Life insurance offers crucial financial protection for everyone. The same goes for those who identify as part of the 2SLGBTQ+ community. Here is what you need to know about life insurance if you identify as 2SLGBTQ+ to ensure a smooth process in obtaining your policy.
2SLGBTQ+ Community Is Underinsured
The Canadian population is vastly underinsured with around half of Canadians with dependents not having life insurance.
This statistic is relative to the 2SLBGTQ+ community because there are approximately one million people in Canada who openly identify as part of said community. That figure equates to 4% of Canada’s population. As of 2016, about a third of same-sex couples were married, and their partners or spouses may need to rely on their income for their livelihood.
Benefits of Life Insurance for the 2SLGBTQ+ Community
Life insurance is an essential component of financial planning for everyone. The right life insurance policy provides your loved ones with a financial safety net which they can rely on in the event of your untimely death.
Here are additional ways a life insurance policy can help:
⦁ Replace your income
⦁ Pay your debts
⦁ Pay your mortgage
However you identify, a life insurance policy can help you plan for your future.
Not only does life insurance protect your loved ones from financial devastation after your death, but it can also benefit you. A whole life policy accumulates cash value. You can use the cash value to help you navigate a difficult financial time or as a supplement to your retirement. You can also borrow against the cash value should you need it for any purpose, which is essentially borrowing from yourself.
Whether your beneficiaries receive payout from the death benefit, or you benefit from the cash value, there are tax benefits of having a life insurance policy.
Most importantly, a life insurance policy ensures that your wishes for your finances will be carried out after you die.
The Life Insurance Process: What Gay Couples Need to Know
You get to choose the beneficiary or beneficiaries for your life insurance policy. Your choice is legally binding and cannot be opposed.
As with any case, you may choose between a term life policy or a whole life policy. With either type of policy, you will likely be asked to take a medical exam as part of your life insurance application.
What if your gender has changed since birth? In most cases, life insurance companies ask you to note the sex you were assigned at birth. This is regardless of whether you have undergone any medical or physical transition. With that being said, at Hometown Life Insurance we also ask that you include your identifying pronouns so that you can be addressed properly in conversation.
Be aware that life insurance companies will consider your general health, past health history, and family health history when determining your coverage level and premium. Most insurance companies will allow you to give the context about your gender identity and offer explanations as they make decisions about your application.
They may also consider how well you have adjusted psychologically to any surgeries or transitions. An insurance company may ask for a modified birth certificate, a note from your therapist, or your surgery record.
Health and medical coverage have been challenging for people with HIV in the past. A diagnosis of HIV used to mean an automatic denial but that is not nearly as common anymore. Some companies consider HIV to be an ongoing illness and are willing to approve life insurance applications.
Life Insurance for Gay Couples and Nonbinary People: Choosing a Policy
As you explore your options for life insurance, you will need to choose either a term life insurance policy or a whole life insurance policy.
Much as it sounds, a term life insurance policy lasts for a specified term which is usually 5, 10, 15, 20, 25, or 30 years. At the end of the term, there is no death benefit. One of the benefits of a term life insurance policy is that the premiums are relatively low.
A whole life insurance policy lasts your entire life regardless of health and other life changes including a gender transition. The premiums are higher than term insurance, but they do not increase as you get older. Whole life insurance policies accumulate cash value which you can use during the term of the policy for various reasons.
Guaranteed Issue and Accidental Death Life Insurance
If you do not meet the qualifications for a term life or whole life insurance policy, you are not out of luck. A guaranteed issue or accidental death life insurance policy may be just what you need!
A guaranteed issue life insurance policy does not require a medical exam. The death benefit is usually lower than for other types of life insurance policies, and the premiums are often higher than other policies.
Another type of life insurance is called an accidental death benefit policy. Such a policy will pay the benefit to your beneficiaries if you die due to an accident such as a car crash, drowning, a fall, or another serious incident. This type of insurance may be purchased either as a standalone benefit or as a rider to a life insurance policy.
Final Thoughts
A life insurance policy ensures that your final wishes will be honoured, and your chosen beneficiaries will have a sound quality of life after you are gone.
If you have a partner and are not legally married, your estate will go to your next of kin if you do not name your partner as a beneficiary, leaving your partner without financial protection. Alternatively, you can set up a trust to receive the money where your partner can access the trust to receive funds after your death.
If you are a single person without dependents, a life insurance policy allows you to donate a portion of your wealth to any organization of your choosing in lieu of a family member or other loved one. Moreover, without life insurance, your money will be subject to taxes.
Our team at Hometown Life is happy to answer your questions about life insurance. Call us today at 289-606-0103 to get the conversation started.
External Links
⦁ https://www.newswire.ca/news-releases/over-90-of-canadians-are-dangerously-under-insured-survey-816219353.html
⦁ https://www150.statcan.gc.ca/n1/daily-quotidien/210615/dq210615a-eng.htm
⦁ https://www.canada.ca/en/canadian-heritage/services/rights-lgbti-persons.html
