Top 10 Life Insurance Questions

Written by Marcais Bowen

Navigating the world of life insurance can often seem like travelling through a glass maze with its myriad terms, policies, and conditions. It's a crucial part of financial planning, offering peace of mind by ensuring that you and your loved ones are protected. To help demystify the process, I’ve compiled the top 10 life insurance questions and answers.

1. Can I Change the Beneficiary on My Policy?

Absolutely. Policyholders have the flexibility to change beneficiaries as often as needed. This is straightforward if you've designated a revocable beneficiary since changes can be made without their consent. However, if the beneficiary is irrevocable, their permission is required for any alterations.

2. What Happens If I Miss a Premium Payment?

Life insurance companies typically offer a 30-day grace period for missed payments. During this time, your policy remains active. Should the grace period lapse without payment, your policy may be considered void. Reinstatement could require catching up on payments and possibly undergoing the underwriting process anew.

3. Will My Policy Expire?

Policies expire under two conditions: failure to pay premiums or reaching the end of a term without renewal.

4. What Happens If I Reach Age 100?

For whole life policies, coverage continues regardless of age. Term policies, on the other hand, generally terminate at age 100.

5. Can I Borrow Money From My Insurance Policy?

This option is available only with whole life policies, providing a form of cash value that policyholders can borrow against.

6. When Will a Policy Not Pay Out?

Exclusions include the insured's involvement in criminal activities, suicide within the first two years of the policy, or falsification of the insurance application.

7. Is the Death Benefit Subject to Tax?

Generally, death benefits are tax-free for the beneficiary. Exceptions arise if the beneficiary is the estate or if the benefits undergo the probate process.

8. Can I Borrow Money From My Death Benefit?

Direct borrowing against the death benefit is not possible. However, certain policies may allow advancing a portion of the benefit under circumstances like terminal illness diagnosis.

9. What if I Want to Increase My Coverage Later?

Increasing coverage typically necessitates purchasing a new policy and meeting the current underwriting criteria.

10. What if the Insurance Company Goes Out of Business?

In Canada, life insurance companies are required to be members of Assuris, which offers protection to policyholders if their insurer fails. This guarantees some level of benefit, the specifics of which can be found on the Assuris website.

Understanding these key aspects of life insurance can significantly simplify the decision-making process. Whether you're purchasing a new policy or revising an existing one, knowledge is your best ally in navigating the complexities of life insurance. Book a call with me today.

Written by Marcais Bowen

Marcais Bowen is a distinguished Financial Advisor and Certified Health Insurance Specialist at Longevity Achieved with a profound dedication to assisting families in constructing generational wealth. His approach emphasizes the strategic use of insurance and investment products as pivotal tools to meet his client’s diverse financial goals and needs.

Marcais is committed to helping more families build a financial legacy in their lifetime.