During the holidays our thoughts turn to our family and the future. It should come as no surprise then that this time of year is often when people consider getting their financial plans organized. Life insurance after all, is regarded as an important part of a comprehensive financial plan that offers protection to your family and loved ones.
What's the point of having life insurance?
Life insurance offers you an opportunity to ensure the financial security of your family and loved ones, no matter what happens. Life insurance can be used to:
- Pay off any final expenses or personal debts like credit cards, car loans or a mortgage
- Offset the loss of your income for those who rely on you for financial support
- Contribute to the future education of your children
- Protect your estate by helping to pay the taxes due on an estate upon death
- Leave a legacy to your favourite charity
Who should buy life insurance?
The purchase of life insurance is often associated with major life events like getting married, buying a home, or having children. However, even if these scenarios don't apply to you, ask yourself the following questions. If you answer yes to any of them, you'll want to consider life insurance:
- Does anyone rely upon you for financial support? Whether it's a spouse, child, grandchild, parent or dependent adult, life insurance will help them protect their financial well being no matter what happens.
- Do you have a mortgage, or any other debts? If so, a life insurance policy can provide a way to take care of these outstanding bills along with any others like funeral expenses, legal fees and taxes, and medical expenses.
- Do you own a business?
- You're accountable for the debts your business owes. If you do not have enough life insurance to cover these debts, your personal assets could be liquidated to pay them off, possibly leaving little left for your family.
- If you're in a partnership, a life insurance policy where the other partner is the beneficiary means the surviving owner has the cash easily available to buy out your portion of the partnership from the estate.
- Do you want to leave a legacy? Life insurance policies can be used to leave money to your favourite charity.
What types of life insurance are there?
Essentially, life insurance can be broken down into two basic groups: term or permanent.
Permanent life insurance provides a lifetime of insurance protection and usually includes a cash value. Permanent life insurance can be divided into three types: whole life insurance, universal life insurance and variable life insurance.
Term life insurance offers protection for a specific amount of time, the term of the policy. The most popular term policies are for 10, 20 or 30 years, but there is also a product called Term to 100 available. A Term to 100 policy means you'll have coverage until age 100 (basically permanent without the savings or investment components).
Term insurance is more affordable than permanent insurance because there is no savings or investment components to the policy. Due to its affordability, you can get a large amount of coverage at a lower cost. Term life insurance plans offer Canadians the opportunity to meet their immediate life insurance needs while also providing the option to later convert into a permanent life insurance product without having to give any further medical information. Another favourable feature of term insurance is that you are never locked in and can cancel your coverage at anytime without penalty.
Online quotes for term life insurance (term 10, 20, 30 and even term to 100) are available through Kanetix.ca, so getting started is easy. It's a hassle-free way to see what's available and at what cost.