How do you get good, honest advice when buying life insurance?
How do you get good, honest advice when buying life insurance
?Have you ever been confused when considering your options for buying Life Insurance? Do you trust the advice you are getting and have confidence that it is unbiased?
With the advent of technology like the internet, or the recent surge in telephone call centres, there are numerous ways to buy life insurance in Canada today. The most important thing to ask yourself when buying insurance is where are you going to get the best advice from a truly unbiased source? We can take a look at the numerous ways to purchase insurance in Canada today, and assess the pros and cons of dealing with each distribution channel.
Online sales
The number of insurance policies being sold online in Canada is still relatively small, but the numbers are increasing rapidly. As a buyer of life insurance you might think it is easier to purchase online, and that by cutting out the middleman you may save some money. In fact, insurance companies will charge the same premium for a policy bought online as they will for one sold through a face-to-face advisor. There are no discounts on premiums in the Canadian marketplace.
Another major draw-back to the online purchase is the lack of personalized service. You may find it difficult to research the unique features and benefits a policy might offer, miss beneficial riders that would enhance your policy and will not have an experienced advisor who knows your unique situation and can make suitable recommendations when you wish to make changes to your policy later in life. Also, online sales offer only a limited number of policy types, usually only term insurance, so the option to purchase a permanent plan with enhanced cash values would be unavailable.
Call Centre sales
This is similar to buying online, but a live person is taking your application. Many of the same limitations of buying online exist with call centre sales. They offer only a limited selection of products and lack detailed knowledge in personalized riders and benefits. Call centres usually represent only one insurance company and can offer only the products on their shelf. Often this means clients will not be able to shop the whole insurance market for the best rates, and could be stuck paying much more than necessary.
Special Mail-Out offers
Many insurance companies offer members of groups, such as university alumni or employees of an organization, special mail-out offers for life and accidental death insurance. These plans are all built on group insurance platforms. This means as the insured person you would not own your policy, but be only a certificate holder as part of the larger group. There would be no rites to convert your policy into permanent insurance down the road. Premiums tend to increase on a five-year age band, so what seems cheap toady could get very expensive in 10 or 15 years.
The accidental death policies within these offers are not considered full coverage life insurance. The insured person would have to die from an accident in order to claim any benefit. Sometimes there are even conditions on how the accident should occur, such as an airplane or bus crash, in order to get the full benefit of the policy. It is highly unlikely that people with this type of insurance will ever claim ANY benefit for the premiums they pay.
Mortgage/Creditor Insurance
When buying a home, your bank or mortgage broker will always offer their Mortgage Insurance to protect you in case you die while still paying down the mortgage. Be very careful with this type of policy. Even though it might seem easy to be insured for this coverage, at time of claim (death) the insurance company will investigate whether or not you are eligible for the insurance. Some prior health issues could disqualify you from getting your coverage. Consider also that these plans are a decreasing benefit every time you make a mortgage payment you have less and less insurance coverage, yet the premiums remain the same. When you are finished paying down your mortgage, the insurance cancels, and there is no option to convert it into a personally owned plan.
Captive Agents
These are insurance advisors who represent certain insurance companies. Captive agents can only offer products from their insurance company, meaning clients have the choice of only a single carrier. Very often the premiums charged by captive agents are much higher than if a client bought through an independent broker. Captive agents are handcuffed by their inability to sell the entire market, and as such the person buying insurance generally loses. The most common companies with captive agents are Sun Life, RBC Insurance, Freedom 55 (London Life), Primerica, and Desjardins.
Independent Broker
An independent insurance broker has access to all companies offering insurance in the Canadian market. They can research the market on behalf of their clients and find the best possible solution for the most competitive premium. Sometimes price isn't the only driver when selecting the best insurance policy. Some companies could offer unique benefits and riders that better serve the client, or they could have some health issues that are looked on more favourably by one insurance company over another. All these things come into play when advising clients about the best policy for them. Be sure to also ask about his/her experience, support system/network, professional credentials, etc.
At Life Guard Insurance, we are a team of independent brokers who have access to over 12 major insurance companies. Combined, our team has over 45 years experience in the insurance industry, with the most experienced field underwriters in Calgary. We have access to specialized services from reinsurance, meaning we can negotiate a policy when there are serious health issues, for the ultimate benefit of our clients.
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