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How Does Life Insurance Work?

January 12, 2022

Insurance Broker Mississauga

Life insurance can be a confusing topic for many. There are various types, and you may not be sure what type you need or even if you need it at all. If you’re new to buying life insurance in Mississauga, you likely have questions. In this article, we will give an overview of how life insurance works.

Types of Life Insurance

When you make an appointment with your insurance broker in Mississauga, they will evaluate your needs to see whether term insurance, permanent insurance, or a combination of the two is the right choice for you.

With both types of life insurance, you make monthly or yearly payments (your premium), and in exchange – as long as the policy remains in force – a death benefit is paid to your beneficiaries when you pass away.

With permanent insurance however, there is usually a cash value that that grows within the policy over time as you pay your premiums. Depending on how your insurance is structured, this cash value may be a source for you to borrow from. Or you may also get dividends within the policy that you can receive in cash or use to purchase additional coverage.

How Are Premiums Determined?

How much you pay in premiums when you purchase life insurance in Mississauga is determined by a number of factors including type of insurance, amount of death benefit, age, health status, and family health history.

For some insurance, you may to complete some health tests and/or supply records from your family doctor.

How Do I Apply for Life Insurance?

The best way to apply for life insurance is to do so with the help of an insurance broker in Mississauga. This is preferred over other options (like applying online) because your broker can review your situation to help you tailor an insurance plan that is exactly right for your needs.

What Happens When the Policy Holder Dies?

When the policyholder of a life insurance policy dies, their beneficiary should contact the insurance broker in Mississauga who manages the policy. They will require a copy of the death certificate before funds can be released.

Once the information is received, the money (death benefit) is paid out to the beneficiaries fairly quickly. This is because money from a life insurance policy does not have to go through probate (unlike assets held by the estate). Additionally, beneficiaries receive this money tax free.

If you are interested in applying for life insurance, or if you simply have more questions, we are here to help. Contact us today to speak to an insurance broker in Mississauga.