Do You Need Life Insurance?
Uncertain if you truly need life insurance? We are here to answer that question.
Who is life insurance for?
Life insurance is designed to provide benefits to your loved ones if you prematurely pass away. It is a purchase that hopefully you will never have to use but will be there to give you peace of mind in case it is ever needed.
It is there to protect your family.
What will it provide for my family?
- Pays off any outstanding debts such as credit cards or lines of credit to take that stress off your loved ones.
- Helps cover the cost of a mortgage to ensure your family stays in the home they are used to.
- Replaces your income to help your family maintain their standard of life.
- Helps pay for your children’s university fees to ensure your kids have the best chance of success in their future.
What if you do not have a spouse or children?
There are exceptions to every rule but in general, we do not believe it is necessary to purchase life insurance before it’s necessary.
There is no use in paying for something that you do not need in preparation for the future.
When the time is right and the need for life insurance is there, we hope you will come back to us and we can help you with this decision at that point.
How Much Do You Need?
Determining how much life insurance you may need is a bit of guesswork.
Each company and individual will have a slightly different “needs analysis”, however, there will be no perfect amount of life insurance that will ever feel right for your beneficiaries.
If the unspeakable happens and you, unfortunately, do prematurely pass away, no amount of money will bring you back and the varying numbers you may receive from different calculators will be insignificant to your beneficiaries.
Any amount that you are able to leave behind for your beneficiaries will be greatly appreciated and help ease the stress regardless of if it’s $100,000 or $1,000,000.
However, there are some general guidelines we can follow to try and determine the financial loss that would occur if you did pass away.
These are based on a few different criteria such as:
- Providing for your children’s post-secondary education
- Replacing your income for your family for a period of years (20 years is common)
- Paying off the mortgage on your home
- Paying off other existing debts such as credit cards, line of credit, and student loans
Using this information, we can try and most accurately provide you with a coverage amount, however, it is very possible that these two scenarios may arise:
- Based on the premium amount you may wish to purchase more life insurance as it’s cheaper than expected
- Based on the premium amount you may wish to purchase less life insurance as it’s more expensive than expected
There is no wrong or right answer to how much life insurance you may need, only guidelines and principles we can follow.
You should use our recommendation as a guideline and purchase how much you feel is right without putting too much of a financial strain on your month-to-month expenses.
Take Our Recommendation Quiz to find out much you may need!
How Long Should Your Term Be?
When trying to decide what length of term life insurance is best for you there are a few factors that you need to consider.
- Do you have a spouse?
- Do you have children?
- Are you planning on having children?
- Do you have an existing mortgage?
- Are you planning on buying a home?
A general rule of thumb for choosing what term (10, 20, 30) is best for you is considering when the need for life insurance will no longer be necessary.
That could be when all your children have moved on to university and are all now self-supporting, or when your mortgage is all or mostly paid off.
As you start to accumulate more investments and savings, pay your mortgage down and your children start to move into their next stage of life it is probable that the need for life insurance will start to decrease.
This is obviously dependent on each unique individual circumstance and is not dependent on any specific age.
Take Our Recommendation Quiz to find out what term may be best for you!