How it works
Life insurance helps to ensure your family will have the funds they need no matter what the future holds.
A life insurance policy will pay your beneficiaries a predetermined amount of money you choose upon your death, often tax-free. These funds can help your loved ones cover loan or mortgage payments, maintain their lifestyle, help supplement your retirement income, cover the cost of other insurance policies, and more.
Ideal for protecting you and your family
Life insurance offers affordable financial security:
– Life insurance enables you to provide financial security for your family’s future. Plus, the earlier you purchase your policy, the lower your premium.
– Flexibility – You can design your life insurance plan to meet your short or long-term needs. Plus, some policies allow you to change your premium and your coverage to adapt to your changing needs.
– Peace of mind – Life insurance allows you to enjoy life’s little moments knowing you and your family are protected.
Finding the right life insurance policy for you
Term Insurance: This coverage lasts for a certain period of time. It’s ideal to protect your short-term expenses, like a vehicle loan or mortgage, or to protect your children for the period of time in which they are financially dependent on you. Other factors to consider include:
– Term insurance usually costs less than permanent insurance in the short-term; and
– Your policy does not have a cash value for you to access if and when you need it.
Permanent Insurance:
This coverage typically lasts your entire lifetime. It’s ideal to protect long-term expenses like replacing an income, leaving an inheritance for your loved ones, paying for final expenses, or supporting a cause that’s important to you.
Permanent insurance can build equity because it builds tax-deferred cash value. This means you can use your policy’s cash value as needed – to help supplement your retirement income, pay for an unexpected expense, and more.
Some permanent insurance policies can be paid off in a specified amount of time so your coverage continues even after your full premium has been paid.
The right coverage at the right price
If you have a limited budget now but expect your income to increase over time you may consider a term life policy or a combination of a term and permanent life policy. Keep in mind that the earlier you purchase a permanent life insurance policy, the lower your (lifetime) premium will be. Plus, you’ll also benefit from the growth of the policy’s cash value over time.
Converting your policy
You can also consider converting your term life insurance policy before it expires in order to ensure you’re permanently protected. Benefits of converting your policy include:
– Saving over the long run. If you decide you would like life-long coverage, the total cost will be lower if you opt to convert to permanent life insurance.
– No proof of good health required. If you develop a serious health issue and allow your term policy to expire, the cost to renew your coverage will be much higher. As long as your term policy is in force, you can convert to a permanent policy without having to provide new proof of good health. Just be sure you do so by the date specified in your term policy.
How much coverage do I need?
Determine the total amount your loved ones would need for immediate expenses after your death, like outstanding medical costs, funeral costs, final estate settlement costs and any other debts. Next, add the annual income your family will need each year and multiply it by the number of years you would like to provide them with this income. Then, subtract the value of any life insurance you may have through your employer. This is the total amount of coverage you will need.
How do I choose a beneficiary?
Generally speaking, your beneficiary or beneficiaries should be those who rely on you the most – like your children, spouse or extended family. But don’t forget to name a successor beneficiary in case your first beneficiary passes away before you.
Not sure who to name? You can donate the value of your policy to a charity by naming them as the beneficiary.
Do I need to provide proof of good health?
This depends on your age and the amount of coverage you are applying for. A medical professional may need to complete a physical exam and/or review your medical history in order for us to accurately assess risk and determine your premium.
When should I review my coverage?
We recommend you review your coverage any time your life or your finances change significantly – like when you take out a mortgage, or buy a new car. At the very least, it’s important to complete a life insurance review every couple of years.
Submission by Steve Lund, Desjardins Insurance Agent
