Think you’re too young for life insurance? Here’s why you may want to reconsider.
Published: August 30, 2024 | Reviewed by Catherine Malone
A life insurance contract financially protects your beneficiaries after you die. Here’s how it works.
How does life insurance work in Canada?
Life insurance is a contract between you and an insurance company, in which you agree to pay a certain fee (also called premiums) on a monthly or annual basis. In exchange for paying your premiums, the company agrees to provide a lump sum payment (called the death benefit) to your beneficiaries after you die.
Who does life insurance protect?
Life insurance financially protects your beneficiaries. A beneficiary can be your spouse, your children, or any other person. It can even be an organization like a corporation or a charity. You get to choose who your beneficiaries are.
How does life insurance pay out?
Life insurance policies pay a tax-free lump sum to your beneficiaries after you die.
How much life insurance do you need?
It really depends on your unique situation. The amount of recommended coverage varies from person to person depending on their annual income, debts, net worth, and more. To get an estimate of how much life insurance is right for you, try our free life insurance calculator. You only have to answer a few questions to help us figure out how much coverage you may need to financially protect your beneficiaries.
Can you use life insurance while you’re alive?
While life insurance is designed to financially protect your beneficiaries upon your death, some plans allow you to access your cash value while you’re still alive.
The cash value is a savings portion within some permanent life insurance policies. You can use cash value to pay for the cost of insurance as you age, or you can borrow from it as a loan, or withdraw funds from it. Keep in mind, borrowing or withdrawing from your cash value may have tax implications and can reduce your death benefit.
How do you get a life insurance policy?
At Sun Life, there are two ways to apply for life insurance:
Get a quote and apply online
Applying online is an easy option if you’re looking for life insurance coverage ranging from $50,000 to $1,000,000.
Connect with a Sun Life advisor
If you aren’t sure what’s right for you, you can connect with an advisor. An advisor can help you get a quote and apply.
Enter your postal code to find an advisor near you.
Can you cancel a life insurance policy and get your money back?
Your premiums won’t be returned if you cancel your policy. Some permanent policies, however, can build cash value over time. If you cancel your policy, you can receive that cash value, less any unpaid premiums. Keep in mind, there may be tax implications concerning the payment of the cash value. In contrast, term insurance policies do not build any cash value – so you won’t get your money back if you cancel your policy.
More resources
7 life insurance mistakes to avoid
Find out how to help protect yourself from making these mistakes.
4 common life insurance myths unmasked
Don’t let these myths stop you from getting the coverage you need.
This information is meant for educational and illustrative purposes only. Some conditions, exclusions and restrictions apply.