Protect Against Setbacks with Life Insurance
March 15, 2018Building Your Future
At the most basic level, life insurance isn’t complicated. It’s simply a tool to replace income. Statistics show that three in four Canadian households would have difficulty paying living expenses if the primary wage-earner were to die. In these cases, the surviving family members will need to replace the lost income or change their lifestyles—or sometimes both.
Similarly, if you are a key person in your business and your loss would have a material impact on revenue generation; you need a plan in place to back-fill that lost revenue. Insurance is often the best and most cost effective solution to bridge the gap until the business can regain its footing.
Given the importance of this lifeline, it’s surprising that 1/3 of Canadian households do not have any life insurance at all, and unfortunately, 42% of Canadians put expenses, such as cable, ahead of buying life insurance.*
Broadly speaking there are two categories of life insurance: Term and Permanent. Within each of these categories, there are different plan types that can be customized to a lesser or greater degree to meet your specific needs. The first question you need to answer is whether or not you have a temporary or permanent need. The table below highlights some needs for which people typically seek an insurance solution.
In addition to meeting different kinds of needs, the two insurance categories have different features and benefits to consider based on the objectives you’re trying to achieve with your insurance plan. The table below steps through some of the key differences between term and permanent insurance.
Determining how much you need is very specific to your individual needs. If you’re simply trying to cover a debt like a mortgage, it’s pretty straight-forward, but if you’re trying to determine how much money your family will need in general, it makes sense to sit down with a trusted advisor who can help guide you through the process. According to industry research by LIMRA (Life Insurance and Market Research Association, now LIMRA International), almost 80% of people overestimate the cost of life insurance.
When you consider the cost of not having it, and what you spend on other things in life, it’s a simple decision. I know it sounds cliché, but it really can cost as little as a cup of coffee, or less, a day. A life insurance policy is a wise use of money to protect your family against setbacks. It’s about living without worrying about your family’s financial future, should the unexpected happen.
*Canadian Life and Health Insurance Facts, 2016 Edition