Life insurance

Simply put, life insurance is a legal agreement or a policy between you (the insured) and an insurance company (the insurer). When you purchase a certain amount of life insurance (let’s say a $200,000 policy) and remain in good standing on your policy, the insurer promises to pay that $200,000 to your beneficiaries, who are the people you choose to receive this money (the death benefit) if you pass away.

It’s also important to note that life insurance can be very affordable, no matter how much money you make. That $200,000 policy might be as low as $20 a month for a 30-year-old woman who doesn’t smoke with coverage for the next 20 years.

In general, most life insurance policies work the same way: in exchange for a fee that you typically pay monthly or annually (your insurance premium), an insurance company provides a certain amount of coverage on your life and will provide a tax-free benefit to your beneficiaries if you pass away while you have coverage. Learn more about how life insurance works.

Life insurance is there to protect your loved ones under most circumstances, but there are a few considerations to be aware of. The death benefit will not be paid if the life insured commits suicide within 2 years from the coverage date or from any reinstatement date. The death benefit will also not be paid if the policy is declared null and void due to material omission, misrepresentation, or fraud. Being honest and truthful on your application is of the utmost importance to ensuring your benefit will support your loved ones.

Life insurance comes in many forms, but all coverage essentially falls under two main buckets: term life insurance and permanent life insurance. Within those buckets, you have flexible options to help you get the specific coverage you need.

Term life insurance is the most affordable and is intended to cover short-term needs between 10 to 40 years. The majority of Canadians find that term life insurance is the suitable option for their needs. Many people choose to buy term life insurance when their kids are young and they’re carrying debt, such as a mortgage. It costs less than permanent insurance, has consistent premiums for the length of your chosen term, and is usually easy to buy. For example, you may not have to take a medical exam if you’re young and healthy, and could even be eligible for an instant approval. After your chosen term length, the premiums increase year over year until age 100, when it is considered paid up.

Permanent life insurance typically comes at a higher cost — however, the reason for this is that it provides coverage for your entire life and, in some cases, the opportunity to grow wealth and build savings. Term 100, Universal and Whole Life Insurance are all different types of permanent coverage.
Universal and Whole Life options have the added benefit of combining lifelong insurance coverage with savings opportunities within your policy (called cash value or accumulation value). One of the perks of a cash value policy is that you may be able to access the cash value to supplement your retirement income, help your kids pay for post-secondary education and more.

To learn more about term and permanent life insurance, as well as specialty products, check out The Types of Life Insurance Explained.

Life Insurance helps provide financial protection for your loved ones should you pass away.

A life insurance policy pays a guaranteed lump sum amount of money to your loved ones (beneficiaries) when they need it most after you pass.

The lump sum amount of money from a Life Insurance policy can be used to help:

• Replace lost income for your family
• Cover or pay off living expenses like mortgage or rent
• Provide for your child’s care
• Pay off debts you may leave behind
• Fund your children’s education
• Create a tax-free inheritance
• Cover funeral and other final expenses

If you can check off one of the boxes below, you probably need life insurance:

That depends. There can be benefits to getting coverage now while you’re young and unattached. Check out Reasons to Get Life Insurance At Any Age.

The answer to this question is unique for everyone, however, you probably need more life insurance than you think. How much you earn, your debt obligations, how many dependents you have and other factors should all be considered as you choose what’s right for your needs.

Try our life insurance calculator to get a quick estimate or learn more about the factors that can affect how much life insurance you need.

We’d recommend you talk to your account manager or your business advisor. We can explain the options available to you so that you can determine a plan that suits your business needs. Life and disability insurance protections for individuals in your business may be an important tool to include in your financial plan. Additionally, options like our Business Loan Insurance Plan may contribute to how you plan for the financial security of your business.

Life insurance coverage falls into two broad categories: term and permanent.

