Looking for Life Insurance Hamilton? Get the facts here.

by Paul Carvalho | Last updated: Apr. 6, 2023

Welcome to the Life Insurance Hamilton Guide!  If you live in the Hamilton area, and  want simple answers to all your life insurance questions, this guide is for you!

Wow!  There’s a lot of information on life insurance out there.

If you Google the phrase “Life Insurance Hamilton Ontario” you’ll get over 18 million results.  That’s over 30 times the population of Hamilton!  I had no idea life insurance was so popular in the Steel City.

Listen.  Having lots of information is great.  But too much information can make you feel overwhelmed.  Confused.  Frustrated.

Let’s face it.  Nobody wants to shop for life insurance.  And certainly nobody wants to spend hours looking for the best life insurance policy.

I completely understand.  

That’s why I created the Life Insurance Hamilton Guide.  It provides simple answers to your life insurance questions.  It also gives you a step-by-step guide on how to get the best insurance policy, fast.

So if you’re new to life insurance, or want to learn more about how life insurance works, this is the place to be!

Life insurance Hamilton: Simple answers to your common questions

My name is Paul Carvalho, and I’m a financial advisor in Hamilton, Ontario.  Thank you so much for visiting!

Now I know how confusing it can bee looking for life insurance Hamilton families need.  I see it everyday.

Most people I talk to are brand new to life insurance.  So they have lots of questions like:

• What is life insurance?
• Do I need it?
• How much coverage do I need?
• How much will it cost?

Some people try to get answers on their own.  But they end up with more questions than before!  (18 million Google results will do that to you…)

That’s where I come in.  People look me up, and I give them simple answers to all their life insurance questions.

And you know what?

Once people have the information they need, they’re usually able to make the right decision all on their own!

That’s right.  If you do a good job at explaining things, most people can clearly see what’s right for their situation.

And I think that’s fantastic!

You’ll still need a licensed advisor to actually buy life insurance.  But for me, it’s extremely satisfying to see a client who fully understands their options, and is confident in their choice.

That’s why I created this guide.  It’s intended to help you get the life insurance Hamilton families need.  Specifically, it shows you how to:

• determine if you need life insurance;
• estimate the amount of life insurance Ontario families need, and;
• compare insurance quotes to make sure you get the best deal.

Now I don’t promote any life insurance companies or products in the guide.  I leave that choice to you.

My goal is to simply give you the best information to help you quickly find the right choice for you and your family.

Let’s get started!

 

What is life insurance?

Some of you might be wondering: What exactly is life insurance?

I won’t bore you with an industry definition.  Instead, I’ll explain it this way:

Suppose you’re married with three kids.  Your job pays you $50,000 per year.  Over a 35 year career, you’ll collect over $2 million dollars in salary (assuming inflation, raises etc.)

As a family breadwinner, you’ll likely spend your lifetime earnings on things like taxes, your mortgage, car payments, groceries, family vacations, tuition costs etc.

But… (Don’t you hate it when there’s a but.  Sorry…)

Collecting the $2 million over your lifetime is not guaranteed.  There are a lot of risks to your career earnings: illness, death, your job becomes obsolete etc.

Life insurance is one way to eliminate some of the risk to your lifetime earnings. Specifically, it protects your family from the financial hardship if you were to pass away prematurely.

 

Do you need life insurance?

The first obvious question is: Do you need life insurance?

Not everyone needs life insurance.  An example is someone who doesn’t have anyone relying on them for support.  Remember, life insurance is not for you – it’s for those you leave behind.

But if you do have people who depend on you financially, you likely need life insurance.  Here’s why.

Life insurance answers a simple but difficult question: How will your family manage when you die.  Of course nobody wants to think about this subject.  But if someone depends on you financially, it’s a question you need to think about.

There are many types of life insurance, but they all do the same thing: They pay cash to your family after you die. This protects your loved ones from any financial hardships resulting from your death.

The cash from a life insurance policy is used to pay for things like daily living expenses, mortgage payments and education costs. And a valuable feature of life insurance is that the cash your family receives is almost always tax free.

 

Your stage in life has a big impact on the life insurance Hamilton families need.  Here are some specific life stages that might trigger the need for life insurance:

• Getting married: Many couples depend on two incomes to make ends meet.  Protecting both incomes is important.
• Becoming a parent: Children are precious.  And expensive.  Life insurance protects your child’s future from unexpected financial hardships.
• Buying a Home: Your home is likely your biggest financial asset.  Life insurance can help keep that asset in your family’s hands.
• Changing Jobs:  Your spending tends to move in step with your income.  So a big raise or promotion will also increase your life insurance needs.

 

How much life insurance do you need?

So you’ve determined that you need life insurance.  Now what?

The next step is to figure out how much you need.  A ballpark estimate is five to seven times your current net income.

