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Thinking about death brings up some painful emotions. The idea of your own death is unsettling.

Combine a morbid topic like that with the financial challenge of your family's life after your death, and it's no wonder most people skip buying life insurance all together.

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Here are a few things to consider:

  1. Most likely you will outlive your term life insurance policy.
  2. Term life maintains standard of living.
  3. You only have to buy what you need.

Only approximately one percent of all benefactors have to call up and claim death benefits. That means, you probably will live. In an ideal scenario, you buy sufficient death coverage to maintain your family's or dependents' standard of living.

If your twins are now 10 years old, you probably only need to buy a 10-year term life insurance policy. The reason is after that your kids can fend for themselves.

If your spouse is a home maker, then you may want to factor in how much they would need to survive, even once the kids are grown.

Obtaining Coverage

When you start shopping around for a policy, input your information and get a handful of Canada term life insurance quotes. The responses from the various life insurance carriers takes a little patience and preparation on your part.

There are a whole host of life insurance products. Term life makes the most sense because it is the least expensive. Comparatively, the investment varieties, such as universal or whole life, build cash value over your lifetime.

Though they cost sufficiently more than term life that many financial experts recommend investing the savings from forgoing universal life independently.

Fear needles? Fear Not

Furthermore, you need to decide if you can deal with medical tests and extensive questionnaires or not. The savings on term life insurance if you give into the medical test is hundreds of dollars per year. Multiply say 500 dollars per year for a 20-year policy and a medical test could save you 10,000 dollars.

Otherwise, you could buy a guaranteed acceptance policy instead. It generally costs more because the insurance company has to account for the blind risk they are taking.

Along the same lines, the insurance carriers will review your past medical history. This gives them information to establish insurance rates. What they are looking at is how likely is it they will have to pay out benefits for you.

Establishing Risk and Resulting Rates

Another way that the insurance carriers decide how much to charge in annual premiums is risk. If you just took up sky diving last year in exotic and war-torn parts of the world, you will pay much higher life insurance premiums than a telecommuting bookkeeper who stays home watching television in their free time.

Insurance companies are going to do their homework on you. For that reason, be sure you make an accurate report of your hobbies, line of work and travel habits. The questionnaires are lengthy and you might feel tired.

Keep in mind the motivation and inspiration for this whole exercise is to keep your family and other dependents financially stable if you are to pass prematurely.

What's your car got to do with it?

Your actual vehicle has nothing to do with your term life insurance rates. An irresponsible driving record dotted with a slew of traffic tickets and accidents will increase rates. It means there is a greater chance that they would have to pay out death benefits.

If you give up dangerous hobbies, exotic travels and become a safe driver, feel free to contact your insurance company. They will be relieved and hopefully your rates can be adjusted to reflect your new, safer lifestyle. Though life insurance sounds very rigid, you may be able to find a newer policy for less money at some point.

Term life insurance tends to cost more as you age, though remove some dangerous sports and it could drive a new policy's premiums down. It's ok to shop around again once you have a policy in effect. You could have multiple policies, though once you find a better one you may cancel the obsolete and over-priced policy.

Beware the Add-on Insurance

Insurance companies are in the business of selling you products in addition to offering services. Knowing the difference between what is useful and what is going to take your money is beneficial. For instance, credit life would pay off a car note and interest for you.

Instead, if you buy sufficient term life all at once, you would pay a few hundred dollars less per year and be able to pay off your car. The idea is that you do not need anyone to earmark your funds for you, especially if they are collected separately. It just costs you more money.

Here's how to decide how much insurance to buy. If you are the sole income earner in your household, logic tells you to replace for all of your income. Same if you are one of a two-income-earning household.

Though, the official calculation directs you to purchase 60% value of your income if there are two earners and 80 percent if you are the sole income earner.

It's good food for thought, but use your best judgment. What makes you stay up all night? The thought of being underinsured? Then beef up on the policy. If you feel comfortable knowing your survivors will be able to live on a percentage of your income, then go with that.

The biggest mistake people make is waiting until they are older to buy a life insurance policy. If you have young kids, that's the time to buy term life insurance. Compare quotes and make sure that your family is protected in the event of your untimely death.

Do Your Homework

When you are buying life insurance it might feel like you have to jump through insurance company hoops. Answer the questionnaires, submit to the medical tests and wait for them to tell you how much money to send every year.

What you could be doing is evaluating the insurance companies. Check them out with the Insurance Bureau of Canada or with the credit rating agencies. Do a quick online search about the carriers to find out which ones pay out as agreed quickly and what companies try to avoid paying on valid claims.

After all, if your family has to file a life insurance claim, they will not be in the mood to deal with the run-around. Help them get their money by doing your research ahead of time.

When you buy term life insurance, compare quotes and be patient. The process is involved and time consuming, if you want to save money while shopping and applying.

If you are willing to pay a few hundred dollars extra per year on premiums, you may be happier to go the guaranteed acceptance route and forgo the medical testing.

Be sure to compare insurance rates using the FREE search tool below.

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