Many people think their biggest asset is their home or investments. While these may be large assets, your ability to earn an income is your biggest asset and basically determines everything else! That’s why you need to make sure that it’s protected should anything happen to you.
Any financial plan you make to safeguard your family should include life insurance. Making sure they don’t have to deal with financial hardships is the best way to protect them.
However, like any other type of coverage, it’s important to keep in mind that life insurance isn’t “one size fits all”. So, to help you make the right choice, here are some key considerations about this type of insurance.
The main reason to get life insurance is to guarantee that your loved ones won’t face financial hardships if you die. Many people don’t realize just how much the people they love rely on them, and if you take a few minutes to think of everything you do, you’ll realize that an individual life insurance policy is the best way to protect them.
At the time of death, the policy beneficiaries receive a non-taxable sum. The benefits can help pay for any mortgages or car loans and allow your family to maintain their quality of life.
While it’s best to contact one of our brokers to formally assess your needs, it’s useful to know about the different kinds of life insurance that are available. There are three basic types: term insurance, whole life insurance and universal life insurance. Here are the key points about each of them.
Term insurance. This type of insurance is meant to provide protection for a specific period of time, after which the coverage ends. Term insurance is typically more affordable and ideal for younger families who are still saddled with considerable debt – like a mortgage and child rearing expenses. The lower cost allows you to have protection while you manage your other expenses.
Whole life insurance. This type of coverage provides protection for someone’s entire life and usually gets paid out regardless of how or when the person dies. Consequently, the premiums are higher, especially when compared to those for term insurance. In the long run, however, it may be the best option. Whole life insurance policies typically come with a level premium, meaning the cost will remain the same for the duration of the contract.
Universal life insurance. If flexibility is important to you, then you may want to consider universal life insurance. These policies offer permanent protection, but you can make changes to your premium payments. Any amount above the cost of the insurance, or how much it costs to insure your life, is added to the policy’s cash value.
If you keep up with the cost of the coverage itself, which will increase as you age, this can sometimes be a better option than paying for whole life insurance. However, illness, injury and other unpredictable issues can dramatically increase the cost of coverage, which will result in you needing to pay higher premiums.
Each policy comes with its own benefits. Term life insurance is affordable, whole life insurance offers stability and universal life insurance offers flexibility and comes with an investment component. The best way to make the right decision is to work with an experienced broker.
However, the overall key benefit of having a life insurance policy is that it provides you with peace of mind. The right policy will guarantee that should you pass away, your family won’t face financial hardship. Instead, they’ll be able to maintain the quality of life you’ve worked hard to provide for them. It also ensures that any costs associated with your passing will be covered, although this can vary depending on the policy.
To determine how much coverage you should purchase, you’ll need to assess your lifestyle and your annual income. The average annual cost of living in Halifax is roughly $30,866, which means that, at a minimum, your coverage should be $30,866.
However, this minimum may not be sufficient, especially if you have debts. In addition, while meeting the annual average cost of living will allow your family to carry on for one year, it won’t be enough to maintain their quality of life. To find out your minimum amount of life insurance required for your family, contact our Life Insurance Brokers at Eisenhauer Insurance.
In Canada, monthly life insurance premiums can vary from $30 to over $200. The specific cost will depend on a number of factors:
Your age. This is the most important factor when determining life insurance premiums. The older you are, the lower your life expectancy, which means you’ll have to pay higher premiums.
Your health and lifestyle. Any health issues or concerns will also result in higher premiums. Family history, gender, body weight, past medical problems and current health are all taken into account when determining insurance rates. In addition, lifestyle factors, such as smoking or drinking, can dramatically increase your premiums.
Your occupation. Finally, you may be required to pay higher premiums if you’re in a high-risk job like construction work, for instance.
At Eisenhauer, we offer no-pressure, no-obligation, consultative insurance services.
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