But everyone’s situation is different.  So to work out the specifics of your situation, you’ll need to do a financial needs analysis.

A financial needs analysis looks at the assets, liabilities and cash flow available to your family if you were to pass away.  It then determines the capital needed to keep loved ones financially secure.

The math can get a little tricky because you need to estimate things like inflation and future investment returns.  Fortunately there are plenty of free resources available to you.

A good idea would be to visit an online life insurance needs calculator, like the offered by the Canadian Life and Health Insurance Association (CLHIA).  The CLHIA is a not-for-profit organization that represents 99% of Canada’s life and health insurance companies.

 

Just remember, online calculators are no substitute for the advice you’ll get from a qualified insurance professional.  The pros can do a thorough analysis to help you determine the right amount and type of life insurance your family needs.

 

What’s the average amount of life insurance Hamilton?

How much coverage do people in Hamilton typically have?  Good question.

Many people in Ontario have life insurance protection.  According to the 2016 Canadian Life and Health Insurance Facts report published by the CLHIA, over 8.3 million people in Ontario have about $1.7 trillion dollars worth of life insurance.

 

A trillion dollars is an incredibly big number!  So let’s break that down.

Income is one of the biggest factors in choosing the right amount of life insurance.  And Ontario has one of the highest levels of household income.  So it makes sense that Ontario also has one of the highest levels of in-force life insurance.

Ontario has an average of $400,000 life insurance coverage per insured household.  That compares to an average of $388,000 life insurance coverage for all of Canada.

Both Ontario and Canada have coverage levels that approximate five times household income.

 

Life insurance rates in Hamilton:  What will it cost?

Is it possible to get life insurance Hamilton families can afford?

First, it’s important to understand how life insurance rates are set. Unlike car insurance, life insurance rates are not based on your province.

That means that life insurance rates in Ontario are not higher than the rest of Canada. (Although as we’ve seen, Ontario has larger policy sizes when compared to other provinces.)

Rather, life insurance rates are based on demographic factors like your age, sex and medical history. So a fifty-five year old male with a heart condition will have a different insurance rate than a twenty-two year old female athlete.

Here’s an example.  The following table shows you different life insurance quotes for a male and female, ages 35 and 45:

Life Insurance Ontario:

$250,000 Term-20.  Non-smoker.  Good Health.
Canadian dollars per month

For illustrative purposes only.  Rates change frequently, so consult your advisor for an up-to-date quote.

 

As you can see, life insurance is cheaper for the younger group.  In fact, the younger group pays about half what the older group pays.

Generally speaking, anything that increases your life expectancy will decrease your life insurance rate.  That’s because people who live longer will pay their insurance costs for a longer period of time.

Conversely, anything that decreases your life expectancy will increase your life insurance costs.

What are the major factors that influence rates?  According to Investopedia, there are seven major factors that will impact your life insurance quote:

• Age:  Your age has the biggest influence on your future life expectancy, and therefore your insurance rates.
• Gender: Women tend to outlive men, so women generally have lower life insurance rates than men.
• Smoking Status: Smoking increases the number of health risks, so smokers pay higher rates.
• Health: Your current health is an obvious factor in your life insurance rates.
• Lifestyle:  Participating in dangerous activities increases the chance of death, therefore increasing rates.
• Family Medical History: Genetics also play an important role in determining life expectancy.
• Driving Record: Motor fatalities are a leading cause of death, so insurance companies will look at your driving record.

It’s important to know that some life insurance factors are beyond your control. But some factors are completely under your control.

Why is this important?  Because a few good choices can dramatically decrease your life insurance costs.

 

From the table above, you can also see a wide gap between the lowest and the highest insurance quote.

Insurance companies use their own formulas to set prices.  That’s why the quotes are so different.  In the example of the 45 year old male, the difference between the lowest quote and the highest quote is over 50%.

Let’s look at another example.  This time, we’ll compare a 45 year old male and female smoker to a 45 year old male and female non-smoker:

Life Insurance Ontario:

$250,000 Term-20.  Smoker vs. non-smoker.  Good Health.
Canadian dollars per month

Median quotes.  For illustrative purposes only.  Rates change frequently, so consult your advisor for an up-to-date quote.

 

Smokers pay a big premium versus non-smokers.  So you can save big bucks on your life insurance if you kick the habit.

Keep in mind that life insurance companies have strict lifestyle classifications.  For example, most companies would require a smoker be free of smoking for several years before classifying them as a “non-smoker.”

But it pays to shop around!  Each insurance company is a little different, and some are more favorable to smokers than others..

This is where an experienced professional can be invaluable.  Everyone’s situation is unique.  A good insurance professional can help you navigate all the choices to find the best solution for you.

 

What type of life insurance policy do you need?

The life insurance industry has created an almost infinite amount of policies to choose from.  But they all boil down to two basic forms: term and permanent.

