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FAQs

We understand that Life and Living Benefits insurance can be confusing. We are here to help and have detailed some of the more frequently asked questions and subsequent answers. If you require further clarification or would like to discuss your specific circumstances, please do not hesitate to contact a licensed PIB Life and Living Benefits Account Executive directly.

Please note these frequently asked questions contain general information only, are subject to change, and may not apply to your specific situation or to all insurers. Your policy documents outline details as they apply to your specific policy, including any policy exclusions or limitations. Please also refer to this website's Terms of Use Agreement.


Why should I have life insurance?
How much life insurance do I need?
What is term insurance?
How do I qualify for term life insurance?
How do I qualify for preferred rates?
Does my weight affect my life insurance rate?
What if I smoke cigarettes or use tobacco, does that affect my insurance rates?
What if I smoke only occasionally?
What if I quit smoking after the policy is issued?
Do I have to take a medical exam when applying for insurance coverage?
How important is disclosure when answering the application questions?
What can I do if the insurance company declines my application?
Are the rates guaranteed?
What if I had a bankruptcy; will that affect my rates?
How do I pay for my policy?
What happens if I fail to make the required premium payments?
What should I consider in naming life insurance beneficiaries?
Can I change my beneficiary?
How do my beneficiaries collect the money?
What about suicide? Can life insurance still be collected?
Are there any situations where the death benefit cannot be collected?
How long does it take for the insurance company to pay a claim?
Is there any cash value with a term life insurance policy?
What is a conversion option?
What’s the difference between term and permanent life insurance?
Which is better for me -- term or permanent life insurance?
What is the advantage of universal life insurance?
 

Why should I have life insurance?
It is unfortunate but people die - some sooner than later. The important point is to do what’s right for those you love. A person buys life insurance to make sure that there is money available to maintain financial stability for those who will still be living. In a way it is a selfless decision since you are looking out for your spouse and/or your children in the event of your death, just like you would protect them from dangers and difficulties in life.

Some types of life insurance can also be a useful financial tool during your lifetime. Permanent type life insurance policies with a cash value can be used for cash withdrawals, collateral for loans, retirement income, or to finance tuition costs for your children.
 

How much life insurance do I need?
If you are providing financial support for people who are depending on you, you probably need life insurance. To determine how much you need, deduct the total income that would be lost upon your death from the sum required for your family's ongoing financial stability. Beyond that, it depends on your particular circumstances (e.g. whether you have considerable net worth or few backup resources) and whether you want insurance for other purposes, such as educational funds or your own retirement income. Although there is no substitute for a careful evaluation of the amount of coverage needed to meet your needs, one rule of thumb is to buy life insurance that is equal to five to seven times your annual gross income.

Try this online life insurance needs calculator to get a general picture of your life insurance needs, and then contact one of PIB’s licensed Life and Living Benefits Account Executives to discuss how we can help you with the right amount and right type of life insurance for your unique situation.
 

What is term insurance?
Term insurance provides protection for a specific period of time. It pays a benefit only if you die during the term of the policy. Some term insurance policies can be renewed when you reach the end of a specific period, which can be from one to 30 years. The premium rates increase at each renewal date. Many policies require that evidence of insurability be furnished at renewal for you to qualify for the lowest available rates.
 

How do I qualify for term life insurance?
You must be a permanent resident of Canada, between the ages of 18 and 70 and in good health to qualify for term life insurance.
 

How do I qualify for preferred rates?
If you are in excellent health, based on a number of health and lifestyle factors you may qualify for a preferred rate. A preferred rate is a reduction in rates from the standard or regular rate that rewards good health. When you apply for insurance, your Licensed PIB Life and Living Benefits Account Executive will ask you a series of questions that will indicate whether you could be eligible for a better rate.
 

Does my weight affect my life insurance rate?
There are different rate classes for life insurance. When calculating the exact rate for you, the insurer does take your weight into consideration.
 

What if I smoke cigarettes or use tobacco, does that affect my insurance rates?
The answer is yes it will affect your rates, but you still can get competitive rates. Some insurance companies charge less for tobacco use than others. If you smoke cigars occasionally or chew tobacco occasionally, a few companies will still offer preferred rates.

