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Questions to Ask When Purchasing Life Insurance – The ABC’s

Posted by Allison Barton

Nov 18, 2014, 2:30:00 PM

ABCs

For many people, purchasing life insurance can be a daunting process.  The topic forces you think about your own mortality and it can be a complicated subject.  

As a result, many Canadians find it difficult to make the necessary choices when buying life insurance.

6 in 10 Canadians find it difficult to:  1) Choose an insurance company 2) Decide how much to buy 3) Understand the policy details 4) Decide what type of policy to buy*LIMRA, 2013 Canadian Life Insurance Ownership Study

It’s important for you to feel comfortable with the purchasing process, and gain as much knowledge as possible about what you’re buying. A life insurance advisor can help you with the decision making process by answering your questions and providing advice.  

A great way to find the right information that you truly need to know about purchasing life insurance is by asking the right questions.

To help simplify your list of questions, let’s break it down into the ABC’s:

A –Advisor

B – Benefits

C - Coverage

Let’s focus this blog on questions to ask advisors.  

Advisor Questions

1) Get some history:

  • How long has your prospective life insurance advisor been in business, and in what province is he or she licensed to sell life insurance?  

Don’t be embarrassed to ask the question and don’t simply assume that the advisor is licensed in your province.

  • What education and professional accreditation does this individual have? 

You don’t necessarily need the alphabet soup after the advisor’s name but determining the areas of financial planning that you’d like advice for will help you narrow your search.  Licensed Life Insurance advisors need to have completed the Life License Qualification Program (LLQP). Additionally, financial planners have designations and credentials that require extensive education in financial planning. As well, many advisors may also have their Certified Financial Planner (CFP) designation.

2) Understand their company affiliations:

  • Who does the life insurance advisor work for?

Life insurance advisors can either be:

a) an independent life insurance advisor or
b) a captive life insurance advisor

An independent life insurance advisor can be licensed to do business with a number of different insurance companies and are able to look at many product offerings from each company they represent.  A captive life insurance advisor generally only offers life insurance solutions from a single company.

  • Which insurance company will he or she be submitting your life insurance application to and why? 

For peace of mind, most people want to know which company their application is submitted to. Organizations such as A.M. Best Co, provide ratings so that consumers can research the financial stability of the life insurance company.  Ask your advisor if your policy is submitted to an established and reputable company.

A policy provided by a trusted company is the second most important factor to Canadians when purchasing life insurance.

*Mintel Life Insurance Study, September 2014

3)  Understand the application process:

  • What is involved in the application process? 

The application process requires you to complete a Life Insurance application either electronically or on paper.  Your age and insurance coverage amount as well as other factors will determine whether or not you need to also complete a medical exam, provide fluid samples or simply complete a health questionnaire as part of the process. An advisor can help you go through the application process.

To help connect you with a life insurance advisor, click Find an Advisor.

Stay tuned for questions to ask about your:

B – Benefits and C - Coverage