What is Life Insurance?
Whether you’re young or elderly, deciding on a life insurance policy can be tricky. In order to protect you and your family, a solid life insurance policy is important at any age. A life insurance policy is a contract between yourself and an insurance company. In that contract, outlined and agreed is that the insurance company will payout a lump sum, known as the Death benefit, to your listed beneficiary after you pass.
Do I need life insurance?
Purchasing life insurance can be overwhelming, but it is an important aspect of your long-term financial planning. Not everyone needs life insurance, but speaking with an advisor is your best option for making that decision. If you don’t have any debt or dependents, for example, you may not need insurance. However, if you are the main income earner in your household with a mortgage and several dependents, then you will definitely want to consider choosing a plan that will cover your payments.
How to do I decide how much coverage I need?
We are often asked how much life insurance to purchase, but the answer isn’t that simple because it is different for each individual. Most Canadians purchase under $500,000 of life insurance. When deciding on your coverage you will need to look at your current monthly expenses like mortgage/rent, utilities, debt repayment, etc. You will also have to consider any future costs your family will incur, such as post-secondary education for children, replacement of vehicles and/or home, etc. If you and your spouse pass away at the same time, you will need to consider the cost of living for your children as well. You should also consider funeral costs and if your dependent(s) will extra compensation for extended time off of work.
How do I choose a plan?
There are a few options for choosing a life insurance policy including whole life, term life, variable life and universal life. The cost will depend on the plan you choose, as well as your age and current lifestyle. Your insurance advisor can help you choose a plan that will be the most beneficial for you in the long-run. Term plans are generally less expensive but expire after a set period of time. Whereas whole life plans will be more expensive but once the premium runs out, you will still have the coverage.
In conclusion…
Make sure you educate yourself when choosing a life insurance plan. Do your homework before you meet with your advisor and make sure you ask about all of the fees associated with setting up your plan. Life insurance policies can be used as a financial investment, but again, that will depend on your situation. One of our experienced agents will be happy to assist you in choosing the plan that is best for you and your family.
Life Insurance
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