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Life Insurance

Life insurance is a financial protection product that provides a tax-free lump-sum payment, known as a death benefit, to designated beneficiaries when the insured person dies. It is designed to replace income, pay debts, cover final expenses, or provide financial stability for dependents and loved ones. Life insurance helps ensure that family members can maintain their quality of life and meet ongoing financial obligations even after the loss of the primary earner.

There are two main types of life insurance: term life insurance, which provides coverage for a specific period such as 10, 20, or 30 years, and permanent life insurance, which provides lifelong protection and may include a savings or investment component (such as whole life or universal life). Premiums are based on factors such as age, health, lifestyle, and coverage amount.

Example:

If you purchase a $500,000 term life insurance policy with a 20-year term, your beneficiaries will receive the full $500,000 tax-free benefit if you pass away within that period. If you live beyond the term, coverage ends unless you renew or convert the policy.

What to Watch For:

Review your policy regularly to ensure it aligns with your current financial goals and family situation. Missing premium payments can cause the policy to lapse, ending coverage. For permanent policies, understand how the cash value and investment features work, including fees and potential tax implications. Always confirm your beneficiary designations are up to date.

Related Terms

Lapsed Policy

A lapsed policy is an insurance contract that has ended because the required premium was not paid within the grace period. Once a policy lapses, coverage stops, and the insurer is no longer obligated to pay any benefits for claims incurred after the lapse date. A lapse can occur in any type of insurance - including health, dental, life, or disability - when the policyholder fails to make a payment by the due date and does not bring the account up to date before the grace period expires.

Laser Eye Surgery Allowance

A laser eye surgery allowance is a vision care benefit included in some health insurance plans that provides reimbursement toward the cost of corrective laser procedures such as LASIK or PRK. These procedures permanently reshape the cornea to improve vision and reduce or eliminate the need for glasses or contact lenses. Because laser eye surgery is considered elective and not medically necessary, it is not covered by provincial health insurance plans, making this allowance a valuable feature in private coverage.

Licence

A licence in the context of insurance refers to the official authorization granted by a provincial or territorial regulatory body that allows an individual or company to sell, advise on, or administer insurance products. Licensing ensures that insurance professionals meet educational, ethical, and legal standards required to operate in their jurisdiction. It protects consumers by ensuring that only qualified and accountable individuals provide insurance advice and services.

Life Insured

The life insured is the individual whose life is covered under a life insurance policy. If the life insured passes away, the insurer pays the death benefit to the designated beneficiary or to the policyholder, depending on the policy structure. The life insured may or may not be the same person as the policyholder. For example, a spouse, parent, or business partner may own a policy that insures another person’s life.

Lifestyle Drugs

Lifestyle drugs are prescription medications used to improve quality of life rather than to treat or manage life-threatening or medically necessary conditions. These drugs address personal or lifestyle-related concerns, such as sexual performance, hair growth, weight management, or cosmetic enhancement.

Have questions about your insurance coverage?

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