What does a sample life insurance policy look like?

A sample life insurance policy isn’t just a contract—it contains the details of everything that your policy has to offer, including coverage amount, beneficiary information, cost of premiums, payment schedules, exclusions, and claims processing. For a whole life insurance policy, you will also find information about the death benefit, the accumulated cash value, dividend structures, etc.

In this guide, we’ll break down the key sections of a sample life insurance policy in Canada to help you get to know your policy better and avoid claim rejections.

What are the different types of life insurance policies?

Life insurance policies essentially come in three types: term life insurance, whole life insurance, and universal life insurance. Different life insurance types are designed to meet different financial goals and coverage needs. 

• Term life insurance: Provides coverage for a set period (e.g., 10, 20, or 30 years). Although it is affordable, it expires if not renewed
• Whole life insurance: Lifetime coverage with fixed premiums and cash value accumulation
• Universal life insurance: Flexible premiums with an investment component, allowing cash value growth

What are the main components of a life insurance policy document?

A life insurance policy document includes some of the essential details such as policyholder information, coverage amount, premiums, beneficiaries, and exclusions, which apply to both term and whole life insurance. In addition to this, samples for participating whole life insurance policies will include details about the death benefit, cash value component, dividend strategies, policy loan options, and tax implications.

1. Policy summary page 

The policy summary page is the first section of a sample life insurance policy, offering a quick overview of the contract’s main details. It typically includes:

• Policyholder name: The person who owns the policy
• Insured person: The individual whose life is covered by the policy (sometimes different from the policyholder)
• Beneficiaries: Those designated to receive the death benefit
• Coverage amount: The lump sum payout that the insurer provides upon the insured’s death
• Policy type: Whether it’s term, whole, or universal life insurance
• Premium amount: The cost of maintaining the policy, along with the payment schedule (monthly, quarterly, or annually)
• Policy start date and expiry: For term life insurance, this indicates when coverage begins and ends
• Payout percentage allocations: If multiple beneficiaries are named, the policy specifies what percentage of the payout each will receive

2. Premium structure and payment schedule

The cost of your life insurance premium depends on various factors, including the policy type, the insured individual’s age, health, and lifestyle. This section outlines:

• Fixed vs. increasing premiums: Some policies offer fixed premiums, meaning the cost remains the same for the duration of the policy. Others have increasing premiums, especially term policies that renew after a set period
• Payment frequency: Premiums can typically be paid monthly, quarterly, semi-annually, or annually. Some insurers offer discounts for annual payments
• Grace periods and lapse protection: Most policies include a 30-day grace period, allowing you to make late payments before the policy lapses. If a policy lapses due to non-payment, you may have to undergo medical underwriting again to reinstate coverage.

3. Riders and add-ons 

Riders are optional benefits that enhance your policy’s coverage. While they add extra cost to your sample life insurance policy, they can provide significant financial protection. Common riders may include:

• Disability waiver of premium: Waives premiums if the policyholder becomes disabled and unable to work
• Accidental death benefit: Pays an additional sum if the insured’s death is due to an accident
• Critical illness coverage: Provides a lump sum payout if the insured is diagnosed with a covered illness (e.g., cancer, stroke, heart attack)
• Child or spouse insurance riders: Allows additional life insurance coverage for family members under the same policy
• Long-term care rider: Converts part of the death benefit into funds for long-term care if needed

4. Exclusions and limitations 

While life insurance provides financial security, certain circumstances may result in a delayed payout or claim rejection. Common life insurance exclusions may include:

• Death by suicide: If the insured dies by suicide within the first two years, most insurers will only refund paid premiums, not the death benefit
• Misrepresentation: If the insured provides false medical history or lifestyle information, the insurer may deny the claim
• High-risk activities: Deaths from extreme sports (e.g., skydiving, racecar driving) may not be covered unless an additional rider is purchased
• Illegal activities: If the insured dies while committing a criminal activity, the insurer may refuse to pay the death benefit

Two-year contestability period

Most policies include a two-year contestability period, meaning that if the insured dies within the first two years, the insurer can review the application for any misrepresentation or fraud. After this period, the policy is generally incontestable, except for fraud cases.

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5. Additional components in a participating whole life insurance policy

Apart from the main features found in both term and whole life policies, participating whole life insurance sample contracts contain additional information on guaranteed death benefits, cash value accumulation, loan options on the policy’s cash value, and tax implications.

• Guaranteed death benefit: This section specifies the fixed amount paid to beneficiaries upon the policyholder’s death
• Cash value accumulation: This outlines how a portion of premiums contributes to a growing cash value, which policyholders can access through loans or withdrawals
• Dividends and strategies: Policyholders may receive dividends, which can be used to reduce premiums, purchase additional coverage, or be taken as cash
• Policy loan options: This section showcases how policyholders can borrow against the accumulated cash value
• Tax advantages: This covers tax benefits such as tax-deferred cash value growth and tax-free death benefits for beneficiaries

Sample life insurance policies from top insurance providers

At PolicyAdvisor, we work with 30+ of Canada’s top life insurance providers. While their policy documents are structured differently, they typically give similar information. Here are some of the sample life insurance policies by our partner insurers:

• Manulife Level to 100 sample policy – One insured
• RBC Term 100 sample policy (whole life insurance)
• RBC YourTerm sample policy (term life insurance) 
• Sun Life term life insurance sample policy
• Empire Life Solution 20 sample policy
• Empire Life Guaranteed Life Protect sample policy (whole life insurance)

Key factors to consider when reviewing your life insurance policy

Before you finalize a life insurance policy, it’s crucial to understand some aspects, such as hidden charges and whether the named beneficiary for your estate is a minor. You should also read the documentation thoroughly to avoid any surprises later. 

• Hidden fees and costs: Watch for administrative charges, early surrender fees, and premium increases over time
• Naming a minor as estate beneficiary: Naming a minor or your estate as the primary beneficiary can lead to unnecessary delays in payout or even rejection
• Understanding the fine print: Look for specific exclusions, waiting periods, and conditions that relate to your situation and can affect the payout to your beneficiaries

How to customize your life insurance policy?

You can customize your life insurance policy by choosing the right coverage amount, selecting additional riders based on your unique needs, opting for the annual premium option, and keeping your beneficiaries updated

• Choose the right coverage amount: Calculate your desired coverage amount to cover lost income, debts, and future expenses
• Select the best riders: You can opt for add-ons like critical illness, disability waiver, or child coverage for higher protection
• Adjust premium payment options: Choose annual payments to enable a flexible premium structure for budget ease
• Review and update beneficiaries: Update your beneficiary information to avoid unwanted delays or claim rejections
• Consider cash value features: If you’ve opted for participating whole life insurance, use the policy’s accumulated cash value for loans, withdrawals, or premium payments

How to get the best life insurance policy in Canada?

Finding the best life insurance quote in Canada is easy with PolicyAdvisor. Our expert advisors offer personalized recommendations to match your needs, ensuring the right coverage at the best price. With access to 30+ top insurers, we make policy comparisons simple and convenient. 

Our AI-powered calculator delivers accurate quotes in under 60 seconds, helping you make informed decisions instantly. Plus, our lifetime after-sales support ensures seamless policy updates, claims assistance, and expert guidance.

Schedule a call today and get instant life insurance quotes in Canada!