Life Insurance in Canada
Life insurance in Canada is an agreement between the insured and the insurance company. The insurer agrees to pay a death benefit amount to the person or people nominated as the beneficiary in the event of the insured’s death, as long as the policy is in effect at that time.
There are two types of life insurance Canada
Term Life Insurance : Term life insurance is simpler, cheaper, and sufficient for most people. It covers you for a certain period, like 10, 20, or 30 years. If you pass away during this period, your beneficiary will receive the payout. Term life insurance in Canada has only one purpose: to provide financial assistance to your loved ones after you are gone. It does not include an investment component.
Permanent life insurance: It provides coverage until your death and usually also includes a savings component. However, these benefits come at a price. Premiums for permanent life insurance in Canada are five to 10 times higher than a comparable term life policy.
What do I Need to Make a Claim?
There are a few items you need to file a claim on a life insurance policy. Some of the items you can gather while your loved ones are still living. The first thing you need to file your claim is a copy of the policy. You will need to know who to call and what the policy provides. You can keep a copy of the policy in a safe place. If you keep track of where you keep the policy, it will help you find it when the time comes. Many people keep it in a safe deposit box, in a filing cabinet, or a safe in their home. If they have a will, they may keep the policy with the trustee for their estate.
You will also need your loved one’s name, date of birth, and social security number to complete the claim. Once this happens, you need a copy of the death certificate to submit to the insurance company. If you work with a funeral director, you can obtain a copy of the certificate from them. However, you may obtain a copy from the office of vital records in your county or the county coroner’s office.
The steps to file a claim
Here’s the steps your family needs to take in order to successfully file a life insurance claim:
1. Obtain death certificates
The keystone to filing life insurance claims is to get copies of the death certificates. In general, completing and filing the death certificate is the responsibility of the funeral director.
2. Contact your insurance advisor and life insurance companies
Once your family members have the policy information and death certificates, they should contact each insurance company to find out the current claim procedure. If the insurance was purchased through an insurance advisor, he or she can help you in dealing with the life insurance company.
3. Complete the claim procedures
Each insurance company will have its own rules and methods. Some may have online claims processes, most will require that beneficiaries fill out and submit a hard copy claim.
Receiving the proceeds of the insurance claim
1. Evaluate your payment options
It is up to the policy beneficiary how they want to receive the payout. The most common options available are as follows:
- – Lump-sum
This is the most popular payout option because it offers more flexibility and freedom. You get the entire death benefit amount as a lump sum and are free to use it as you like. You can use it to pay for everyday living expenses, cover the debt, or take care of future expenses – like college tuition fees.
- – Specific income
If you want, the insurer will release the death benefit amount in installments. You can decide for how long you would like to receive payments and the amount of each payment.
- – Lifetime income
This option lets you convert the payout to an annuity. The insurer will make guaranteed payments until your death. The amount of each payment depends on three factors: death benefit amount, your gender, and your age at the time of the insured’s death.
- – Life income with a certain period
If you select this option, the insurer will make payments for life or over a certain period, whichever is longer. If you die before the period is up, the person or people designated by you as beneficiaries will get the remaining payments.
- – Interest income
You can keep the payout in an interest-bearing account with the insurer and, in turn, will receive interest payments for the rest of your life.