1. Be prudent when replacing your insurance. Many unscrupulous brokers encourage applicants to replace existing life insurance policies, simply to pad their wallets. There are arguments to support replacing your existing policies especially as the cost of term policies have fallen over the last few years. But be careful when stopping an existing whole life or universal life policy. Some of these policies can cost you large amounts for surrendering them early as they are locked into agreeable rates.

2. Be cautious of non-medical life insurance plans These policies carry higher premiums and lower face amounts than traditional life insurance policies. Their death benefits are also often restricted to a return of premium as well as interest in the first two policy years. If you have major health issues then these types of plans can be the best type to purchase.

3. Avoid accidental death insurance. Quite a few Canadian life insurance companies heavily market accidental death insurance to unsuspecting consumers. Accidental death insurance is exceedingly advantageous to insurance companies, as less than 3% of all life insurance claims are paid out because of death by accident. Accidental death insurance can sometimes cost even more than an same term policy.

4. Captive agents are only allowed to sell their own companies products, so be very careful of them. Companies employing independent brokers usually charge cheaper charges than companies employing captive agents. Not being able to hunt around, captive agents rarely find the best policy to suit your needs and the best price.

5. Costs involved with the initial premiums can be off putting, but when looking at your life insurance premiums, calculate the complete cost instead. Small start up premiums on insurance policies is one of the ways businesses lure the customer to purchase them. Policies that start with reduced initial premiums which increase with age are probably better for those customers who only need temporary insurance. The difficulty is many brokers use a one-size-fits-all philosophy. The companies don’t take enough time to work out why you are looking for insurance or how long you’ll need it.

6. Be aware of policy exclusions. All life insurance policies have a two-year suicide exclusion. Other kinds of exclusions at the beginning of the policy application are travel and recreational activities. Therefore choose a broker who is up to date on policy underwriting and can look around for the best plan, as each insurance company writes their policies differently.

7. Make sure your application form is written up accurately and completely, as all life insurance products have an approximate two year incontestability period. Not telling the truth or keeping back information can be questioned by an insurance company if you try to make a claim in this time period.

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