You never know what life has in store for you. In the event of your death, who will pay your debts, your mortgage, the cost of your funeral? Who will provide financial support to your loved ones? Life insurance can be a solution.
Life insurance is a type of insurance that provides financial protection in the event that the insured person dies. By receiving a sum of money, certain people around the insured (children, parents, spouse, etc.) will be protected against the financial difficulties that may result from his death. This is called permanent life insurance.
Life insurance can also provide financial protection in the event that the insured person remains alive until a certain age or until the expiration of a certain number of years. This is called term life insurance.
Since the world of life insurance contracts is sometimes difficult to understand, here are the main rules and steps to know!
Choose who will be the insured person
One of the first things to do before applying for life insurance is obviously to choose the person whose life will be insured. This person is called the 'insured'.
You then have two choices: take out life insurance on your own life or on the life of another person.
If you are taking out life insurance on another person's life, you must first get their written permission. However, this permission is not necessary if it is a person whose life is of interest to you. For example :
- your partner;
- your child or that of your spouse;
- your grandchild or that of your spouse;
- your father or mother;
- one of your grandparents;
- someone who contributes to your support or education;
- your attendant;
- your staff;
- another person whose life or health is of financial interest to you (such as a business associate) or moral interest (such as a close friend).
Choose who will receive the life insurance benefit
You can choose the 'beneficiary' (s) of the life insurance, that is to say the person (s) who will be able to receive the insurance benefit when the insured dies or reaches a certain age.
You are free to choose who will be the beneficiary of the insurance. Sometimes you can be that beneficiary yourself. You can also choose a charity or even someone that does not yet exist, such as your 'future child'.
Insurers generally require that the beneficiary have some connection or interest in the insured.
Change who will receive the life insurance benefit
In principle, you can change the beneficiary or beneficiaries of your life insurance contract. All you have to do is notify your insurer in writing of your decision.
However, two situations require you to obtain permission from the current beneficiary before making this change:
- when a mention in the contract indicates that the 'designation of the beneficiary is irrevocable'; Where
- when the current beneficiary of the insurance is your married or civil union spouse, unless this designation is 'revocable'.
It is also possible to change the beneficiary in your will if the beneficiary is 'revocable'. You don't need their permission to change it.
Declare the true state of health of the insured person
In your initial declaration of risk, you must declare the true state of health of the insured. It may therefore be your own state of health or that of the person you have chosen to insure.
You should answer the insurer's questions to the best of your knowledge and honestly. This means that you should not lie or avoid revealing certain important details, such as whether you are a smoker or have a genetic condition.
If you do not report the insured's true state of health, the insurer may ask a court to have your life insurance contract canceled.
Declare the real age of the insured person
In your initial risk declaration, you must declare the real age of the insured. It could therefore be your actual age or the actual age of the person you have chosen to insure.
If the age you report is not the actual age of the insured, the insurer can ask a court to cancel your life insurance contract.
However, in order for the contract to be canceled, the following conditions must be met:
- the actual age of the insured was not included in the insurer's rates when it accepted your proposal. For example, the real age of the insured was 63 and the insurer never insures people over 60;
- the insured is still alive when the insurer requests cancellation; and
- the insurer's request for cancellation is made at the latest:
- within three years of the conclusion of the contract; and
- 60 days after the discovery of the real age of the insured.
If the insurer does not request cancellation of the contract, it can simply adjust the amount of the insurance compensation. It will do this by establishing the ratio between the premium that you have already paid and that which you should have paid according to the real age of the insured.
It is therefore possible that the insurance indemnity may decrease given the real age of the insured.
The beginning of protection
Life insurance begins to protect you as soon as the insurer accepts your proposal, but only if the following three conditions are met:
- The insurer accepted your proposal without changing anything.
- There has been no change in the insured's state of health or situation between the time you make your application and the time the insurer accepts it.
- For example, if you find out between these two times that you have a critical illness, your life insurance will not be able to start. You will then have to declare your illness to the insurer in a new application.
- You paid the first of the cash payments required in your life insurance policy (officially called 'premiums').
Pay life insurance
The amounts of money you have to pay your insurer to get life insurance are called 'premiums'.
They vary, among other things, according to the amount of the insurance indemnity. They may also vary depending on the type of life insurance you have chosen between permanent insurance (valid until the death of the insured) or term insurance (valid for 15 years for example).
You must pay the premiums at the time stipulated in the insurance contract. A late premium can however be paid within 30 days (except the first premium which must be paid at the scheduled time). If you exceed this period, the insurance contract automatically terminates.
Be aware that it is possible to 'reactivate' life insurance that has ended due to non-payment of a premium. For more details, contact your insurer.
Receive the life insurance indemnity
The beneficiary will be able to receive the insurance indemnity if the event provided for in the life insurance contract occurs. It can be the death of the insured or the fact that he has reached a certain age.
If the insurance contract so provides, then the beneficiary or the insured must send certain documents to the insurer to prove the event. This can be, for example, the 'death certificate' of the insured.
After receiving these documents, the insurer must pay the insurance compensation within 30 days.
Suicide of the insured person
If the insured commits suicide, the insurer may refuse to pay the indemnity if:
- the life insurance contract contains an exclusion to the effect that the beneficiary will not be entitled to compensation if the death of the insured is caused by suicide; and
- the life insurance contract has protected the insured for less than two years.
The injury to the life of the insured person
If the beneficiary damages the life of the insured in order to be compensated more quickly, the insurer may refuse to pay the insurance indemnity. He will then have to prove it in court
If it is the owner who damages the life of the insured, the contract automatically ends.
The end of protection
The life insurance contract ends and ceases to protect the insured at the time provided for in the insurance contract or at the time subsequently agreed with the insurer.