Exactly what is covered will vary by your individual policy and the insurance company. Generally, upon your death, your beneficiaries are given a tax-free lump sum. Some policies provide continued payments to replace lost income.
Your beneficiaries are free to use this money as they see fit. They can choose to pay off the mortgage or other debts, cover funeral costs, cover education expenses for children, or use it to maintain their standard of living over time.
It’s important to understand that life insurance only covers you in the event of death. Disability and critical illness insurance are separate policies, although they may be bundled with a life insurance policy.
While many causes of death are covered by Calgary life insurance, many insurers will not cover you for death due to pre-existing medical conditions, reckless endangerment, or while you’re visiting a restricted company. Some will not cover suicide, but many insurers will after the waiting period.
There is also generally a waiting period after you purchase a new life insurance policy in Calgary before it can be used. This is usually 2 years but can vary per insurance company. Your life insurance could also be void if it is proven you participated in misrepresentation or fraud. If you don’t pay your premiums, you can also be cancelled due to non-payment only a short time after a missed payment.