Best life insurance tips: Helping you save in 2011

Life insurance is one of those products that most people need, and few people ever want to buy. But, if 2011 holds for you an upcoming marriage, birth or home purchase then you should consider getting life insurance, as each on its own is a major milestone when you should consider your life insurance needs.

When shopping for life insurance in 2011, keep in mind the following tips and you could save money on the life insurance you need.

1. Consider term life insurance

   Term life insurance typically offers you the most coverage for the least amount of money, and although there is no investment or saving component, there are many who would tell you to "Buy term, and invest the difference."
   
   Compare term life insurance quotes.

2. If you're healthy, avoid guaranteed issue policies.

   Guaranteed issue policies typically do not require a medical exam, which is why they are generally more expensive. A guaranteed issue policy is available to everyone, healthy or not, and this is reflected in higher premiums.
   
   Note: Guaranteed issue policies are ideal for people who are unable to get any other life insurance. While it may be more expensive, it is still worth having a guaranteed issue policy over having no life insurance coverage at all.

3. Buy only what you need.

   Knowing what you would like to accomplish with your life insurance policy will help you determine how much coverage you need. Consider common goals like covering the cost of funeral arrangements, paying outstanding debts like mortgages, providing money for the future education costs of your children, and offsetting the loss of your income into the family.
   
   You'll find that many industry folks suggest that the amount of life insurance coverage you should buy should be five to ten times your annual, before-tax, income.
   
   Exceptions to the rule. Sometimes-not always-the more you buy, the cheaper the policy. Sometimes companies will charge you less if you purchase a slightly larger policy. For example, if you are considering buying $200,000 in coverage, get quotes for the next common face amount $250,000. You'll be surprised to see how in some cases the premium is actually less.

4. Consider a two-in-one policy.

   If you're looking to get life insurance for yourself and your spouse or partner, then consider buying one joint policy, instead of two individual policies. The premium is usually about 15% less for a joint life policy than 2 single life insurance policies of the same coverage amount.
   
   Compare joint term life insurance quotes.

5. Pay once a year, instead of monthly.

   Save money by paying your annual premium all at once, instead of setting up a monthly payment plan. Almost all life insurance companies will charge you a little extra to cover the cost of administering your payments every month.

6. Buy before your half-birthday.

   Your next birthday may be 6 months away but in the eyes of most life insurers you've already hit that next magical number. It's called "Age nearest", and it's what happens when you get quotes for life insurance. The quote you're offered is usually based on the age you are closest to, which 50 per cent of the time is your age at your next birthday.

7. Compare quotes.

   Compare the life insurance policies and prices of competing insurers. Every company prices their policies differently. A real easy way to do this is to compare premiums and policies online. It's a great way to compare prices and see what different companies have to offer.
   
   Compare life insurance quotes today.

8. Compare standard and preferred quotes - but not to each other!

   There are two basic life insurance rate groups: standard rates and preferred. Most people qualify for standard life insurance rates, while only about one third of the population is eligible for preferred rates.
   
   Preferred rates are offered to exceptionally healthy people and means that you may pay a smaller premium than most. Usually preferred rates are offered only once the results of the medical information and tests are known.

Top 10 life insurance myths

The facts of life insurance

True or false? Fact or fiction? Understanding term life insurance and its benefits means sifting through the myths surrounding it. So we've taken a look at the most common misconceptions about term life insurance to set the record straight, helping you to make the right choice for you and your family.

Myth #1: I don't need life insurance.

Probably false. Unless you are an individual who does not have children, has money on hand to cover all debts and funeral expenses, and does not feel the need to offset the loss of your income to a spouse, leave any additional money to family, or to a charity, then it may be true, you don't need life insurance. But few people have the funds readily available to fulfill all their wishes or meet their obligations after their death.
At the very minimum, if you have anyone who relies on your income for their day-to-day needs like a spouse or children, or if you have debts like a mortgage, credit cards, or car loans, then you likely need life insurance.

Myth #2: I don't work outside the home so I don't need life insurance.

Definitely false! Just because there's no paycheque to replace, doesn't mean life insurance is unnecessary. In fact, have you ever considered how much it would cost to pay for childcare and housekeeping in the absence of a stay-at-home parent? It's a lot of money and reason enough to have life insurance.

Myth #3: I have life insurance through my job. I don't need any more coverage.

The truth is your life insurance coverage through your work may not be protecting yourself and your loved ones as much as you think. Review how much your employer-paid insurance provides and calculate whether this is enough to keep your family comfortable through the difficult times if you're not around. What's more, when you leave your job your coverage will likely cease.

Myth #4: I have coverage from my mortgage lender. It's enough.

Mortgage life insurance pays off your mortgage if one of the people listed on the loan dies before it's paid-but that's it. What about the rest? Term life insurance offers coverage that can be used for anything, including funeral expenses, paying down a mortgage, car loan and credit cards, or to offset the loss of income into the family finances.

Myth #5: I don't need life insurance once my children are self-supporting and my mortgage is paid off.

