Seems like a pretty simple question, but many Canadians fail to address the need for Life Insurance until it is too late. Many life events trigger a need, such as buying a home, having children, wanting to leave a legacy, etc….
With Life Insurance, people generally focus on two primary attributes – the premium and the benefit. To understand how to get the best premium you will need to first determine if your need (i.e. death benefit) is a temporary need or a need that is permanent (i.e. your entire life).
A temporary need is generally to replace one’s income during their working years and/or while they have dependents relying on their income. The cost of purchasing temporary insurance will increase with age as well as with health issues. The policy will have a level cost for the term that is purchased (i.e. 10 yr. term), but then the price will increase dramatically. Many people chose to use term insurance while they have a mortgage, which can be much cheaper than buying Mortgage insurance from a bank. Banks typically charge a flat rate for the life of the mortgage, but only pay out the remaining balance of the mortgage in the event of death.
A permanent need is generally used for estate planning or to cover a known tax on death from an asset transfer like a cottage or small business that one wants to keep in the family. Permanent insurance is much more costly than temporary as the insurance is meant to last for your life.
In order to achieve the best premium for the amount of insurance required, temporary needs are generally best met with Term Insurance while Whole and Universal Life Insurance is best used to cover a permanent need. If you are unsure of the type of Insurance you need and/or the amount of coverage you should have, please let us know. We are experts at determining not only the type and amount of coverage that is best for you, but also as independent advisors we have access to many life insurance providers to ensure you get the best rate possible.
Insurance products offered through R.G. Packman & Associates