4 reasons to consider buying life insurance
Life insurance is one of the most selfless gifts you can give to your loved ones if you pass away. Life insurance is not as complicated or as expensive as you may think. It can provide for the future of your loved ones and be an important part of your overall financial planning.
Here are four important reasons why life insurance is important:
1. Life insurance is not for you — it’s for your family
If you think you don’t need life insurance, you’re right — technically, at least. You don’t purchase life insurance for yourself, you purchase it for the loved ones and dependents you leave behind. Here are the ways in which life insurance can help your loved ones in your absence.
Short-term family needs
Upon your death, would your spouse or partner be able to pay the rent or mortgage? Afford to pay the bills? How about pay for funeral, burial or cremation costs, which average between $800 and $15,000 in Canada? 1 Would you leave behind significant credit card debt or student loans? If you’re young and your parents co-signed on your private student loans, they may be liable for your debt.
At a time of great emotional stress, financial concerns can pile on. Your loved ones may be forced to move, re-enter the workforce or make other significant lifestyle changes. Life insurance can help keep your loved ones or dependents from having to tackle large financial issues when they may be least equipped to do so.
Long-term family needs
Your family can feel the economic impact of your loss well into the future.
Sometimes family members must make major changes that create additional expenses, such as a non-working spouse returning to the workforce and needing to pay for daycare and other expenses. Life insurance proceeds can help cover those new expenses.
If you have children, life insurance can help provide stability and normalcy in their lives such as remaining in the same school district, participating in sports, having the ability to go to a post-secondary school or pursue other dreams. Perhaps your family includes a child, sibling or parent who is disabled or requires lifelong assistance and financial support. Life insurance can help ensure the continuity of their care.
2. Life insurance may not be as expensive as you think
While the cost of life insurance coverage depends on a lot of variables like age, sex, overall health, and type of policy, it typically costs far less than people think.
In fact, for healthy individuals under the age of 40, a $500,000 20-year term policy can be less than $35 per month for men and $26 for women. If you’re under the age of 30, it can cost less than $31 per month for men and $22 per month for women. 2
3. When you finally need life insurance, you may not be able to qualify
Not all deaths are unexpected — in fact, serious illnesses are a top leading cause of death for adults aged 25-44. 3
Unfortunately, by the time someone is diagnosed with a serious illness, it is often too late to get life insurance coverage. The bottom line is, the earlier you are able to obtain coverage the better, both in terms of affordability and coverage options.
4. Life insurance can help you leave a legacy
When you purchase life insurance, you choose at least one beneficiary. This is someone you have chosen to receive the proceeds from your life insurance policy.
In addition to naming family members or estates as beneficiaries, some people choose to name their religious institution, favorite charity or nonprofit organizations that support causes they care about.