You’ve decided on your coverage, picked your policy, and compared quotes—you’re finally ready to buy life insurance. But just when you thought it was safe to break out into a happy dance, you realize that your work isn’t done yet. You have a list of different prices from various insurance companies, and you need to figure out which one to choose. Do you pick the most affordable option and save money? Or do you choose the brand you recognize even if it’s more expensive?
Here are our tips on how to choose a life insurance company. You can also read our reviews of Canada’s top life insurance providers.
Let’s start by talking about the financial health of an insurance company. First and foremost, you want to be sure that you can rely on the company you choose. Life insurance is a long-term relationship (one that outlasts many marriages). Whether your policy covers you for 10, 20, or 30+ years, you want to make sure the company will still be around if you need to make a claim down the road.
Fortunately, you don’t have to worry too much here. Life insurance companies are highly regulated and supervised by the government at all levels. As a result, they’re generally in excellent financial health.
And that’s not all. You can also rely on Assuris. Assuris is a not-for-profit organization that protects Canadian policyholders if their life insurance company fails. Their job is to protect you by making sure that your policies are quickly transferred to a solvent (“healthy”) company where your benefits will continue. In the very, very, very … very …. unlikely scenario that your life insurance company does fail, Assuris guarantees that you will keep at least 85% of the promised insurance benefits.
So in sum, you can snuggle comfortably in bed at night knowing you have the protection in place no matter how you choose a life insurance company.
The actual life insurance product is important to consider too. You want robust coverage, few exceptions and exclusions, and the option to renew your policy in the future. (Why settle for less than the best bang for your buck?) Luckily, almost all insurance companies offer these benefits in their term life insurance products.
What should you steer clear of? Anything with the word “simplified” or “guaranteed” on it. Like a carton of milk that’s past its best before date, it’s something you want to avoid.
The good news is that we’ve thoroughly reviewed everything recommended on PolicyMe to make sure it gives you all the options and features that have become standard in term life insurance products.
This is an interesting factor in the equation. We would have placed it higher on our list, but there’s a teensy weensy problem: the data isn’t widely available yet. For now, you’ll have to rely on word of mouth—comments from friends and family on their experience with a particular company. (Let’s hope you can trust Aunt Betty!)
The good news is that we’re ready to change the availability of insurance company reviews. These days, you can check reviews for stores, restaurants, a pair of jeans, and even the doctor down the road. Why can’t you see what people have to say about your financial institutions? At PolicyMe, we’re working on getting customer reviews of insurance purchases (including feedback on the application, underwriting, and claims processes) so we can give you more transparency in the future.
So now that we’ve covered everything else, let’s talk about price. Price is a very important factor to look at when buying life insurance, especially when you’re purchasing term life insurance. Ideally, you won’t kick the bucket before your policy ends. And in this case, you want to pay the lowest premiums possible because your insurance company will never pay your death benefit.
If you’ve ever looked at life insurance prices, you’ll know that premiums can vary widely among companies, even for the same coverage. This is usually because some companies have higher costs than others for a certain policy or age group. It can be easy to fall into the trap of thinking that a cheaper price means that you’re looking at a cheaper product. But in most cases, a cheaper price just means that for your product, one insurance company is pricing the policy more aggressively than another to “win the sale.” This works for you! Just like you shop around for the best prices on flights and hotel accommodations, you should take advantage of competitive pricing for life insurance policies.
Under almost all circumstances, we recommend choosing the cheapest company unless word of mouth or reviews tell you otherwise. For the same coverage and benefits, why not?
PolicyMe gives you the chance to get some of the most affordable term life insurance rates in Canada. Not sure what you need? Take 5 minutes to get a free life insurance recommendation today.