Essential Questions to Ask About Life Insurance

Most people don’t enjoy thinking about life insurance questions. It’s understandable—who wants to consider their own death or plan for circumstances we hope never happen? But asking the right questions about life insurance can make the difference between leaving your family financially secure or struggling to make ends meet.

Life insurance sounds complicated, but it’s really quite simple. You pay premiums to an insurance company, and if you pass away, they pay your beneficiaries a death benefit. The challenge isn’t understanding what life insurance is—it’s figuring out which type of policy fits your situation and budget.

Many Canadians put off these important decisions, thinking they’ll deal with life insurance “someday” when they’re older or when they have more money. But waiting often means paying higher premiums or facing health issues that make coverage harder to get. Whether you’re considering term insurance for a specific period or permanent coverage that lasts your entire life, the questions you ask now will shape your family’s financial future.

Consider what would happen to your dependents if your income disappeared tomorrow. Could they still pay the mortgage? Would your children be able to afford university? These aren’t pleasant thoughts, but they’re the realities that make life insurance more than just another expense.

The good news is that getting life insurance doesn’t have to be overwhelming. When you ask the right questions and understand your options, you can find coverage that provides genuine peace of mind without breaking your budget.

What is life insurance and why does it matter?

Life insurance is a contract between you and an insurance company. When you die, the company pays your beneficiaries a death benefit—a tax-free lump sum they can use however they need. Your family can use this money to replace your income, pay off the mortgage, cover funeral expenses, or even make charitable donations.

The real value of life insurance becomes clear when you think about what would happen to those who depend on you financially. If you’re the primary breadwinner, your death could leave your spouse struggling to pay bills and your children wondering how they’ll afford university.

8 essential questions to ask about life insurance

Getting life insurance doesn’t have to be complicated if you know what questions to ask. Here are the most important ones:

1. What type of life insurance should I get?

This comes down to term versus permanent coverage. Term insurance covers you for a specific period—10, 20, or 30 years—and costs less upfront. If you die during the term, your beneficiaries get the payout. If you don’t, the coverage ends.

Permanent insurance lasts your entire life but costs more. It builds cash value you can borrow against while you’re alive. Your choice depends on your budget and whether you want temporary or lifelong protection.

2. How much coverage do I need?

Most experts suggest 5-7 times your annual income, but it really depends on your circumstances. Add up your mortgage, debts, and future expenses like your children’s education. Don’t forget funeral costs—they can range from $5,000 to $25,000 in Canada.

If you have dependents who rely on your income, you’ll want more coverage than someone who’s single.

3. Do I need life insurance if I don’t have dependents?

You might think you don’t, but consider this: who would pay for your funeral? What about outstanding debts or your student loans? Life insurance can handle these costs so your family doesn’t have to.

Plus, buying coverage while you’re young and healthy means lower premiums. Even if you don’t need much now, securing a policy early can save you money later.

4. What happens if my health changes later?

Once you have a policy, your coverage stays in place even if you develop health problems later. But getting additional coverage after a health issue can be expensive or impossible.

This is why it’s better to buy more coverage than you think you need while you’re healthy. You can always reduce it later, but adding more might not be an option.

5. Is my work insurance enough?

Probably not. Most workplace policies only provide 1-2 times your salary, which rarely covers all your family’s needs. Plus, this coverage disappears if you change jobs or get laid off.

Think of employer insurance as a bonus, not your main protection. A personal policy stays with you regardless of your employment situation.

6. How do I buy life insurance in Canada?

You can buy from insurance agents, brokers, directly from insurance companies, or online. Brokers, such as Maple Bay Insurance, often give you the best options since they work with multiple insurers.

Non-medical policies are available if you want quick approval without medical exams. These are perfect ever if you’re healthy but want to avoid the hassle.

7. What are the tax and estate planning benefits?

The death benefit your beneficiaries receive is tax-free. That means if you have a $500,000 policy, they get the full $500,000.

