Many Canadians lack life insurance

While most Canadians would assume that the general public believes life insurance is important, a recent poll suggests otherwise.

According to a recent TD Insurance Risky Business poll, 31 per cent said they didn't have life insurance. Of these individuals, 40 per cent said they didn't think it was necessary.

Wendy Hope, who works for the Canadian Life and Health Insurance Association, told the Globe and Mail that having life insurance is particularly important for individuals who have dependents to support.

"When you have liabilities and you have a family, you want to make sure that you provide them with some protection should something happen to you," said Hope.

Hope added that because so many people have other liabilities - such as paying off a mortgage or financing a child's college education - those expenses can put dependents in severe economic jeopardy should the primary provider for a family pass away unexpectedly.

According to the latest statistics compiled by the Globe and Mail, approximately 21 million Canadians have some form of life insurance. But because there are so many types of life insurance policies available, finding the best policy can be difficult.

To help, the CLHIA has published a step-by-step guide to help consumers navigate their life insurance options.

Included in the report is a description of the differences between permanent and term life insurance. For instance, permanent life insurance provides financial protection for as long as someone lives, so long as they're paying their premiums. Term policies, meanwhile, provide insurance coverage for a specific period time, usually measured in the number of years.

Determining whether someone needs permanent or term can also be confusing for some. But as CLHIA indicates, individuals can answer this based upon their individual circumstances. For example, if the life insurance policy will be covering ongoing expenses - such as supplementing a dependent's income - policyholders should chose a permanent policy. However, if costs are more temporary in nature - such as paying off a mortgage - term life may be a better fit.

Other issues clarified in CLHIA's "Guide to Life Insurance" includes how premiums should be paid, how best to select a life insurance agent, comparing policies, how benefits are paid and whether there is a time limit to file a claim.