Buying life insurance for the first time is a big decision. Finding coverage that’s right for you can help take care of your loved ones if you’re no longer there.
Life insurance is essential at any age and there are key advantages to starting early.
You can use these helpful tips today to make the process easier.
Remember why you need insurance
Insurance can help financially protect those you care about when you’re no longer there to support them. It means there could be money when it’s needed the most, so your loved ones can spend more time helping each other through a difficult time, and less time focused on how to pay the bills.
Life insurance can help:
- Cover everyday living expenses
- Settle debts
- Keep the family home
- Fund an education
Life insurance that’s right for your needs and budget
There are two kinds of life insurance:
Term life insurance – temporary, lower-cost insurance coverage, at least initially, which you buy for a set period. When that time’s up, coverage can be renewed or converted to permanent, lifelong, coverage without having to answer further health questions.
Permanent life insurance – typically costs more, but lasts a lifetime and includes features that can grow money inside your policy over time, called cash value. You can access this money while you’re alive or leave more money for those you care about.
Once you know what type of life insurance you want, you’ll then want to determine how much your family will need to continue their lifestyle after you’re gone.
To start, add up your:
- Monthly household expenses – groceries, bills, mortgage, loan payments, etc.
- Planned expenses - RRSP or contributions to your children's education, for example
- Expected one-time costs - funeral expenses
With an idea of expenses for a full year, then multiply that by how many years your loved ones would need to rely on this money. It’s a good starting point to get an idea of your insurance needs. An advisor can help you finalize this.
Don’t forget to insure your health
Did you know you’re much more likely to experience a serious illness or injury before you retire than you are to die? Ask yourself: if you were too sick or injured and couldn’t work for a while, would you need money to support yourself and your family? If your answer is yes, critical illness and disability insurance may be valuable additions to your financial plan that can protect what you’ve planned for and help ensure your loved ones are taken care of.
The information provided is based on current laws, regulations and other rules applicable to Canadian residents. It is accurate to the best of our knowledge as of the date of publication. Rules and their interpretation may change, affecting the accuracy of the information. The information provided is general in nature, and should not be relied upon as a substitute for advice in any specific situation. For specific situations, advice should be obtained from the appropriate legal, accounting, tax or other professional advisors.