How much do you know?
If you do not name a beneficiary for your life insurance, is your death benefit paid out to your estate?
Regardless of whether you have group life insurance as part of your employee benefits package, have an individual life insurance policy, or are thinking of buying life insurance, you should take the time to educate yourself so you are clear on the details and can make informed decisions.
You can find more information about the many types of life insurance by visiting Types of Life Insurance or the Canadian Life and Health Insurance Association’s website .
Then, when you think you have enough information, take the following checklist of questions along with you when you speak with your employer, HR representative, or life insurance agent or company.
Questions to Ask Your Employer/ HR Representative
□ Does my benefits package include life insurance? If not, is there an option to purchase life insurance through the insurer or the group policy?
□ How much coverage do I have?
□ Is it possible to increase my coverage? How much will it cost me? Is there a deadline?
□ What insurance company is the coverage with?
□ Do I need to have a medical exam to provide evidence of insurability?
□ Can I extend coverage to other family members?
□ If I leave my job for any reason, can I convert the coverage to an individual policy?
□ What happens to my coverage if I take a leave of absence, maternity leave, etc.?
□ What happens to my coverage if I am laid off?
□ What happens to my coverage if I retire?
Questions to Ask Your Life Insurance Agent or Company
If purchasing an individual life insurance policy, a licensed life insurance agent or insurance company can help you. Most life insurance agents are paid a commission by the insurance company issuing the insurance policy. Some agents represent one company while others represent several companies.
The Financial Services Commission of Ontario (FSCO) regulates life insurance agents and companies in Ontario. You can find a licensed insurance company in FSCO’s Licensed Insurance Companies in Ontario database and a licensed insurance agent in FSCO’s Agents licensed in Ontario database.
Once you have found someone to work with, you should check to see if they are in good standing with the regulator. Check FSCO’s Enforcement Online database to see if any enforcement action has been taken against an agent or company in Ontario. Enforcement actions, like having a license suspension, or the imposition of a fine (Administrative Monetary Penalty) may indicate issues in regards to compliance with legislation that were remediated through these sanctions. If a life insurance agent or company has had an enforcement action taken against them you should ask what it was for and how they fixed the issue. You might also want to check out the Canadian Insurance Regulators Disciplinary Actions database that offers public access to regulatory decisions issued by insurance regulators across Canada.
Once you have verified they are licensed and have no outstanding enforcement against them, you should ask the following questions:
About the agent
□ Which insurance companies do you represent?
□ What insurance products can you sell?
□ Are you engaged in other financial services such as mortgage brokering, mutual funds, etc.?
□ How long have you been in business?
□ Do you have updated Errors and Omissions (E&O) insurance? (all insurance agents are obligated to have E&O insurance that is up to date)
□ Have you completed the 30 hours of continuing education you are required to do every two years?
□ Do you have any other professional qualifications such as Chartered Life Underwriter or Chartered Financial Consultant?
□ Will you provide me with a letter of engagement that describes the services I can expect from you during and after the sales transaction?
□ What level of service will you offer me in the immediate transaction and ongoing? Will you assist me in completing a financial needs analysis? Will you arrange for the purchase of a policy? Will you provide ongoing services to review or update my policy?
□ How are you compensated?
□ Do you have any other relationships that may create actual or potential conflicts of interest?
Can you provide me with any client references?
□ How/when can I contact you for advice or more information?
About your needs
Your life insurance agent or company will probably ask you many personal questions about your family, health, finances and your future plans. Tell the agent what you need and what you can afford. They need this information to understand how much it will cost to pay off your debts (including your mortgage), and how much your dependants will need to maintain their lifestyle without your financial support. Be honest in your answers – any personal information you provide is confidential. Misleading or erroneous information can invalidate your policy. By understanding the risks associated with insuring you, the agent will be able to form a needs assessment. Make sure you understand how they came up with your assessment.
□ How much life insurance do I need? How did you come up with that number?
□ How much coverage do I need if I have children?
□ What is the best type of policy for me?
□ How does this type of policy meet my needs and circumstances?
□ Can you provide me with some alternatives or options?
□ Will you provide policy illustrations to me?
□ When will I receive copy of my application? My policy?
□ Can I increase or reduce the death benefit and premiums at a later date if my personal situation changes?
□ Can I insure my children under my policy?
Make sure you ask at least three insurance agents or companies to provide quotes and/or policy illustrations to you for a similar product so you can make a comparison and select the one that best suits your needs. Don’t accept only one solution to your life insurance needs and avoid anyone who tries to sell you a particular plan and won’t suggest alternatives.
About the policy
Once your life insurance agent or company has assessed your situation and your individual needs, they will recommend policies for your consideration. The following are questions you should ask before you sign anything.
About the basic features
□ What type of policy is this?
□ Please explain how this policy is suitable for my personal needs.
□ Can I have a written explanation of your recommendation please.
□ What is guaranteed in the policy and what is not – including premiums and benefits?
□ How long will my policy last?
□ Are there any exclusions?
□ Are any benefits from the policy subject to income tax?
□ What will the premiums be? Will they change over time? How do I pay them?
□ Is there cash value? If so, what is it? Can I take a loan against the cash value of the policy? If so, what is the interest rate?
□ Does the policy pay dividends? How much will they be? How can I use them?
About the death benefit
□ How much will the death benefit be? Is it guaranteed?
□ Is the death benefit adjusted for inflation? Can I buy more insurance if needed?
□ How is the death benefit paid out? How long does it take?
□ What exclusions apply to the death benefit?
□ Is the death benefit taxable?
□ Do I need to set up a trust for my children? If so, how do I do that?
□ What happens if I separate or divorce?
□ What documentation is needed to make a claim?
About your health
□ Do I need a medical exam to purchase the product? Will I need any in the future?
□ What happens if my health changes?
□ What happens to my premiums if I become disabled and cannot work?
You should receive your policy within 30 days of your application. A good life insurance agent will deliver your policy and explain the terms, conditions and risks. If your policy is mailed to you, call your insurance agent when you receive it and ask them to go over these things with you. You should also check your personal information and policy information carefully yourself and report any errors. Check that the policy aligns with the information you submitted in your application and your expectations for coverage.
All life insurance policies come with a rescission right, which means after you receive your policy, you have at least 10 days and in some cases 20 days to cancel it, and they will return any premiums you already paid. Visit How to read your insurance policy to learn what to look for when reviewing your policy.
You may be interested in...
Life Insurance 101 Getting Started: learn the basics of life insurance.
Types of Life Insurance: learn what the different policy types are and what options you have.
Working with a Life Insurance Agent or Company: understand what to expect when working with a life insurance agent or company.
All About Beneficiaries: learn what they are, who they can be, and how to update them.
Financial Literacy Portal: your one-stop shop for links to other great financial information.
Glossary: Life Insurance: to better understand common life insurance terms, refer to this glossary.