Term life insurance provides coverage for a specific number of years and is renewable after the initial term is up, if needed. It is customized to cover short term needs like debts, loans and/or income replacement until your child becomes independent. Term Life Insurance is the most affordable type of life insurance.

Permanent life insurance is designed to cover long term needs such as income to support a disabled dependant, funeral expenses or estate planning.

You may want to consider life insurance if you have people who depend on you financially or have debt that will be left for your loved ones.

You would likely need life insurance if you:

• Are expecting or have kids or dependants
• Share financial responsibilities with your spouse or partner
• Have debts, such as a mortgage or car loans
• Don’t have enough savings to cover funeral and final expenses
• Want to leave an inheritance to your loved ones

You probably don’t need life insurance if you:

• Are single and have no kids or dependents; and
• Don’t have debts; and
• Have enough savings to cover funeral and final expenses

Life insurance is not a one size fits all approach. The amount of coverage you need will depend on your existing assets, your debts and bills, and if you have anyone financially dependent on you.

If your budget doesn’t allow for you to obtain the total amount of coverage recommended – some is better than nothing. You can revisit adding more as your life and budget changes.

If you have life insurance through your employer, you may not be sufficiently covered because it’s only valid during your employment and generally only covers a small amount of lost income – often only one or two times your salary.

That depends on your needs. If you’re considering term life insurance, you can get a cost estimate pretty quickly with a life insurance quote. Your premiums may be different from another person’s premiums—that’s because premiums are based on many things, including risk factors that are unique to you. Check out I Need To Adjust My Budget, How Can I Get Insurance To Fit?

In general, here’s what will figure into your cost:

The type of insurance you choose

Term life insurance is intended to cover short-term needs and is more affordable than a permanent life insurance policy that offers lifetime coverage, such as Universal or Whole Life insurance. Some permanent life insurance policies may also have an investment component and legacy-building benefits. See Types of Life Insurance Explained or check out Can I Personalize My Insurance?

How much coverage you buy

A million-dollar policy is going to cost you more than a $250,000 policy (for the same term length).

Your age, health and gender

The younger and healthier you are when you buy life insurance, the less it will cost. And men typically pay more than women do based on life expectancy.

As an example, a 35-year-old female non-smoker can expect to pay around $19.85 per month for a 20-year term life insurance policy worth $350,000, while a 35-year old male non-smoker can expect to pay around $25.78 per month for the same policy.

Your lifestyle

If you drink alcohol or consume marijuana frequently, or enjoy more extreme activities like scuba diving or rock climbing, you will be required to disclose more information and, depending on the specifics, you may pay higher premiums. And, if you smoke or use tobacco products, you will almost certainly pay more for your policy.

Family medical history

If cancer, diabetes or other medical conditions run in your family, this could increase your rates.

Get a quick life insurance quote now to see what a life insurance policy might look like, based on your needs.

The first thing you should know is that some types of life insurance are simpler to buy than others. Depending on the type of coverage you want and how much you’re applying for, your application may need to go through underwriting.⁶ This is the process an insurer goes through to evaluate the risk associated with insuring you.

Before we get into underwriting though, here are the routes you can take once you’re ready to buy:

Buying coverage online

If your needs are fairly straightforward, you may be able to get a quote and buy your coverage online. At RBC Insurance, we offer a few online options:

• Term life insurance: Depending on your age, health, the amount of coverage you are applying for and if you’re a Canadian citizen or permanent resident/landed immigrant, you may be able to request a quote and get an instant decision online⁶. If you don’t receive an instant decision, you may need to complete a phone interview. It’s also possible that a paramedical nurse will need to visit you to take your vitals.
• Personal accident insurance: If you’re already an RBC^® client, age 18 to 69, and a Canadian resident, you can buy personal accident insurance online. In fact, your acceptance is guaranteed. Learn more or enrol now⁷.
• RBC Guaranteed Acceptance Life Insurance: If you’re a Canadian citizen or permanent resident/landed immigrant and age 40 to 75, you can buy up to $40,000 of life insurance. There’s no medical exam or health questions to answer. Learn more or get my quote⁸.

