• Tue. May 28th, 2024

7 features of life insurance: tips and types


Jan 7, 2023
life insurance

There is no one in the world who does not know what life insurance is , or at least who does not know it superficially. Chances are we’ve all heard of it at one time or another.

However, it is not easy to approach this subject. We often have to admit that we do not know more and that we do not know things like how life insurance works or the characteristics of life insurance.

But, that may change today, because from Lewer Canada , experts in employee benefit programs (including life insurance ) we want to tell you about it! We will talk about some types of life insurance , their peculiarities, etc.

So stick around for the seven characteristics of ideal life insurance , along with some tips. Prepare yourself, you will find very important information, so better take notes! We will start from scratch, so that the presentation is as understandable and didactic as possible. Let’s start!

Let’s start with the basics: what is life insurance?

Let’s cut to the chase: what is life insurance? It is a program that guarantees financial stability in the future for you or your loved ones. It is monetary assistance generally designed for retirement, death, serious illness or any other eventuality.

And where does this money come from? Well, before we answer that question, we need to understand how life insurance works . It’s not as complicated as it sounds: the validity of life insurance is governed by the extension of a document called a life insurance policy.

This policy is a kind of contract, in which all the benefits, conditions and terms of life insurance are established . It consists of an agreement between two parties: a natural person and an insurance company (generally called “policyholder”).

The policyholder establishes one or a group of beneficiaries, i.e. the people who will benefit from the insurance cover (this can be himself, a person or a group ). Article n° 2445 of the Civil Code of Québec specifies that “the sum insured may be paid to the policyholder, to the member or to a specific beneficiary”.

For the insurance to take effect, the policyholder must make a series of payments called life insurance premiums . These payments can be made in monthly, annual periods… As the client decides and as the policy establishes. With this information, we can answer the last question.

Some life insurance policies offer other possibilities, such as being able to have additional savings at the same time. In other cases, it is also possible to access insurance benefits, even if the policy is canceled ( surrender value ). This may vary from one insurance policy to another.

What should life insurance look like? Consider these features and tips before making your choice

It goes without saying that when the going gets tough, life insurance can be a great ally. As you know, there are different types of insurance and each has its peculiarities (we’ll talk about them later).

But is there a way to distinguish the characteristics that certain policies have in common and define what an ideal life insurance policy should look like? Yes, there is a way. That’s why we’ve compiled seven characteristics that a good font should contain. Do not forget :

The policy has a defined sum assured and a defined premium

If you’re planning on buying life insurance , it’s important to remember that it has two important components. The first is related to the sum insured, ie the sum of money that the beneficiary or beneficiaries will receive in the event of a tragedy previously specified in the contract.

On the other hand, the premium must also be detailed in the policy, of course. Always consider the duration of the life insurance. In this way, you will protect your financial future in the most appropriate way.

Cover the essentials

Insurance coverage is a basic point. Whenever you buy something, you should always make sure that it delivers what it promises. And buying a life insurance policy is no exception. Read it carefully, make sure everything that is promised is written there.

This way you can make sure it covers the essentials you have contracted. And even the rest of the things that we are going to mention in this list.

To provide sickness or disability protection if you have requested it

As you might expect , life insurance is often meant to protect your family, but it can also directly benefit you. If you suffer from a serious illness or become disabled, you will be covered by the life insurance policy , allowing you to deal with your illness or condition without worry.

Be careful, because in some cases, some companies offer coverage programs for these types of situations, but they are very different from life insurance . There are even specialized insurance policies for serious illnesses or cases of invalidity.

Do not incur excessive debt and taxes

Although there are exceptional cases, the money that the beneficiaries will receive, in the event of the holder’s death, is generally exempt from taxes or taxed balances. This means that the compensation will be issued in full and that the capital claimed by the beneficiaries will not be subject to tax.

It is possible that in other cases it may vary, but it will all depend on what the life insurance policy establishes. Keep a close eye on this part to avoid any such issues in the future.

Ensure financial security

There is no doubt that we all seek the security of not having to worry about our debts when we die. However, mortgage payments or other issues will always be on the horizon. That’s why it’s important to get life insurance (like mortgage life insurance ).

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