What Kind of Life Insurance Should I Buy?
Thinking about buying life insurance? Good on you — you’re a big step ahead of a lot of people! Unfortunately, people love to pretend that they’re invincible and don’t need to worry about what will happen once they pass on. In reality, no one is too good for life insurance and every single one of us can benefit from planning ahead. After all, you never know what can happen and when. So while there’s nothing wrong with hoping for the best, it’s always best to be prepared for the worst.
As insurance advisors in Vancouver, we’re experts in all things life insurance: why it matters, how it can help you and your family, and how to pick the best policy for your needs. Not sure where (or when) to start? Here, Prometheus Private Advisory Group is sharing everything you need to know about life insurance in Canada.
What is Life Insurance Anyway?
Okay, we’re going to go ahead and state the obvious: life insurance can be pretty dull. It’s one of those not-so-fun parts of adulting that most of us would rather ignore for the rest of our lives. We get it: when you sign up for a life insurance policy, you have to fill out a lot of paperwork, estimate and calculate your living and dying expenses, and dive deep into your medical history. Not exactly anyone’s idea of a good time. But even though life insurance can be tedious, time-consuming and expensive, it is 100%, totally and completely worth it.
Why? Because a life insurance policy is the official contract that guarantees your dependents (or anyone who relies on you for financial support) is taken care of once you’re gone. In exchange for a monthly premium, you get peace of mind that your loved ones don’t have to stress about money in the event of your death, and can enjoy their current lifestyle for many years to come.
Here’s how it works: you open a policy with an insurance company for a specific amount of money that will be paid out when you die. You pay said company a monthly fee for as long as the policy is in place. Upon your death, the lump sum is given to your surviving family or chosen beneficiaries. Your loved ones are free to use the money for whatever purpose they choose, whether that’s for living expenses, tuition, debt repayments, your funeral costs or anything else.
Do I Really Need Life Insurance?
Again, we’re going to be straight up with you: life insurance policies can cost a pretty penny and you personally will never see that money again. It can be a little annoying to send that cash out into the ether when you could use it for way more fun things, like vacations or a new car. If you’re feeling that way, it’s natural! You’re certainly not the first to ask yourself, “Why should I buy life insurance?”
In a word, yes. At least, if you have a spouse, children or any other dependents, you probably want to get yourself some life insurance. Because even though no one likes to think about their own death, isn’t it worse to imagine your family struggling financially because you’re no longer around to take care of them? For that reason alone, we believe life insurance is worth the investment.
But now we’re getting to the fun part. No, really, insurance can be exciting! (Hey, we see that eye roll…) Being the insurance connoisseurs we are, we can help you use life insurance as an investment vehicle to achieve your financial goals. Our team has your back with personalized solutions and strategies that will set your family up for long-term financial stability.
What Kind of Life Insurance Should I Buy?
There are two main types of life insurance in Canada: term life insurance and permanent life insurance. With term insurance, you pay an annual premium for a set number of years (usually 10, 20 or 30 years) or up until you reach a certain age. If you die during that term, the insurance company pays out the lump sum to your beneficiaries. If you don’t die, nothing happens. The insurance company keeps the money and you’ll need to renew your policy to re-up on coverage.
Permanent life insurance works a little differently. Instead of only covering you for a fixed term, you’re covered for life. As long as you keep paying your monthly premiums, you can rest assured that a payout is coming to your family at some point in the future, whenever you pass away. In addition to lifelong coverage, permanent life insurance has the added benefit of allowing you to accumulate cash value, which you can use as collateral on a loan or receive as a payout of your own if you cancel the policy. Permanent life insurance is also valuable for estate planning purposes, allowing you to leave tax-free money to beneficiaries or charities.
The type of life insurance you choose will depend on your personal goals and financial situation. Keep in mind that term insurance premiums are much less expensive than permanent insurance premiums, but term insurance has fewer perks. When in doubt, talk to an insurance advisor in Vancouver to discuss your options.
When Should I Buy Life Insurance?
As for when to buy life insurance, the answer is now. It’s never too early (or too late) to get started, but the longer you wait to buy life insurance, the more expensive your premiums will be. That’s because insurance companies consider your entire health history. Since you’re more likely to develop chronic health conditions as you age, premiums are lower for younger, healthier folks.
We know talking about life insurance can be a little overwhelming, but don’t worry. The insurance advisors at Prometheus Private Advisory Group are experts in making insurance accessible, affordable and yes, even fun. Contact us today to get started.