1. Be aware of crooked insurance brokers who may advise you to change your policies even if they don't need replacing, just to get money out of you. Changing them often does make sense, as term costs have dropped across the board in recent years. But be careful when cashing in an existing whole life or universal life policy. With great rates given when you purchased the policy, these type of policies could have large surrender charges.
2. Standard life insurance plans usually have lower premiums and larger face amounts than the non-medical life insurance policies. These type of plans are normally restricted and only pay out the equivalent of the fees paid plus interest if cashed in the first two years. These non-medical insurance plans are designed for people primarily with significant health issues.
3. Another type of policy to avoid is the accidental death insurance policy which is pushed onto the unsuspecting customer. Whilst they may seem like a good idea when you are buying them, be aware that less than 3% of insurance claims are due to accidental death. When looking at the same term policy benefits, most of the time the accidental death policy is more costly.
4. Captive agents are only licensed to sell their own companies products, so be very careful of them. Companies employing independent brokers often charge cheaper premiums than companies employing captive agents. Not being able to shop around, captive agents rarely find the best policy to suit your needs and the best price.
5. Charges involved with the initial premiums can be off putting, but when looking at your life insurance premiums, work out the complete cost instead. Many insurance businesses try to lure clients with low initial premiums. Term insurance schemes, which offer low initial premiums that increase as the insured ages, are appropriate if bought for temporary insurance needs. All consumers are different and have different lifestyles, so schemes that assume everyone is alike are really not in your best interest. Time needs to be taken too assess each consumer and a policy found to suit their individual needs and circumstances.
6. Be knowledgeable of policy exclusions. With exception life insurance policies have a two-year suicide exclusion. Recreational pursuits and travel may be excluded from your policy if they are being done when you put the application in. As these exclusions and guides are different depending on which organization you pick, make sure your broker can look around for the best policy and is up to date on their guidelines.
7. Refrain from any misrepresentations on your application. All Canadian life insurance products have an incontestability period, generally of two years. During this two years, insurance businesses can contest a claim for misrepresentation or not admitting a material fact.