No one really wakes up and thinks, “Today I’m going to buy life insurance”.
However, you might be thinking, “I don’t want to think about death”, “life insurance seems expensive” and “I’m young, I’m not going to die right now”. So is it really necessary to think about life insurance?
Let’s agree on one thing – in life, no one makes it out alive. And all of us know at least one person that has left this earth too soon.
We all know that death is guaranteed, we just don’t know when.
If you know something is guaranteed to happen, why not use that knowledge to your advantage and plan ahead?
So how does life insurance work?
Life insurance is a lump-sum cheque that is paid to your loved ones when you pass away. Simply put, you pay a monthly premium for a certain amount of years, and in exchange the insurance company will pay (in most cases) a pre-determined sum of money which we call the death benefit. You can designate who you would like to be the beneficiary of this money and they will receive it TAX FREE!
There are two major types of life insurance – Term and Permanent.
Term covers you for a specific period of time usually ranging from 10 to 30 years.
Permanent provides life-long coverage.
Unfortunately, life insurance is not one size fits all. Especially if you’re working with brokers like us that have access to many companies in the industry. To determine which type of coverage to get, the best way is to sit down with an advisor and do an analysis.
So, what’s the cost of NOT having life insurance?
- The cost of waiting: Remember, you can’t get life insurance when you need it. If that were the case, everyone would wait to sign up on their death bed. One thing you have to remember is that the price and eligibility is based on age and health. So if you wait too long, you may not be able to afford, or maybe even qualify for all the insurance you need or would like to get. We are the youngest and most likely the healthiest we’re ever going to be, today.
- Your loved ones’ inability to pay for Final Expenses. If you were to pass away unexpectedly tomorrow without life insurance, who would pay for your funeral? The average cost of a funeral in Canada is between 10 & 20 thousand dollars. And what about any outstanding debt you may have? who will pay for that? Do you expect your loved ones to pull from their life savings or assets? Or to panic and start a GoFundMe account? Ask friends and family for help? Some food for thought…
- Leaving your family in a financial crisis. When you plan ahead, life insurance can provide for so much more than just final expenses. When you die, the income you made to support your family stops. But their bills stay the same. How will they pay the ongoing bills, the mortgage payment, debt, college tuition, and retirement? – There are so many areas where you can help your family be less financially devastated if you pass away unexpectedly.
- No Legacy. Life insurance has the opportunity to mean the difference between your child or grandchild having a head start in life or opportunities afforded to them that they may not have had without it. Do you want to create multi-generational wealth? Maybe they can have the life you never had, because of you. What legacy do you want to leave beyond from your years here on earth? How do you want to be remembered?
- Your last love letter to your family. How do you want your last love letter to your family to read? What would you want to leave behind?Life insurance can be like a last goodbye, a promise of the bright future you had planned together. It can’t bring you back, but it can help to ease the financial burden and really puts the phrase “I love you” into motion.
Let’s look at some common myths:
Myth: I already have life insurance through my job. That’s enough
Fact: Coverage through work is typically not enough to cover your loved ones’ expenses for a prolonged period, and coverage can be lost if you change jobs
Myth: life insurance is too expensive. How will I ever be able to afford it?
Fact: most people overestimate the cost of life insurance by 3x or more. It’s probably more affordable than you think!
At the end of the day, the sooner you have the life insurance conversation, the happier and more secure you’ll be in the future. Because the reality is, if you understand its power, you wouldn’t want to live without it!