If you’re considering buying life insurance in Canada, you’ve likely heard that there’s a “right” and “wrong” age at which to take the leap. While there is no perfect age at which to purchase life insurance, it is true that you’ll get a better rate if you buy insurance when you’re young and healthy rather than old and perhaps already ill.
In fact, it may be difficult or even impossible to secure a life insurance policy when you’re older and sick.
The Different Types of Life Insurance in Canada
Beyond considering what the perfect age at which to buy insurance is, it’s important for customers to consider which type of insurance policy they’re going to buy, since this also plays into when you should buy it.
Here are the top types of life insurance in Canada:
This type of insurance includes 2 key components. The first relates to the name of the policy type, the Term. The term can be anywhere from 1 year to age 100, and this indicates what the guaranteed premiums will be for each Term throughout the length of the policy. The second component refers to the attained age that coverage is available. Most Term policies expire at age 75 or 80 from the major Life Insurance companies in Canada.
The plan does not accumulate value and is frequently chosen by younger individuals who want to ensure they’re covered during a critical time in life (while their children are young or attending college, for example), or older individuals looking for end-of-life coverage, although it can be an expensive way to create that. That said, though, it’s the most popular form of life insurance in Canada, with Insureye.com reporting that upwards of 44% of insured people purchase it.
Universal Life Coverage
Universal life insurance covers end-of-life expenses while also providing an investment component. Each month, when you pay your premiums, they go into an account which serves to gain value and grow your net worth, over time. The way these funds are invested is up to you, which is a unique feature. While these policies are more expensive than term policies, they can be a great way for a younger, healthier individual who wants to plan accordingly for end-of-life to prepare both themselves and their families for security. Currently, 39% of insured Canadians opt for this type of insurance.
Whole Life Insurance
A whole life policy also offers an investment component, although it’s less flexible than a universal plan. In these policies, the insurer decides how the investment is dispersed. Policies of this type are more expensive, still, than either Universal or Term policies, although they can be more valuable at the end of the day. This is the least popular form of insurance in Canada.
Knowing When to Purchase Life Insurance
As a general rule, it’s always wiser to buy insurance when you’re young and healthy than it is when you’re old and ill. There are various reasons for this. On the one hand, purchasing insurance as a young, healthy person makes it easy to get a great rate, a pursuit that can be difficult down the road, when you have pre-existing conditions or a history of health emergencies.
What’s more, insurance is a form of investment, and it’s easier to invest effectively when you start preparing in advance than it is when you’re rushing to put everything in order down the road.
By evaluating the various types of life insurance available to you and making an informed decision about which is best for you, you can take the proactive step of ensuring that you and your family are covered if anything unexpected happens.
While all insurance has its pros and cons, giving yourself ample time to evaluate available plans and find the tone that suits your needs and requirements most effectively is a smart way to ensure you’re getting a great deal, while also facilitating the coverage your loved ones would need were you to pass away suddenly.
While it is indeed possible to purchase life insurance as an older individual, most experts recommend buying it as early as possible in life, since this helps you avoid many of the pitfalls and complications so typically associated with life insurance. It also gives you ample time to make a financial plan and take the needed steps to protect your family and loved ones for years to come.