Life insurance also bypasses probate when you name beneficiaries directly. This means faster payouts and more privacy for your family during a difficult time.

8. What’s the difference between medical and non-medical policies?

Medical policies require health exams, blood work, and detailed health questionnaires. They typically offer lower premiums if you’re healthy.

Non-medical policies skip the exam—you just answer some basic health questions. They cost slightly more but you can get approved quickly, sometimes instantly. Perfect if you hate needles, have health concerns, have a dangerous career or hobbies, or have been declined in the past.

Common mistakes and misconceptions to avoid

Life insurance decisions seem straightforward, but many Canadians make the same costly mistakes year after year. Understanding these pitfalls can save you money and ensure your family gets the protection they actually need.

Assuming you’re too young to need coverage

This might be the most expensive mistake young Canadians make. Life insurance isn’t just for people with mortgages and children—it’s for anyone who wants to lock in low rates while they’re healthy.

The younger you are when you buy life insurance, the less you’ll pay in premiums. A healthy 25-year-old might pay $30 monthly for coverage that would cost a 40-year-old $80 for the same policy. That’s $50 more every month for the rest of their lives, simply because they waited.

Think about it this way: if you’re planning to get married or have children someday, you’ll need life insurance eventually. Why not secure affordable rates now, before health issues or age make coverage more expensive?

Relying only on employer-provided insurance

Workplace life insurance feels like a nice perk, but it’s rarely enough to protect your family. Most employer plans provide coverage worth only one to two times your annual salary. If you earn $60,000 per year, your work policy might pay out $120,000—barely enough to cover a mortgage, let alone years of living expenses.

Here’s the bigger problem: this coverage disappears the moment you change jobs, get laid off, or retire. Nearly half of Canadian households with only workplace insurance would struggle financially within six months if they lost their main income earner.

Your employer’s policy should supplement your personal coverage, not replace it.

Not reviewing your policy regularly

Many people buy life insurance and forget about it completely. This approach can leave dangerous gaps in your coverage as your life changes.

When you get married, have children, buy a house, or take on debt, your insurance needs grow. A policy that seemed adequate when you were single might barely scratch the surface of what your family needs now. Without regular reviews, you might discover your coverage fell short only when it’s too late to fix it.

Schedule an annual review with your insurance advisor. It takes an hour of your time but ensures your coverage keeps pace with your responsibilities.

How to choose the right policy for your needs

Choosing life insurance shouldn’t feel like guessing. The best policy is one that fits your specific situation, budget, and goals. But with so many options available, where do you start?

Working with a licenced advisor

You don’t have to figure this out on your own. A licenced insurance advisor at Maple Bay will walk you through your options and help you understand what makes sense for your situation. These professionals have access to multiple insurance companies and can compare policies to find the best fit.

When you meet with an advisor, they’ll ask about your health, lifestyle, and financial goals. Don’t worry—these aren’t trick questions. They need this information to recommend appropriate coverage and ensure you’re not paying for more than you need (or getting less than you should).

What should you expect from a good advisor? They’ll take time to understand your circumstances before recommending anything. They’ll explain policy terms in plain language and answer your questions without making you feel rushed. Most importantly, they’ll follow up to make sure your coverage continues to meet your needs as your life changes.

Conclusion

Life insurance doesn’t have to be complicated, but it is essential.

We’ve covered the key questions you need to ask before buying a policy. The choice between term and permanent coverage comes down to your budget, your family’s needs, and your long-term financial goals. What matters most is that you have coverage in place.

Working with a qualified advisor can help you sort through your options. They’ll explain the differences between policies and help you find coverage that fits your situation and budget. More importantly, they can help you avoid the common mistakes that leave families underprotected.

The best life insurance policy is the one you actually buy and keep in force. Whether you’re protecting your family’s mortgage, ensuring your children can afford university, or simply covering final expenses, having coverage gives you peace of mind that your loved ones will be financially secure.

Don’t put this decision off any longer. Your family’s financial security is too important to leave to chance.