Remember, if you have a life insurance policy that is rated on the basis of tobacco use, it’s possible to lower your premium in future years if you quit using tobacco for a number of years and remain healthy. We can work with the insurance company to try to lower your rate and in most cases it is possible.
 

What if I smoke only occasionally?
You qualify for non-smoker rates only if you have not used ANY form of tobacco products within the last 12 months. If you occasionally smoke or if you have quit smoking within the last 12 months, you are still considered a smoker.

 

What if I quit smoking after the policy is issued?
Once the policy is issued, you can apply for a change to non-smoker rates if you have gone a full 12-month period without using any form of tobacco products. Just contact us to apply for a switch to non-smoker rates, and we will guide you through the process your insurer requires for such a change.

 

Do I have to take a medical exam when applying for insurance coverage?
Not always. Many companies require a brief paramedic exam which includes blood and urine samples. This is free, is generally done in your home or office at your convenience, and usually takes less than 30 minutes. However, some lower face amount policies only require a medical questionnaire to be completed.

 

How important is disclosure when answering the application questions?
Remember that it is very important to be completely honest when answering any application questions. The underwriting process and resulting insurance contract is based on the information you provided in the application. Inaccuracies in your answers may affect how your policy is paid out in the future. For further information on the importance of disclosure, read the following article “Applying for Life Insurance? Be sure to tell them everything!”
 

What can I do if the insurance company declines my application?
If your application for life insurance has been declined, there are still options for obtaining coverage. First, we can help you apply to a different insurance company since different insurers often have different underwriting criteria.

Also remember the condition that has caused the decline can sometimes be something controllable (i.e. high blood pressure or weight). Often if the condition has been under control for 6 to 12 months you can re-apply.

Guaranteed Standard Issue life insurance is also an option. With Guaranteed Standard Issue the face amounts offered would be quite a bit lower, but there are fewer medical questions. If you have been declined for coverage then this coverage would be considered a Differed Plan, whereby if death occurs during the 1st two years the face amount of the policy will not be paid – only a refund of premiums.

Accidental Death and Dismemberment insurance is an option you may want to consider if you are declined for traditional life insurance.
 

Are the rates guaranteed?
Once you are approved, your policy will contain a premium schedule that will show all premiums payable, including the renewal premiums. These premiums are guaranteed and cannot be changed. As long as you continue to pay your premiums, your coverage will continue at these rates. For some Universal Life insurance policies there may occasionally be a request to increase premium payment amounts slightly to keep pace with inflation. These increases are voluntary. Your licensed PIB Life and Living Benefits Account Executive will be able to explain this to you.

 

What if I had a bankruptcy; will that affect my rates?
Most insurers will require that the bankruptcy be discharged completely or that a year has passed since filing for bankruptcy before they will underwrite you for life insurance. Discuss your situation with your licensed PIB Life and Living Benefits Account Executive to determine how your specific application will be affected.
 

How do I pay for my policy?
You may pay for your policy on a monthly, quarterly, semi-annual or annual basis.
 

What happens if I fail to make the required premium payments?
If you miss a premium payment, you typically have a 30- or 31-day grace period during which you can pay the premium with no interest charged. If you own a term policy and fail to pay your premium within the grace period, your insurance company will typically terminate the policy. If you own a permanent policy and fail to pay your premium within the grace period, your insurance company, with your authorization, can draw from your policy's cash value to keep the policy in force. In some flexible-premium policies, premiums may be reduced or skipped as long as sufficient cash values remain in the policy. However, this will result in lower cash values and a shortened coverage period. Contact a PIB Life and Living Benefits Account Executive to discuss.
 

What should I consider in naming life insurance beneficiaries?
It is recommended you name a "contingent," or secondary, beneficiary, just in case you outlive your first beneficiary.

It is generally better to name a specific beneficiary, rather than having the proceeds of your life insurance paid to your estate. One of the great advantages of life insurance is that it can be paid to your beneficiaries immediately, thus giving your family money it may need to deal with immediate expenses associated with the death. If the death benefit is payable to your estate the funds will have to go through probate with the rest of your assets.

