This interview with PolicyMe is part of a series of posts where I chat with some of the best personal finance products and services available to Canadians.
PolicyMe makes it simple and affordable to buy term life insurance policies from the comfort of your home – 100% online.
The interview is with Tobin Tuff, who is a senior licensed life insurance advisor at PolicyMe. Tobin has been with PolicyMe since September 2019.
Chat with Tobin Tuff of PolicyMe
What is PolicyMe and how is it different from the traditional life insurance providers in Canada?
Tobin Tuff: PolicyMe is an online life insurance provider. We pride ourselves on our affordable rates, fast and easy application process (you receive a decision instantly), and helpful customer service.
We are 100% online, so we don’t force any pushy in-person meetings, though if you need help, we’re always available by phone, email, or chat.
We’re different from other traditional life insurance providers in Canada in multiple ways.
One difference is that we only have salaried advisors. That’s why we don’t force an in-person meeting, because all of our advisors are non-commissioned. So, all of our advisors have your best interest at heart, and there is no pressure to buy or upsell.
Secondly, most applications get an instant decision with PolicyMe. Our application takes 20 minutes to fill out, and we’ll give you an immediate decision after.
Most other companies have weeks-long processes before you actually get your decision. Many of our applicants also don’t need a medical exam to be approved!
Check this PolicyMe Review to learn more about its offerings.
Compared to the traditional life insurance companies, PolicyMe is more affordable. Being an online provider helps but how exactly does this translate to lower rates for Canadians?
Tobin Tuff: With other companies, there’s a lot of additional distribution, underwriting or even operational costs that PolicyMe just doesn’t have.
For example, everyone receives a decision instantly when they apply with PolicyMe. With other companies, that timeline lasts weeks and there’s a lot of back and forth, often with additional interviews, follow-ups or even medical exams.
With PolicyMe, since most people receive a decision instantly, we’ve made the process more efficient, leading us to save time and money.
Also, as I mentioned earlier, PolicyMe only has salaried advisors. In traditional life insurance, some parts of premiums often go towards commissions for advisors.
PolicyMe eliminates the middleman by selling directly to our customers, allowing us to pass those savings back to our customers.
The PolicyMe instant quote tool is a quick and simple way to calculate how much coverage someone needs and the monthly rates. Are those quotes final or subject to change?
Tobin Tuff: Any company you go to, if they’re good and honest, they’ll quote you at what they call standard rates.
Standard rates are rates for any person with good or average health for your age. So if you have average health for your age, then you can expect your final rate to be the one quoted.
However, if you have any conditions, let’s say for example, diabetes, or high blood pressure, then your actual rate may be higher than the ones quoted originally.
The majority of PolicyMe customers are approved at the standard rates quoted initially, and if they have an underlying health condition or a complex history then their rate may change.
How do you estimate the coverage amount and why is your method or model better than the other ones out there?
Tobin Tuff: When you take PolicyMe’s recommendation quiz, we have an algorithm that estimates what coverage amount or term length is best for you depending on your personal situation.
And if you don’t need life insurance, we’ll tell you that too. We actually tell about 20% of our users that they don’t need life insurance at this moment.
Our recommendation quiz is based on your personal and financial situation. We’ll ask you questions about your assets and your expenses, like do you own a house? If you have children, do you plan on paying for their college education?
All of this boils down to one essential question, which is what coverage amount is enough for your loved ones to maintain their current lifestyle if you were no longer in the picture?
Many advisors may use a basic formula like you need 10x your income, but it’s not as simple as that, because everyone’s personal situation is different so there’s no one size fits all.
If you’re unsure how much coverage you need, take our life insurance recommendation quiz. It only takes 4 minutes!
With auto or home insurance, the cheapest insurance is not necessarily the best insurance. Is this also true with life insurance?
Tobin Tuff: That’s a great question. The answer is Yes and No.
The most important thing with life insurance is to know whether it’s fully underwritten or not. If your policy is fully underwritten, it’s the highest guarantee you can get in Canada that you will receive a pay out, barring any exclusions.
In a fully underwritten policy, the medical information and all the decision making is done upfront.
At PolicyMe, we only offer fully underwritten policies, and we only have the standard industry exclusion, which is we won’t pay for suicide in the first two years of the policy.
So if your policy is fully underwritten, then there’s not much difference between company to company, and you can pick a policy based on whichever company is offering you the lowest rates.
You’re also taking out a life insurance policy for 10 or 20 years, so make sure you’re happy with the customer service of the company you pick, because you may need to interact with them again in the future.
What would you say to someone with an existing life insurance policy with one of your competitors? Can (and should) they switch to PolicyMe?
Tobin Tuff: That’s another really good question. My advice to any policyholders, whether that’s our existing clients or those with another company, is to review your policy at least annually.
Ask yourself: Does this policy still fit my needs? Is the coverage enough? Does it fit my budget?