Everybody's insurance needs vary, but how would your spouse manage daily living expenses without your help? And what if your spouse outlived you by 10, even 20 years?

Myth #6: I won't be able to get insurance because I'm a smoker.

Not true. What is true is that as a smoker, the premium you pay for your life insurance coverage will be slightly higher than a non-smoker's premium. Even though as a smoker you'll pay more for your coverage, it's likely more affordable than you think.

Myth #7: Once a smoker, always a smoker in the eyes of the life insurers

Wrong! Good news for ex-smokers. Many life insurance companies consider you a non-smoker once you've been smoke-free for 1 full year. So congratulations, after one year you can usually get non-smoker rates.

Myth #8: I'm young so odds are I won't need life insurance.

Although it is unlikely you'll die during your working years, you're not insuring for what's likely to happen but instead, for the worst-case scenario. That's why term life insurance is inexpensive for young, healthy people. Buying life insurance now means you'll be providing financial security without spending a lot of money for it.
For example, an online quote at Kanetix for a $250,000 10-year term policy for:

• a healthy 35-year old non-smoking woman costs as little as $150 a year*
• a healthy 35-year old non-smoking man costs as little as $188 a year*
• a healthy 35-year old non-smoking married couple costs as little as $265 a year*

What's more you may even be eligible for 'preferred' rates that mean the annual premiums are even less!

Compare term life insurance quotes.

Myth #9: If term life insurance is really so cheap there must be a catch.

There's no catch. Your basic term life insurance policy will offer you coverage so long as you pay your premium. You buy term insurance for the duration of time you'll need life insurance, whether that's until the kids are out of school or until your mortgage is paid off. Plus, your premiums are fixed for the length of the term. They won't increase even if the status of your health changes.

Myth #10: It's such a hassle to get life insurance.

Thanks to the Internet, getting quotes is fast, free and easy. Online quotes for term life insurance are available online at Kanetix from some of Canada's most respected and known insurance companies.

Final Fact:

Life insurance policies provide you with customized coverage for your family's needs. Complete a quote online at Kanetix for a Term 10, Term 20, Term 30 or Term to 100 life insurance policy and we'll introduce you to a licensed representative so you can go over your family's life insurance needs.

Popular life insurance products in Canada

What life insurance products are Canadians comparing most?

Hands down, the most popular life insurance product compared at Kanetix.ca is Term 10 life insurance. Last year, this life insurance product accounted for about 45 per cent of all life insurance quotes.

Term 10 life insurance is a popular choice for many Canadians as it is affordable and offers premiums guaranteed not to increase for a 10-year period. It is typically best suited for individuals who have shorter-term needs; their mortgage will be paid off over the term of the life insurance policy and typically, their children are in their teens or older.

How affordable is it? Less than a dollar a day.

Age	Premium - Male	Premium - Female
40	$151	$128
45	$193	$152
50	$255	$200
*Lowest quote offered online at Kanetix for a non-smoker in April, 2011. Premiums shown are the premiums if paid annually.

Compare term 10 life insurance quotes today.

Term 20 life insurance

The second most popular life insurance product available through Kanetix.ca is the 20-year term policy. Last year, this life insurance product accounted for almost 30 per cent of all life insurance quotes.

Term 20 life insurance, like the 10-year policy, offers level premiums for the duration of the policy. It typically appeals to individuals who have longer term life insurance needs of at least 15 years, especially individuals with young families and a new mortgage.

How affordable is it? Still less than a dollar a day.

Age	Premium - Male	Premium - Female
30	$149	$123
35	$164	$139
40	$203	$162
*Lowest quote offered online at Kanetix for a non-smoker in April, 2011. Premiums shown are the premiums if paid annually.

Compare term 20 life insurance quotes today.

Term 30 life insurance

Term 30 life insurance has become more popular especially with homeowners who choose to amortize their mortgage over 30 years. Last year, the Term 30 life insurance product accounted for almost 11 per cent of the single coverage life insurance quotes obtained through Kanetix.ca.

Life insurance rates for a Term 30 policy are also affordable, and will be the same throughout the duration of the policy:

Age	Premium - Male	Premium - Female
25	$169	$132
30	$192	$154
35	$233	$181
*Lowest quote offered online at Kanetix for a non-smoker in April, 2011. Premiums shown are the premiums if paid annually.

Compare term 30 life insurance quotes today.

Term to 100 life insurance

Term to 100 life insurance is often referred to as a permanent life insurance policy. The period of coverage, as the name suggests, is until the policyholder turns 100 years of age. It is different from permanent life insurance policies in that it usually has no cash values and is non-participating (meaning that it will not pay out dividends.) As a result, as permanent life insurance policies go, it is one of the most affordable.

Age	Premium - Male	Premium - Female
50	$1216	$963
55	$1636	$1315
60	$2118	$1696
*Lowest quote offered online at Kanetix for a non-smoker in April, 2011. Premiums shown are the premiums if paid annually.

