Five steps before buying insurance

You don’t shop around every year for life insurance the way you might for automobile or home insurance. When you buy life insurance, it’s for the long term. So, what’s the best way to go about it? Follow these steps!

1. Make sure the person or firm offering the insurance is authorized to do so

Buying insurance requires some thought. Feel free to ask for help from a financial security advisor. Consult the Register of firms and individuals authorized to practise.

2. Determine how much and what type of insurance you need

The amount and type of insurance you choose will depend on both your needs and your financial means. The insurance premium should fit within your budget. Given the many types of insurance that are available, you’re sure to find something that meets your needs. The types of insurance you can buy include:

    If a financial security advisor is offering insurance, remember that he or she must first analyze your needs by evaluating:

    • The features of your current insurance policy
    • Your family obligations
    • Your financial situation
    • Your income

    Your insurance needs will change over time, so re-evaluate your coverage periodically to make sure it’s still right for you.

    Insurance sold by lenders and merchants: A special situation

    Some lenders or merchants might offer you life, health or employment insurance on your loan. Specific rules apply to this type of insurance. See our Insurance sold by lenders and merchants page for more information.


    3. Compare your current coverage with your insurance needs

    Do you already have some form of coverage? If so, compare it with your needs to see what you’re missing and what you’ll need in the foreseeable future. For example, in assessing your insurance needs, you might take into account the children you already have plus any children you’re planning to have down the road.

    Also take the type of insurance into consideration. Some types cover permanent insurance needs by offering premiums that don’t change as you age, while others cover temporary insurance needs and therefore offer lower premiums that go up over time. 

    Before you buy life insurance, find out what the premiums will be not only for the first few years but also for the entire time you plan on holding the policy.


    Before replacing a policy …

    In comparing your current coverage with your needs, you may discover that some of your policies are no longer right for you. If this is the case, BEFORE cancelling the policy, make sure:

    • The financial security advisor who proposes you change policies completes a form called a Prior Notice of Policy Replacement (pdf - 104 KB)This link will open in a new windowUpdated on August 16, 2022. This form lists the features of your existing policy and the proposed policy and the advantages and disadvantages of replacing your policy. The financial security advisor must explain the form to you and the impact of the replacement. Read it over carefully and make sure you’re okay with the change. Feel free to take a few days to think about it.
    • You understand the pros and cons of the new policy compared with the old one.
    • Your new policy is in effect before you cancel the old one.
    • You know whether replacing the policy has tax implications, as may be the case, for example, if you’ve accumulated money in a universal life insurance policy.
    • You know what fees are associated with the changes.
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    4. Shop around for insurance that’s right for you

    No matter the type of insurance, shop around!

    Prices can vary from one insurer to the next, for both premiums and contract features (fixed premium or premium that increases over time, administration fees, and so on). Don’t forget to find out the cost of group life insurance if such insurance is available through your employer.

    No insurer has the best premiums and benefits for every type of insurance and every person. It will therefore take more than just asking your neighbours and buying whatever insurance they have.


    CAREFUL! Don’t just compare premiums. Make sure the products are similar.

    For example:

    1. Is the insured amount fixed and guaranteed?
    2. What exclusions are there?
    3. Are the premiums fixed or do they increase over time?
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    5. Buy insurance that meets your needs

    When you buy insurance, you have to complete forms, some of which may include questions about your health. Answer honestly. You must notify the insurer of ANY facts that may influence the insurer in setting your premium. If you don’t, your insurer may refuse to pay out benefits when the time comes or may reduce the amount of insurance you thought you were entitled to.

    When paying your premiums, make the cheque out to the insurance company, not the financial security advisor.


    Thinking of buying life insurance offered over the Internet?

    You can purchase insurance over the Internet without necessarily having to talk to a financial security advisor. The firm, or an insurer acting as a firm (a business offering you insurance), still has to properly advise you and offer you a product suited to your needs.

    Your responsibilities

    • Answer all questions honestly. Providing false information could have serious consequences.
    • If you are unsure or need clarification, ask to speak with a financial security advisor. Before taking out insurance, make sure you completely understand what’s being offered.
    • Call the AMF at 1-877-525-0337 or check the Register of firms and individuals authorized to practise to make sure you’re dealing with a firm authorized to sell insurance.

    Your rights

    • If you ask for an advisor’s help, the firm must take the necessary steps to ensure that such help is provided on a timely basis.
    • If you purchase insurance on-line without the help of a financial security advisor, there’s no penalty if you cancel it within 10 days.
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