Interesting question. The correct answer to that question is actually… "That depends."
Despite your immediate reaction to this answer let's look a little closer at what it really means. Life insurance is a tool. Nothing more. Nothing less. What needs to be determined is whether or not this tool would be useful and effective for you and how it measures up to other options. Ask yourself the following questions:
What do I want life insurance to accomplish? What do I need it to do?
What are the implications if I do not have it and something happens to me?
What other options are available if I do not use life insurance as a tool?
It is readily apparent that these questions mean different things to different people. Each of us looks at these issues in our own way and we are motivated by various needs, wants and bias. That's the point. Whether you want or need life insurance is a very personal decision. It's different for each of us. As a tool, it may be the ideal solution for the circumstances you face. Whether or not you choose to use it is up to you. What determines your decision to use that tool or not is knowledge and understanding. By understanding what it can accomplish (or not accomplish), by knowing what you are buying and how it provides an appropriate solution for you, and by understanding how it functions you will know and accept whether or not you need or want it as a tool.
Once you have determined what you want/need life insurance to do, you should try to determine a suitable amount of coverage. If your need is for a specific purpose like mortgage insurance then it's pretty simple and straightforward as to the amount. If you were looking for a more thorough program to care for your family and provide income and eliminate debt if you are no longer there to provide for them then going through a "needs analysis" would be beneficial. There are many such tools available and you can access one off the main page of this website under the heading "Life Insurance Calculator". The bulk of coverage in using a tool such as this comes from the capital required to generate the income your survivors need to sustain their standard of living. As a rule of thumb you may want to look at a minimum of 70% of your combined family income as the amount needed to sustain the standard of living in the home. Debt elimination is also a key consideration in the needs analysis. Some people will require more than 70%, and some may want less. The bottom line is that life insurance, as a tool, should provide a sufficient amount of capital to accomplish what is needed at the time it is needed. There are many factors that play into this process and if you have questions or need assistance you are encouraged to send them to us directly. You can email us off the main page of this website by clicking the "Questions? Email us…" field at the bottom left side of the page.
There is no easy answer to this question. Life insurance is a tool. It has a wide variety of uses and applications and the underlying motivation behind buying it is personal to each and every one of us. There are many "experts" on the subject and you will encounter them in the media, on the Internet, in conversation and a hundred other locations. Many of these individuals claim to know what they are talking about. Be wary of "experts" who preach their wisdom without understanding the reasons for why coverage should or should not be purchased, including what "type" of insurance is "best". In the end, it's up to you. It is all about what you want/need.
There is no easy answer to this question. Life insurance is a tool. It has a wide variety of uses and applications and the underlying motivation behind buying it is personal to each and every one of us. There are many "experts" on the subject and you will encounter them in the media, on the Internet, in conversation and a hundred other locations. Many of these individuals claim to know what they are talking about. Be wary of "experts" who preach their wisdom without understanding the reasons for why coverage should or should not be purchased, including what "type" of insurance is "best". In the end, it’s up to you. It is all about what you want/need.
Here are some points to consider:
Look at what you want your insurance to do for you and identify whether or not those items are temporary coverage requirements (like a mortgage) or whether they are permanent coverage requirements (like final expenses and taxes).
Total these two areas separately and also combine them for a grand total.
The grand total represents the amount of protection you should consider if something happens today. The sub-totals represent different applications of coverage for your needs and there are different products that can be applied to solve these issues. It is still too early to consider product, however, so complete this process first.
Before considering what product should be used you need to determine a budget you can afford to provide the protection you want/need. If the cost of your insurance program is not within your budget or is beyond your means, then you really need to sit down and readdress your overall financial plan. Remember that life insurance should provide the appropriate amount of capital to take care of your wants/needs when you need it. Nowhere in that statement did we talk about product or company. It does not matter what product you own when you die. What matters is that the right amount of coverage is in place when you need it. If you have purchased less coverage in favour of product selection based on your budget because of the "benefits" that the product offers "in the long run" then you should seriously reconsider the "advice" your were provided. If your budget allows you to establish an insurance program that affords the full range of product selection from the start then that's ideal, however, if it does not then a good program will allow for adjustments to be made as your circumstances change. You may also find your wants/needs evolving over time. Your program should be flexible enough to also adjust to these changes.
The final step is to determine product suitability and select an insurer with whom you are comfortable. The key considerations in this stage are the value propositions of both product and company. If your program will evolve over time them you should look carefully at product and company to ensure they can accommodate those changes going forward. Value is not just about price. It's a combination of price and fit between what you want/need and what is offered and by which insurer.
Term Life Insurance is a form of Life Insurance that provides coverage with set rates over a defined number of years, or term of the insurance coverage.
With Term Insurance, premiums remain at the defined level for specified periods or to specified ages. Upon reaching the end of the insurance term, the insured has the option of renewing the insurance (typically at higher premium levels) or discarding the coverage.
Term Life Insurance is typically used to provide protection at the cheapest entry level cost. Term Life Insurance is frequently used to provide protection with a specific need in mind and for a specific duration (for example: mortgage insurance).
Term to 100 Life Insurance is typically used to provide permanent life insurance at the lowest premium rate. Premiums will not increase and you cannot outlive the coverage.
Term to 100 is an excellent and affordable way to provide estate protection.
Whole Life Insurance is generally used to provide a combination of insurance protection and cash value to the policy. Throughout the term of the Whole Life Insurance coverage, premiums remain level.
Whole Life Insurance has a moderate level of complexity and you are encouraged to speak to a licensed professional in your quotation efforts.
Universal Life Insurance can be very complex and has an enormous range of use for Canadian consumers. Universal Life Insurance is a valuable tool for everything from simple estate needs to complicated conceptual applications.
Like any tool, however, Universal Life Insurance should be used appropriately and understood before purchasing. Due to the complexity of the product, we require that you to speak with a licensed professional to generate your quotations.
