Life insurance provides a tax-free cash payment to your named beneficiaries (such as your spouse or children) upon your death.
Life insurance can help ensure your family maintains their standard of living if you die. It can also help pay off debts or cover final expenses such as funeral costs.
To get life insurance, you buy a policy. This is a legal contract that sets out:
- how much money the insurance company will pay to your loved ones if you die,
- how much money you will pay each month to get the insurance, and
- how long the insurance will cover you (for a set term or for life).
Calculate your life insurance needs: Most insurance companies have calculators on their websites.
4 other uses for life insurance
- Cover estate taxes – when the death benefit is payable to your estate.
- Save for retirement – by using permanent insurance policies that let you build savings as well as provide insurance protection.
- Donate to charity – by making a charity a beneficiary, or the owner and beneficiary, of your insurance policy.
- Protect your interest in a business – by providing money to buy out a deceased business partner’s stake in the business.
Content in this section is provided in partnership with Investor Education Fund, a non-profit organization founded and supported by the Ontario Securities Commission that provides unbiased and independent financial tools to help Canadians make better money decisions. To find out more, go to: GetSmarterAboutMoney.ca