Buying coverage through an advisor

Many Canadians buy life insurance with the help of an insurance advisor. At RBC Insurance, our friendly advisors can provide advice to help you make the best decision for you and your family, and help you complete your application with ease. You can call one of our advisors at 1-800-461-1413 or search for one near you. Find a checklist to help you prepare at Can I Personalize My Insurance?

Getting coverage through work

If your employer offers a group life insurance policy, you’ll want to follow up with your HR department or plan administrator. Coverage through an employer is likely capped at an amount that may not be enough for your individual needs. Additionally, benefits such as group life insurance may change in the future. Inquire about your options to maintain the policy if you decide to change jobs.

In most cases, you will need to give information about your lifestyle, health, age, personal and family medical history. You must answer all questions in your application truthfully and accurately since, if you give incorrect or incomplete information, the insurance company can deny, adjust your benefits or void your coverage.

The time it takes to hear back varies. In some cases, you may hear back instantly. For example, if you’re under 56, have a good medical history and are applying for less than $1 million in term insurance, you may get an instant response.

In other cases, it could take 3 to 16 weeks to find out if you’re approved, and larger policies may require more time. If you applied with an RBC advisor, you can always reach out to them for an update, and if you applied online you can call 1-800-461-1413.

Once you have your life insurance policy in hand, don’t be afraid to ask your RBC advisor questions—we’re here to help, after all. If something is unclear, it’s in your best interest to understand your coverage. You will also want to store your policy in a safe place.

Once you send in your application, it may go through some form of underwriting, although sometimes this isn’t required.

Underwriting is a formal process an insurer goes through to evaluate the level of risk they are taking on by insuring you. It can be very involved or it can be minimal, depending on your situation. For example, you may need to complete a phone interview and/or a medical exam.

• Medical exam: If a medical exam is ordered, a paramedical nurse may come to your house to check your vitals. This could include collecting a urine and blood sample, weighing and measuring you, and taking your blood pressure and pulse.
• Phone interview: If we need more information, you may need to complete a telephone interview. The interviewer may ask personal, financial and medical questions.

The cost of life insurance (premium) is determined based on a variety of different factors such as:

1. Age
2. Gender
3. Health including any tobacco use
4. Lifestyle
5. Family medical history

As such, your premiums will be lower the younger and healthier you are.

You will be asked about your lifestyle, personal and family health history. In many cases, many receive an instant decision on coverage.

If you do not receive an instant decision on coverage, you will need to complete a 30 minute interview to review the current state of your health in order to finalize a decision. The 30 minute interview is completed over the phone and an in-person consultation may or may not be required in your home.

We understand how stressful it can be to deal with a significant life event like a loved one’s passing. We’re here to give you the support you need and make things as easy as possible. Check out Insurance Claim Essentials.

To file a claim:

1. Locate the insurance policy, if possible. Having the policy number handy when you call will help us give you faster service. If you can’t find it, don’t worry—we can still support you. Check out All Of Your Important Documents. All In One Place.
2. Call us as soon as possible. You will need to make your claim within a certain period of time. This varies by coverage type and is outlined in your policy.
3. Complete and send in all required documentation. We will guide you through the claims process and the documentation you need. What you need to make a claim depends on the type of coverage you have. In general, you will need to provide:
   • a completed claim form
   • the death and birth certificate
   • possibly other documentation.
4. If you are claiming on a life insurance policy worth up to $100,000, you may be able to use express service if the policy:
   • has been continuously in force for ten or more years
   • has a named beneficiary (a policy with an Estate listed as the beneficiary is not eligible).

Life insurance protects your family financially if you pass away, but it can offer other benefits too. Certain types of insurance can help you save up for whatever the future holds, whether it’s paying for your child’s education, protecting and growing your assets or achieving another goal. Check out 4 Reasons to Get Life Insurance at Any Age.