Life insurance is one of the best-known but least-understood forms of insurance, and depending on your personal circumstances, it could be the most important type of insurance you carry.
The Basics
Life insurance is a product that pays out benefits to the individual(s) named in the policy in the event of their death. Many policies provide additional benefits if the death is accidental, reflecting the years of lost employment income loved ones will have to overcome.
Benefits are often used to pay for things like:
- Funeral costs
- Outstanding mortgage balances and tax liabilities
- Childcare or care for elderly parents
- Education
- Inheritances
There are two main types of policies: term insurance, which are valid for specified periods of time, and permanent insurance, which never expires no matter how long you live. Additionalinformation about life insurance is available through our previously published article on the topic.
Who Needs Life Insurance?
The general rule of thumb is that single people with no dependents have the lowest level of need for life insurance. While that is usually true, remember that some policies double as investments, and can be an excellent, low-risk way to build out your asset portfolio.
The younger you are, the more affordable life insurance tends to be. It can actually be a very smart financial decision to buy it while you’re young, even though you may be in a position that would traditionally view life insurance as unnecessary.
People with a more pronounced need for life insurance include:
- Parents of dependent children
- People living in households that are dependent on their employment income to meet basic expenses
- Partners in a marriage involving major co-owned assets, such as real estate that is mortgaged
A knowledgeable insurance broker can help you evaluate your personal need for life insurance. Don’t hesitate to call on one if you need assistance deciding whether or not this type of coverage is right for you.
Reasons to Own Life Insurance
Owning life insurance provides peace of mind. You can rest easy knowing that no matter what happens, your loved ones will be financially secure. That alone often makes it well worth the investment, but there are also many other reasons to carry life insurance policies:
- It enables your surviving loved ones to pay off major assets and settle debts
- Life insurance ensures that dependents, such as children or aging parents, will be properly cared for in your absence
- It is an excellent way to help your beneficiaries, such as your children or grandchildren, meet their educational expenses at a time when tuition rates are rising rapidly
- Life insurance prevents your loved ones from having to meet final expenses out-of-pocket
- Life insurance premiums are generally very affordable, and in Canada, the benefits paid out by policies are tax-free
Life insurance also earns you more time to consider your financial options as you decide how best to invest your hard-earned money. Most people also aren’t aware of it, but life insurance policies can be sold off if you’re in need of quick cash, and they can also be used as vehicles for accumulating cash. In this sense, they can act very much like savings accounts, except with added benefits.
However, it’s important to take action quickly if you’ve decided to purchase life insurance. Here’s why:
- Some life insurance providers have limitations and restrictions related to age or health
- Insurance companies that don’t operate with such restrictions generally charge significantly higher premiums to older people, people with known health conditions, and people at risk of developing serious health conditions
- The longer you wait, the more expensive life insurance tends to become
Acting fast helps you add a valuable asset to your portfolio at low monthly or annual costs.
Life Insurance Calgary: Count on Lane’s for the Best Products in the Alberta Insurance Industry
Lane’s Insurance is a leading Alberta-based brokerage, providing a comprehensive range of competitively priced insurance products offered through the province’s top carriers.
Beyond life insurance, you can also count on Lane’s for:
- Auto insurance and motorcycle insurance
- Home insurance and condo insurance
- Tenant insurance for renters
- Travel insurance for out-of-province travellers
- …and much more!
To learn more, please contact a Lane’s Insurance customer service representative.
