Do you think you really need life insurance? If you have dependents or financial expenses, the answer is definitely yes. When you buy life insurance, you ensure that your family has enough income to cover expenses if you die. If you don’t have a family that depends on your income, you may also need life insurance to cover your debt or business.
Your insurance needs change throughout your lifetime. Here are the top three times to get life insurance:
To better understand what life insurance is, consult our article 5 things you need to know about life insurance.
In your twenties, as young adults
Most people in their twenties are finishing school or have been working for a few years. This is often the decade in which they take on their first debts: student loans, car loans or mortgages. All of these debts can fall on your family members if something happens to you. Life insurance helps cover the type of debt associated with your lifestyle.
For young people, the biggest benefit of buying life insurance in their twenties is the cost; since they are young and often healthy, they benefit from the lowest insurance premiums on the market. Permanent life insurance remains in effect for your entire lifetime; buying it earlier in life could save you thousands of dollars over the life of your policy.
However, buying life insurance when you’re young doesn’t just mean getting lower rates. You can also avoid the risk of being denied because of a health problem later in life. More than half of Canadians (52%) aged 50 and over live with a pre-existing health condition, which can make it more difficult for them to obtain coverage. Pre-existing health conditions can make buying an insurance policy more expensive; they may contain restrictions and exclusions or prevent you from qualifying.
The good news is that once you’re covered, you’re covered for the full life of your policy, no matter what happens to your health. If you apply when you’re in good health, then you’re more likely to get better coverage and more competitive products.
In your thirties or forties, as you start a family
Many things change over those two decades. Family and work life can progress and increase or change your insurance needs.
From a personal point of view, starting a life together also means planning for a financial future together. If your partner depends on your income or if you have other financial needs or commitments to consider, such as student loans or mortgages, make sure you have sufficient coverage to meet those needs.
The arrival of one or more children in your family should also prompt you to reflect on your life insurance needs. This insurance, designed for you, can help you cover any eventuality you might face, from groceries to tuition fees.
Similarly, buying a home entails significant costs. If you die, life insurance can help your family keep your property, ease financial insecurity and reduce or even pay down your home debt.
From a professional perspective, if you have received an increase or a new job, whether you are salaried or work on your own, make sure you have sufficient coverage to match any change in income. It is recommended that you buy coverage valued at seven to ten times your annual salary to ensure you cover your household’s daily expenses and bills.
In your fifties or sixties
While a variety of situations may prompt you to review your insurance needs, according to our firm’s brokers, people who buy life insurance when they are in their fifties or sixties are mainly looking to leave an estate or cover their funeral expenses. Be aware that it is never too late to revisit your insurance needs or plan for adequate future protection.
As a result, since their debts are largely paid off and the children have left the nest, this segment of the population has very different needs. Unlike young adults and thirty-year-olds, they feel that leaving a legacy to their loved ones is important, as is covering the remaining debts and the final costs associated with death.
Funeral expenses are numerous and can be high. Consider the following:
- Embalming or cremation of the body
- Purchase of a casket or urn
- Burial and purchase of a lot in a cemetery, mausoleum or columbarium
- Reception after the funeral
- Estate settlement
- Taxes and fees payable on certain assets
There is specific insurance to cover the costs associated with your death. It ensures that your heirs do not have to use their inheritance to pay the funeral expenses. You can learn more about it in our section 5 facts about funeral expense insurance.
However, traditional life insurance can also cover your funeral costs. We recommend that youto make the most appropriate decision for you.
At any time, choose the life insurance that’s right for you
No matter where you are in your life journey, it’s also important to choose the life insurance that’s right for you. It is also recommended that you review these insurance needs annually or when major changes occur in your life. To do this, read our articles to understand the different types of life insurance and to choose the right amount of life insurance for your needs.