Today we’re going to talk about everyone’s favourite topic—life insurance (end sarcasm). I know that discussing life insurance is about as much fun as organizing your sock drawer, but it’s an important topic that shouldn’t be overlooked. If you’re a single guy or gal (or the heirs of Bill Gates), you can probably get by without life insurance. For everyone else, it’s important to have life insurance in place, especially when you own an asset like a home and have dependents—spouse, children, elderly parents—living with you. If your family would struggle to pay the mortgage without your paycheque, life insurance is a must.
There are two main types of life insurance: term and permanent (also called whole life or universal). Term life provides coverage for a specific period of time—typically 5 to 30 years. Permanent life provides coverage until you pass away or your premiums are unpaid. The premiums are usually higher for permanent than term because they’re averaged over your lifetime, whereas the premiums for term are averaged over the length of your coverage only.
For most families, term is the way to go—it provides homeowners with low-cost coverage. I know what you’re thinking: term insurance is like rent—you’re throwing your money away. You could say that about other types of insurance too. You’re not going to go, “Aw shucks, my home didn’t burn down, so I paid for home insurance for no reason all those years!”
So, how long should you cover yourself with term life insurance? For families with young children, term 20 is probably the way to go. Your family will be protected until your children are grown up and (hopefully) financially independent. Since quotes for term vary among insurance companies, get a few before deciding which provider to go with.
COVID-19: More Canadian Considering Life Insurance
Ever since the Coronavirus pandemic led to most of Canada being in lockdown since mid-March, life insurance has been top of mind.
Nearly a quarter of Canadian adults who didn’t have life insurance pre-COVID have either purchased it or considered purchasing it since the pandemic, finds a new survey by online life insurance platform and advisor, PolicyMe, among members of the Angus Reid Forum.
Of those Canadians who said they’re considering buying life insurance, two-thirds said they were doing it because of concerns to do with COVID-19. The top concerns related to COVID-19 include being more aware of threats to life (36%), re-evaluating your personal finances in the current economic climate (29%) and the fear of losing your job and thus losing your employer-provided life insurance coverage (12%).
Simply put, COVID-19 has opened our eyes to a new threat, a global pandemic that we wouldn’t have anticipated before. This has led to many Canadians looking for ways to protect themselves.
Shopping for Life Insurance During COVID-19
If you’re anything like most Canadians, you’re trying to avoid in-person meetings, unless absolutely necessary. Thankfully you don’t have to meet up in person to shop for life insurance. Pressure-free digital solutions like PolicyMe make shopping around for life insurance from the comfort and safety of your own home easier than ever. PolicyMe doesn’t use commissioned advisors, they’re advice first. That means your needs are put first and foremost.
The Bottom Line
Life insurance can be complicated. Speak with a PolicyMe non-commissioned advisor to learn more in order to make an informed decision. Then be sure you get around to actually signing up for it. Many people don’t, then 10 years down the road they die unexpectedly, without any coverage. If you have dependents, run, don’t walk, to sign up for term life insurance.
Sean Cooper is the bestselling author of the book, Burn Your Mortgage: The Simple, Powerful Path to Financial Freedom for Canadians, available now on Amazon and at Chapters, Indigo and major bookstores, and as an Audiobook on Amazon, Audible and iTunes.