Term to 100 life insurance is best suited for individuals 50 and older because, so long as the policy is kept in force, the premiums will not increase even as the policyholder ages. Last year, the Term to 100 life insurance product accounted for almost 15 per cent of life insurance quotes, making it the third most popular life insurance product at Kanetix.ca.

Insurance

Insurance, in law and economics, is a form of risk management primarily used to hedge against the risk of a contingent loss. Insurance is defined as the equitable transfer of the risk of a loss, from one entity to another, in exchange for a premium, and can be thought of as a guaranteed small loss to prevent a large, possibly devastating loss. An insurer is a company selling the insurance; an insured or policyholder is the person or entity buying the insurance. The insurance rate is a factor used to determine the amount to be charged for a certain amount of insurance coverage, called the premium. Risk management, the practice of appraising and controlling risk, has evolved as a discrete field of study and practice.

Principles of insurance

Financial market participants
Collective investment schemes Credit Unions Insurance companies Investment banks Pension funds Prime Brokers Trusts
Finance series Financial market Participants Corporate finance Personal finance Public finance Banks and Banking Financial regulation
v • d • e

Commercially insurable risks typically share seven common characteristics.^[1]

1. A large number of homogeneous exposure units. The vast majority of insurance policies are provided for individual members of very large classes. Automobile insurance, for example, covered about 175 million automobiles in the United States in 2004.^[2] The existence of a large number of homogeneous exposure units allows insurers to benefit from the so-called “law of large numbers,” which in effect states that as the number of exposure units increases, the actual results are increasingly likely to become close to expected results. There are exceptions to this criterion. Lloyd's of London is famous for insuring the life or health of actors, actresses and sports figures. Satellite Launch insurance covers events that are infrequent. Large commercial property policies may insure exceptional properties for which there are no ‘homogeneous’ exposure units. Despite failing on this criterion, many exposures like these are generally considered to be insurable.
2. Definite Loss. The event that gives rise to the loss that is subject to the insured, at least in principle, take place at a known time, in a known place, and from a known cause. The classic example is death of an insured person on a life insurance policy. Fire, automobile accidents, and worker injuries may all easily meet this criterion. Other types of losses may only be definite in theory. Occupational disease, for instance, may involve prolonged exposure to injurious conditions where no specific time, place or cause is identifiable. Ideally, the time, place and cause of a loss should be clear enough that a reasonable person, with sufficient information, could objectively verify all three elements.
3. Accidental Loss. The event that constitutes the trigger of a claim should be fortuitous, or at least outside the control of the beneficiary of the insurance. The loss should be ‘pure,’ in the sense that it results from an event for which there is only the opportunity for cost. Events that contain speculative elements, such as ordinary business risks, are generally not considered insurable.
4. Large Loss. The size of the loss must be meaningful from the perspective of the insured. Insurance premiums need to cover both the expected cost of losses, plus the cost of issuing and administering the policy, adjusting losses, and supplying the capital needed to reasonably assure that the insurer will be able to pay claims. For small losses these latter costs may be several times the size of the expected cost of losses. There is little point in paying such costs unless the protection offered has real value to a buyer.
5. Affordable Premium. If the likelihood of an insured event is so high, or the cost of the event so large, that the resulting premium is large relative to the amount of protection offered, it is not likely that anyone will buy insurance, even if on offer. Further, as the accounting profession formally recognizes in financial accounting standards, the premium cannot be so large that there is not a reasonable chance of a significant loss to the insurer. If there is no such chance of loss, the transaction may have the form of insurance, but not the substance. (See the U.S. Financial Accounting Standards Board standard number 113)
6. Calculable Loss. There are two elements that must be at least estimable, if not formally calculable: the probability of loss, and the attendant cost. Probability of loss is generally an empirical exercise, while cost has more to do with the ability of a reasonable person in possession of a copy of the insurance policy and a proof of loss associated with a claim presented under that policy to make a reasonably definite and objective evaluation of the amount of the loss recoverable as a result of the claim.
7. Limited risk of catastrophically large losses. The essential risk is often aggregation. If the same event can cause losses to numerous policyholders of the same insurer, the ability of that insurer to issue policies becomes constrained, not by factors surrounding the individual characteristics of a given policyholder, but by the factors surrounding the sum of all policyholders so exposed. Typically, insurers prefer to limit their exposure to a loss from a single event to some small portion of their capital base, on the order of 5 percent. Where the loss can be aggregated, or an individual policy could produce exceptionally large claims, the capital constraint will restrict an insurer's appetite for additional policyholders. The classic example is earthquake insurance, where the ability of an underwriter to issue a new policy depends on the number and size of the policies that it has already underwritten. Wind insurance in hurricane zones, particularly along coast lines, is another example of this phenomenon. In extreme cases, the aggregation can affect the entire industry, since the combined capital of insurers and reinsurers can be small compared to the needs of potential policyholders in areas exposed to aggregation risk. In commercial fire insurance it is possible to find single properties whose total exposed value is well in excess of any individual insurer’s capital constraint. Such properties are generally shared among several insurers, or are insured by a single insurer who syndicates the risk into the reinsurance
8. market

This blog about life insurance in various countries worldwide.