1)  Term insurance: Term life insurance provides protection for a specific period of time called the “term.”  Term makes the most sense when your need for protection will disappear at some point.  Examples of temporary needs are:

• protecting your family’s income
• covering a mortgage

2)  Permanent insurance: Permanent insurance offers lifelong protection and can accumulate cash on a tax-preferred basis.  Permanent policies are used to cover permanent needs.  They are also used for investment and estate planning needs.  Examples of permanent needs are:

• funeral costs
• caring for a lifelong dependent (often due to disability)
• capital gains taxes

Choosing the best policy involves identifying your need, then finding a policy that covers that need.  There are plenty of free tools to help you with this decision, too.

Another non-profit organization that offers free education tools is Life Happens.org.  This organization is U.S. based, but it’s selector tool is still a great resource to help Canadians choose between term and permanent insurance.

 

One thing to keep in mind is that the choice is not always term vs. permanent.  Sometimes the best solution is a combination of both.  Again, a life insurance professional can help show you the different possibilities for your situation.

 

A few more life insurance facts:

If you’ve read this far, congratulations!

You now know more about life insurance than 99% of your friends.  (You’ll be a hit at the next dinner party.)

Here are just a few more facts to round things out:

• Beneficiaries: the individual(s) who will receive the cash in the event of your death.  You have lots of flexibility when naming a beneficiary.  You can choose a person, your estate, a corporation or a trust.

• Premiums:  the cost of your insurance coverage.  Most Canadians pay their life insurance premiums on a monthly basis, but annual, semi-annual and quarterly options are available.  There is a 30-day grace period after the premium due date, just in case you miss a payment by accident.

• How do insurance professionals get paid?  Most professionals are paid a commission by the insurance company issuing the product.  Commissions are already priced into the cost of life insurance – so you don’t pay extra to work with any agent or broker.

• What happens when you apply?  The process starts by filling in an application.  The applications typically asks you questions about your health and lifestyle.

• When is a medical required?  Each insurance company sets its own rules for confirming the information on the application.  Typically, the bigger the policy and/or the older your are, the more medical tests will be required.

• What if I change my mind?   Most insurance policies have a rescission right.  It’s basically a 10-day money back guarantee.  If you are not completely satisfied, you can return the policy to the issuing company for a complete refund.

 

The importance of your Hamilton life insurance professional

As we’ve seen, there’s lots of online resources to help you choose the right life insurance policy.

There’s another popular resource: actual humans.

Life insurance is often a major financial commitment, so seeking professional advice is a good idea.  A life insurance professional can help you with a number of things like:

• completing the financial needs analysis
• arranging for the purchase of the policy
• on-going service request like changing a beneficiary
• helping you make a claim
• helping you with your other financial planning needs

 

There are two types of insurance professionals: agents and brokers.

1) Life insurance agents are typically a captive sales force.  Agents are connected to one insurance company and can only sell products from that one company.

2) Life insurance brokers are typically independent agents.  They represent multiple insurance companies and can sell products from any one of those companies.

As we’ve seen, it pays to shop around.  So an insurance broker is superior to an agent in most cases.

Here’s the best part about using an insurance broker:  By law, the price you get from a life insurance company is same whether you go directly to the company or to a broker.  So you’ll never pay more when using a broker.

More importantly, a broker can help you shop around.  If you apply direct to the life insurance company, and you’re approved at a different rate, your stuck.  The company won’t help you figure out if you can get a better offer elsewhere.

But a broker can shop that offer around to every life insurance company they work with to see if anyone can beat it.  No extra work for you and no extra cost.

 

 

All agents and brokers are licensed and regulated by the provincial government.  In Ontario, insurance professionals are regulated by the Financial Services Regulatory Authority or FSRA (formerly known as Financial Services Commission of Ontario or FSCO).

You can check if a licensed professional in Ontario is in good standing by visiting FSCO’s Licensed Representative Listings

 

Conclusion

Life insurance is an important financial safety net for most families.  But looking for life insurance will probably never be fun for the consumer.

We hope our Life Insurance Hamilton Guide makes thing a little easier for you.  Here’s a recap of the most important issues we covered:

Determine your coverage needs: Once you’ve identified that you need life insurance, the first step is to calculate how much you need:  There are lots of free online tools to help you along.

Decide what type of insurance you need:  The next step is to decide what type of life insurance you need: temporary or permanent.  In many case, the best solution is a combination of both.  Again, there are lots of free online tools to help you decide.

Shop around:  Comparing different quotes is crucial.  In some cases you can save as much as 70%.  Remember, an insurance broker can help you shop around at no additional cost.

About the Author

Hi. My name is Paul Carvalho. I was born and raised in Hamilton, Ontario. And I’m proud to call “The Hammer” home.

I’m not like other financial advisors.  I work with clients on a conflict-free, fiduciary basis.