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
There are 2 kinds of life insurance:
Term life insurance
Temporary insurance coverage that you buy for a set period (common terms would be 5 to 50 years.) When that time’s up, coverage can be renewed or converted without having to answer further health questions.
Permanent life insurance
This form of 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, 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.
Where can you get life insurance?
If you're in search of a life insurance policy, there are a few convenient places to explore your options. Firstly, you can reach out to financial advisors who specialize in life insurance. Canada Life has advisors who can provide personalized guidance and help you navigate the various policy choices available.
Additionally, many insurance companies offer life insurance directly, either through their websites or local offices. Online insurance marketplaces and comparison websites are another handy resource to compare policies from multiple providers and find the one that suits your needs and budget. You could also consider Canada Life for your life insurance policy.
Don't forget to consider employer-sponsored life insurance if your workplace offers it. You can even consider Freedom to Choose™ life insurance coverage if you already have a workplace plan with Canada Life. It's essential to carefully assess your requirements and shop around to find the right life insurance policy that provides financial security for you and your loved ones. You can also contact an advisor if you want to explore your options.
What to look for when buying life insurance
When buying life insurance, here are some important things to consider:
Coverage amount
Determine how much money your loved ones would need in case of your passing. This amount should cover debts, and funeral expenses, and provide financial support to your family. Read this article if you want to better understand how much life insurance you’ll need.
Type of policy
There are 2 primary types of life insurance: term life and whole life. Term life insurance provides coverage for a specified term (e.g., 5 to 50 years), while whole life insurance lasts your entire life. Choose the type that aligns with your needs and budget.
Premiums
Understand the cost of premiums for your chosen policy. Ensure it fits comfortably within your budget, as missed payments can lead to policy lapses. Additionally, your monthly or annual rates can fluctuate due to rate changes.
Riders and add-ons
Some policies offer additional features or riders, such as critical illness coverage or disability riders. Evaluate if these extras are necessary for your circumstances.
Health assessment
Be prepared for a health assessment, as your health can impact the cost of premiums. Quitting smoking or improving your health habits may lead to lower rates.
Beneficiary designation
Designate beneficiaries clearly, and keep your policy up-to-date if your circumstances change (e.g., marriage, divorce, or the birth of children).
Don’t forget to insure your health
Did you know that you’re more likely to experience a serious illness or injury before you retire than if you were 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.