Then, if it’s of interest to you, you should absolutely shop around to see if you get a lower price for the same insurance.
Many times people want to increase their coverage if they have a new mortgage or another child. In that case, the carrier usually offers to replace the existing policy with a brand new one for the amount you need.
That means you’re going to submit a new application anyway, so it’s a good idea to shop around and see if you can get a lower price somewhere else.
With PolicyMe, it takes less than 30 seconds to get a quote, so my advice is you should just check the market.
Insurance companies offer preferred rates or discounts to members of select professions, schools and so on. Are group discounts available on PolicyMe?
Tobin Tuff: The short answer is No, we don’t have group discounts.
It’s important to note though that many companies that offer group discounts are not actually discounts on life insurance, in most cases.
Those discounts are actually referring to a different type of policy, a special policy available to only a certain group. It’s usually not fully underwritten life insurance.
We spoke about the importance of making sure you have fully underwritten term life insurance earlier, so what I would recommend is confirming if the group discount is for a term life insurance policy or something else beforehand.
Use your judgement here and don’t be afraid to ask questions.
PolicyMe does not operate in Quebec and Newfoundland & Labrador currently. Is this likely to change in the future? What happens to my policy if I moved to one of these provinces?
Tobin Tuff: Yes, we do plan on expanding to more provinces in the future! It’s an ongoing project.
And if you are a policyholder in a certain province, and you move to somewhere where that company is unlicensed, your policy is still 100% safe and secure and will still pay out.
This also applies to moving internationally. You just have to ensure that you applied and signed for your application in a province where that company is licensed.
Compared to permanent life insurance, term life insurance policies are better suited to the needs of most Canadians. Why is this?
Tobin Tuff: I can see on paper why it sounds like permanent insurance is a great deal – you get a payout and the price never changes.
However, permanent life insurance is so much more expensive than term insurance, which is what makes it a bad deal for many Canadians. In that case, if you wanted a return on your money, you’re usually better off just investing that money instead.
For example, let’s say you had to pay $100 a month for your permanent policy, or $10 a month for your term life insurance policy.
In many instances, it’s much better to take the term policy and put that $90 a month into an investment account over 20 years.
You’ll usually earn more from that investment account than you would putting that same money in a permanent life insurance policy.
In what situations would a permanent life insurance policy be the better alternative?
Tobin Tuff: I would recommend permanent life insurance in situations where the client doesn’t feel comfortable with the timeframe that it’ll take them to build up the money they need to leave for what they were worried about.
For example, if it’s final expenses, and the client is 70 and they’re worried about their longevity and about $50,000 that’s going to be owed upon their death, then I would recommend a permanent life insurance plan instead of investing that money.
Because if they die in five years, that’s not going to be enough money in that investment account in that timeframe, so it’s better to pay for the permanent life insurance policy and have that payout starting as soon as your application is settled.
A similar case would be if you have a permanent dependent – and again – are uncomfortable with the timeframe that it would take to save up enough to leave them for caregiving.
The second example where permanent life insurance is good is if a client is in a high category of wealth.
So pretty much the top 1% can use permanent life insurance policies as a type of financial tool alongside the coverage it provides.
They’re not meant to be “investments”, but there is some tax-deferred growth that can be achieved with certain policies and configurations that are of interest to those that have more money than they know what to do with.
That would only come into play once your TFSA and RRSP are full, at minimum.
Some Canadians are fortunate to have some life insurance coverage provided by their employers. But these policies hardly provide enough coverage. What’s your recommendation for these Canadians?
Tobin Tuff: My recommendation here is to always go from a needs-based approach. Take a look at your lifestyle and typical expenses, and try to figure out a number of how much money your survivors will need if you were gone.
Ask yourself: If you were just out of the picture, what do your dependents rely on you for, and how much money do they need to keep the standard of living they’re accustomed to?
It can help put you in the right frame of mind by asking yourself “What would I actually do if I lost my partner? Would I stay in the house or sell it? Would I want to take an extended leave from work?”
From there, it becomes easier to see what’s important to you and how much coverage would be best for you.
If you’re unsure what that number is, take our life insurance recommendation quiz. You can also speak to an advisor.
To your point, yes, we’ve found that typically most people’s needs are a lot more than what their employer coverage offers. That’s why most people usually need extra coverage to maintain their lifestyle and take care of their dependents.
Also, coverage is with the employer, so if you don’t have plans to stay with them for your entire career, it’s worth considering getting a personally-owned policy.
Getting life insurance is one of the smart ways to protect your loved ones and family.
And with term life insurance policies provided by PolicyMe, anyone can get started with a policy with affordable monthly premiums.
So if you’re still on the fence, take the step today to secure your family’s finance in the event you’re out of the picture.
Writing a Will is another savvy way to protect your loved ones when you’re not around.
Check this Interview with the CEO of Willful to learn about the importance of getting a Legal Will and how to get started.