When someone first starts considering life insurance, need and cost are usually the first two things that start rattling in their brain. Understandably so, who thinks that they’re going to die? It’s human instinct to be biased towards our longevity, no one grows up thinking they will die in an accident, or from an illness at an early age. But it happens, and at different moments in life our mortality is checked; a loved one passes, someone at work gets sick. When we experience things firsthand it seems so much more real, and that’s usually when someone looks for life insurance.
Before we breakdown the need and cost associated with life insurance, we need to make sure we have a basic understanding of financial products and life insurance in general.
FINANCIAL PLANNING
Most financial products are focused on two core areas: wealth accumulation and risk management. Much focus is placed on the investing or wealth accumulation area of financial planning, however it’s also important to make sure you are insulating your family for the different risks in life, while trying to build that wealth. Both parts are necessary and complimentary in creating a strong and secure financial future.
Life insurance would fall into the risk management category. In short, life insurance can provide a large tax-free lump sum of money to anyone you choose, usually a spouse or family member. In days passed, you could bet that everyone on the block had life insurance, it’s just something everyone did. In today’s world, that’s not to say there aren’t people who firmly believe in protecting their life with coverage, but some would certainly say they are quickly becoming the minority. With the increasing number of financial products, coupled with the confusing nature of life insurance, it’s use and understanding have been in decline in the last 1-2 decades.
LIFE INSURANCE NEED
If you asked a human psychologist what it means to need something, they would directly relate it to whatever that person’s true priorities are. Need and priority are linked at the hip. There’s the very obvious primal needs, such as water, food, and shelter, but there’s also the needs associated with emotional well-being. The funny thing about those abstract emotional well-being needs is that no one can tell you what they are. No one can tell you what’s important in your life, or what you should worry about. It has to come from within, you decide those things.
People who take out life insurance prioritize their desire to ensure their loved ones are taken care of if they are to pass away. Through each stage of life, the type and amount of life insurance needed changes as you do. There are different types of life insurance to satisfy the needs at each one of those life stages, have a component advisor you trust it critical at each one of these steps to make sure you are getting the best advice possible.
LIFE INSURANCE STATS
Now for the stats, it’s always good to look at the numbers! In a 2011 Statistics Canada reporting (last report before Harper cut funding), there was a chart showing the percentage of deaths for Canadian men and women that occurred before age 65 spanning 1927 to 2011. It showed that 24% of men died before age 65, and 17% of women died before that traditional retirement age of 65. I have coverage because I’d rather pay the relatively small premium, then have a 24% chance my family could be financially devastated by my early death. That’s what’s important to me!
LIFE INSURANCE COST
Depending on the type of life insurance taken, today’s premiums can be quite modest to the level of coverage desired. The best thing you can do is run a free quote and educate yourself on the true cost of coverage you need.
Many people don’t really know what insurance will really cost them. Here’s an example: LIMRA is a non-profit financial services company solely committed to researching trends and sentiments in the investment and insurance world, and they released a 2015 study showing that people often roughly estimated insurance premiums to be double what they really were.
Do yourself your favour and call a HERO today at 855-777-4376 or request a quote online. We will help educate you on your personalized need for amount and type of life insurance, and you’ll be on your way to a well-insulated financial plan!
