows you to make major furniture purchases without having the cash upfront. Yes, take this home for a fairly low monthly payment. I’m pretty sure you came across one of these offers and you may not be 100% convinced as to whether or not financing furniture is a good idea, so you decided to make a quick google search on the subject. Just like any major financial decision, there are pros and cons in financing furniture. The answer isn’t so simple but understanding what financing means for you can help to clarify if wether or not it’s your best choice. How Does Furniture Financing Work? …

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Should I Get Life Insurance in My 20’s? Here are 8 Reasons Why!

should i get life insurance in my 20s?

Life insurance is an important part of personal financial planning as it can financially protect your loved ones’ from the immediate expenditures of premature death and even replace a person’s income by providing the necessary capital to provide the needed periodic income to the bereaved. As personal insurance advisors, we often get asked, should I get life insurance in my 20’s? While agreeably, you may not have much of an obligation when you’re in your 20’s but there are a lot of advantages to getting a life insurance in your 20’s and this article shows you why getting a life insurance policy in your 20’s is one of the best financial decisions you’ll ever make. Reasons Why You Should Get Life Insurance in Your 20’s Lower Premium Rate As you may know, life insurance premium rates increase with a person’s risk of dying, which means the older the person is, the higher the premiums are. So deferring the purchase of your basic permanent insurance will cost you more than when you implement a basic life insurance protection in your 20’s. Notice, I mentioned, basic permanent life insurance because it’s going to get more challenging to implement one when you’re older. As a young person, with not much obligations, like small kids, mortgage and the like, you don’t need to implement a life insurance high enough to replace your income or one that provides the necessary funds to pay off a mortgage or other financial obligations when you’re in your 30’s …

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Understanding Personal Financial Risk Management

financial risk management strategies

Risk is inherent in all aspects of our daily lives, yet is an often overlooked piece of the financial puzzle. Oftentimes, you’ll hear financial risk management strategies applied to business operations and investments, this is because risk management is so important to the survival and success of businesses and investment portfolio; its importance, however, is rarely emphasized to individual personal financial planning, and while business and investment growth are important, personal financial conservation and success equally is, and that is the focus of this article. Understanding Risks Risk is the possibility of loss, in most cases, of an asset that could potentially cause financial hardships to an entity, individual, or family. As an economic being, you may own a lot of assets, some are important, some aren’t as important. There are a lot of different risks that may affect ones’ financial well-being, due to loss of one or more assets. Driving to and from work on a daily basis, for example, presents a lot of risks to you, your loved ones and your vehicle. In Canada, you can’t drive a vehicle without insuring it and you have to go through a stringent driver-licensing certification before you could operate one as a licensed-driver. That’s because taking a vehicle on the road presents such a high-risk to yourself and others. Should something happen on the road, a lot of assets and lives are at risk. To protect yourself against the financial obligations of such a risk, proper driver certification and the implementation …

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What are the Benefits and Risks of Investing in the Stock Market?

what are the benefits and risks of investing in stock market

This article talks about the benefits and risks of investing in the stock market to help you gauge, whether or not stock investing is right for you. Investing in the stock market has its share of risks and rewards due to various factors and conditions.  For instance, when trading conditions are favorable, investors earn excellent returns from their assets. However, when stocks go down in value during a market downtrend, investors may sustain losses. Generally, there are two ways people “invest” in the stock market, some invest for long term asset growth, (buy and hold), while some try to buy and sell stocks on a daily basis (day trading). As an investor, I prefer the former because for me, investing in stocks isn’t about timing the market as no one can successfully do this, consistently, it’s about “time in the market”. If you’re seriously considering stock investing as one of your wealth-building strategies, you have to acknowledge the fact that publicly traded stocks go up and down in value, such as the nature of the stock market, it’s called volatility and/or market fluctuation due to market supply and demand. What goes up, must go down but one thing you should take to heart is that the general trend of the market ever since it opened, is upward! Proper understanding of the stock market will help you keep your peace of mind, sanity and assets, during market down trends. Benefits of Investing in Stocks Below are some advantages of investing in …

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Is Life Insurance Taxable in Canada?

is life insurance taxable in canada

Life insurance is an important part of financial risk management that protects your loved ones’ financial security as it has the ability to replace your income in case of premature death. Aside from replacing a breadwinner financially, it also protects your family from other financial obligations that you may leave behind, such as consumer debts, mortgage, business overhead, children’s post-secondary education, and final expenses. A well-planned life insurance policy gives you and your loved ones the peace of mind in knowing that should something were to happen to you, they are well taken care off, financially but you may be wondering, is life insurance taxable in Canada? Life insurance death benefits are usually not taxable in Canada. If something were to happen to you, your beneficiaries need not worry about paying taxes on life insurance death benefits as they are completely tax-free, provided that there are named beneficiaries in your life insurance policy. Naming your loved ones on your life insurance policy is of vital importance if you want them to receive your life insurance death benefits, tax-free. If you fail to designate named-beneficiaries on your policy, the beneficiary for your life insurance policy will automatically be named to your estate, which, in this case, may be subject to tax. If your estate is the named beneficiary on your life insurance policy, the death benefit may be subject to tax. When Life Insurance is Taxable in Canada Generally, life insurance death benefits are not taxable as long as the named …

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Welcome to SmartWealth Blog!

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This is where we’re going to post, 100% free-content to empower clients like you make well-informed financial decisions from spending, budgeting, money management, asset protection to wealth-building strategies. As independent financial advisors in Canada, our team is dedicated to helping Canadians achieve a good financial future and we believe, financial education plays a crucial part. By reading this blog, you will be more informed both as a product and a financial consumer, before you even talk with a financial advisor; thereby making sure that your interest is well represented.

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