Before getting insurance, it is important to take time to decide the type and amount of coverage you need. Your insurance needs may change over time, so it is a good idea to review them regularly.
Where to Buy Insurance
To buy insurance, you have to apply and meet certain conditions before getting approved. Once approved, the insurance company will issue your policy.
You can buy insurance from:
- A licensed insurance agent
- A registered insurance broker
- An insurance company
- A lender when applying for a loan
Regardless of where you buy insurance, only an insurance company can issue your policy.
You can purchase insurance in different ways, including:
- Over the phone
- Online
- In person
Some companies offer discounts if you buy more than one type of insurance from them. For example, you may save money if you get both home and car insurance from the same provider. You may also get discounts for applying online or having a good credit score.
Choosing an Insurance Company
It is important to choose an insurance company that has a federal, provincial, or territorial license. This ensures that you have access to a complaint-handling process if issues arise. It also provides protection if the insurance company goes out of business.
Assuris protects life insurance benefits up to a certain amount if a life insurance company fails. The Property and Casualty Insurance Compensation Corporation (PACICC) protects home and car insurance benefits if an insurance company fails, but only up to a certain amount.
Using an Insurance Agent or Broker
An insurance agent represents one insurance company and sells its products.
An insurance broker, on the other hand, sells insurance from multiple companies. In some cases, a life insurance agent may represent multiple insurance companies as well.
If you choose to deal with an agent or broker, ensure they:
- Are properly trained
- Have enough resources to provide insurance services
Agents and brokers must be licensed in the province or territory where they do business. Always check their licensing before working with them. You can find the insurance regulator in your province or territory to verify their credentials.
Choosing an Insurance Agent or Broker
Before selecting an insurance agent or broker, do some research.
Ask them:
- For references from past clients
- About their training and qualifications
- If they passed the Life License Qualification Program (LLQP) if you’re buying life insurance
If they are part of a professional association like:
- Advocis
- The Financial Advisors Association of Canada
- The Insurance Brokers Association of Canada
- How long they have been in business
- What services they will provide after selling you the policy
Shopping Around for Insurance
It is wise to shop around, get multiple quotes, and compare policy details, including coverage and costs. A cheaper policy may not provide the same level of coverage or service as a more expensive one.
If you are part of a union, association, or club, you may qualify for special group rates on insurance. However, group coverage usually ends when you are no longer a member or when you reach a certain age.
Before signing any policy, read it carefully. Make sure you understand what it covers and what it does not cover.
Criteria Insurance Companies Use to Issue a Policy
Depending on the type of insurance you are getting, insurance companies will decide whether to sell you a policy based on certain factors. These may include:
- Your age
- Your sex
- Your medical history (for life or disability insurance)
- Your credit history
- Any previous claims you have made
- The amount of coverage you are requesting
Insurance companies assess the risk of insuring you before offering a policy. This process is called underwriting. It helps determine:
- How much coverage the insurance company will provide
- If any conditions will be excluded
- The premium you will need to pay
For life and health insurance, you must prove that you are in good health. This may require you to complete a medical questionnaire or exam before approval. This is called evidence of insurability.
No matter what type of insurance you apply for, always answer all questions truthfully. If you don’t:
- The insurance company could cancel your policy or deny future claims
- You may struggle to get insurance from any company in the future
- Maintaining Your Insurance Coverage
To keep your insurance policy active, follow these steps:
Pay Your Premiums on Time
If you do not pay your premiums on time, your insurance company may cancel your policy. If that happens, your coverage will stop, and you will no longer be protected.
If your insurance company cancels your policy, you may:
- Struggle to get coverage in the future
- Have to pay higher premiums when reapplying
Notify Your Insurance Company of Any Changes
Inform your insurance company about any changes that might affect your coverage. For example:
Car insurance companies need to know if you have committed traffic violations or if another driver regularly uses your car.
Life insurance companies need to know if you have developed any medical conditions.
Some changes may even reduce your premium. For instance, if you retire or start working from home, your car insurance premiums may decrease because you are no longer commuting.
Renew Your Policy on Time
To maintain coverage, renew your policy before it expires. Your insurance policy will outline the renewal process.
It is also a good idea to shop around when your policy is up for renewal. Comparing different providers can help you find better coverage or lower costs.
If Your Insurance Company Ends Your Coverage
Your insurance company may choose not to renew your policy due to claim history or missed payments. If this happens:
- Ask them for an explanation in writing.
- If you are unsatisfied with their response, you have the right to file a complaint.
Cancelling Your Insurance
If you decide to cancel your insurance policy before its expiry date, you may have to pay a penalty.
To cancel your policy:
- Check your policy for specific cancellation steps.
- Contact your insurance company.
- Ask for written confirmation that your policy has been cancelled.
- Free Look Period
You have the right to cancel a life insurance policy within a set period, usually 10 days. If you cancel within this period, you will receive a full refund of any premiums paid. This grace period, known as the free look period, allows you to review the policy to ensure it meets your needs.