Be very specific in wording beneficiary designations. Saying "wife of the insured" could result in an ex-spouse getting the proceeds. Naming specific children may exclude those born later. If your child dies before you, do you want the proceeds to go to that child's children? Changing the beneficiary designation is easy, but you have to remember to do it. Due to the various issues involved, your PIB Life and Living Benefits Account Executive can be an excellent source of information to help you properly set up your beneficiary designation.

 

Can I change my beneficiary?
You can change your beneficiary by completing a change in beneficiary form. If you name a beneficiary and designate them as ‘irrevocable’ then the beneficiary must also agree to the change. In the province of Quebec, if you designate your married or common law spouse as beneficiary it is generally irrevocable, unless you state otherwise or your spouse consents to the change.

 

How do my beneficiaries collect the money?
Your beneficiaries will receive a lump sum tax-free cheque in the event of your death, once they have submitted the required paperwork.

 

What about suicide? Can life insurance still be collected?
Each life insurance policy is different, but most contain a suicide provision. The suicide provision states that if the person covered by the life insurance policy dies as the result of suicide within two years from the policy issue date then any beneficiaries would not be able to collect the death benefit. Otherwise, after the two year suicide provision period, the policy should pay the death benefit to the beneficiaries. Be sure to check your policy's exclusions section, since the suicide provision can be different for each policy.

 

Are there any situations where the death benefit cannot be collected?
Policy wording varies. It is important to check your policy for specific information on what is covered and any exclusions.

Most life insurance policies contain a suicide provision stating that during the first 2 years of coverage, if death is due to suicide, then no benefit is payable.

Also, if you provide incorrect or incomplete information during the application and underwriting process the insurance company may have the right to deny the benefit. This includes incorrect or incomplete information regarding health, lifestyle or smoking habits. Consult your policy documents for details about your coverage and any limitations or exclusions.

 

How long does it take for the insurance company to pay a claim?
The insurance companies usually pay death claims within 5 to 10 business days of receiving the proper completed paperwork and a copy of the death certificate. Contact our Life and Living Benefits Administration team to obtain the necessary forms.

 

Is there any cash value with a term life insurance policy?
There is no cash value with a term life insurance policy. The premium you pay for term insurance is for protection only. Permanent life insurance on the other hand can offer both protection and a cash value.

 

What is a conversion option?
A conversion option allows you to change or convert your existing term insurance policy to a permanent type of policy with the same insurer. For example, you may choose to convert your term policy to a permanent type of policy that covers you until age 100. If you do so, you will not need to complete a health questionnaire or medical exam. Note not all term policies are convertible. Check your policy documents for information regarding your conversion options if any.

 

What’s the difference between term and permanent life insurance?
A main difference between term and permanent life insurance is that term life insurance has an end date, for example after 20 years, whereas permanent life insurance provides coverage for life. Term life insurance premiums are usually initially lower when compared to permanent coverage. However, permanent life insurance can offer both life-long protection and a cash value, and may actually be overall less expensive than term insurance in the long run.

 

Which is better for me -- term or permanent life insurance?
If you are looking for a basic, low cost life insurance plan choosing term life insurance could be your best option. Term life will give you a certain amount of life insurance for a specific period of time (the policy term). Term life insurance is a good choice for people on fixed incomes and those with families.

Permanent life insurance (whole and universal) is more expensive but has the benefit of building a cash value which you can borrow against. This is a good option for someone interested in having a life insurance plan well into their retirement years.

There is much to consider when choosing what type of life insurance is best for you. To discuss your specific life insurance needs and learn more about the life insurance choices available to you Contact Us .

 

What is the advantage of universal life insurance?
Universal life insurance is a type of Permanent insurance where the policy offers both protection and a cash value. There are several strong features with this type of policy that can be advantageous for many people, especially high income earners. These advantages are built mainly around the following features:

  • tax-advantaged treatment of investments under the umbrella of an insurance policy,
  • tax free nature of insurance benefits,
  • the ability to use assets accumulated in the universal life policy as collateral,
  • creditor-proof quality of assets in the policy,
  • good investment options, guarantees, and bonuses,
  • flexibility and control of own money (as opposed to traditional whole life polices), and
  • the ability to decrease cost of insurance (of various kind) by paying for it with before-tax money.
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