Just like taxes, death is inevitable. There is no denying that everyone will die sometime. While we don’t like to dwell on it, our death affects our estate and surviving family members.
We must ensure the family and loved ones we leave behind have the right financial resources to care for themselves. These financial resources should include life insurance.
Do I need life insurance in Canada? Well, there are many reasons why you might need life insurance. If you have loved ones who depend on your income and financial support, a child, parent, spouse, business partner, or co-signer on a student loan, you should consider getting life insurance.
Many Canadians wonder if life insurance is worth it. Is it worth the monthly premiums? How do you know if it’s necessary? Why do you need life insurance?
If you are also asking these questions, read on to find out why you need life insurance.
Do I Need Life Insurance?
Many Canadians don’t want to buy life insurance or delay buying life insurance because they don’t want to think about their death.
They refuse to consider it and say it’s too far away in the future to be worried about it today. However, the fact is that we are all constantly exposed to the risk of dying. The probability of dying might be much smaller today than in the future, but the risk is real and should be addressed now.
The financial consequences of the death can magnify the tragedy of death. Should something happen to you, how do you ensure your family and dependents are financially protected?
There are several reasons why you need to purchase a life insurance policy. Here are a few.
- Loss of Income: Are you the breadwinner or income earner of your family or household? Do you have a young family that your death will financially impact? Life insurance would help your family with the everyday expenses and saving for children’s tuition fees and other milestones.
- Debt repayment: Do you have outstanding debts, including car loans, mortgages, or credit card debt? Life insurance can help you cover all your debts and ensure that your surviving family isn’t bothered by the debts you owe.
- Student Loans: Do you have a student loan that you co-signed with someone, a friend, or a sibling? Federal student loans are usually forgiven when you die, but private student loans will be transferred to the co-signers. A life insurance policy will protect your friends and siblings from that debt.
- Entrepreneur or Business Partner: Do you own a business alone or together with a partner that would suffer financially should you die? Naming your business or a partner as a beneficiary could provide proceeds that can keep the business running or buy out your shares.
- Caregiver: Are you the primary caregiver of your parents, adult child, or someone else? A life insurance policy helps your loved ones find new caregivers if you die.
Is Life Insurance Worth It in Canada?
Life insurance has many benefits. It is a great way to provide financial security for your loved ones when you die.
If you have dependents who your death would financially impact, you should consider getting life insurance. Making premium payments on life insurance policies is a sacrifice we make not for ourselves but for those we leave behind after we die.
Do you have a large debt, maybe a mortgage on your family home, that you want to leave to your heirs? Do you want your spouse and kids dealing with financial uncertainty that will affect their lifestyle?
Do you want to support your children’s future, like the cost of post-secondary education, and take care of their everyday living expenses?
If your answer to these questions is YES, you should probably be on your way to getting a life insurance policy.
Read more about is life insurance worth it
Can I Use Life Insurance as an Investment?
Yes, it’s possible to use your life insurance as a vehicle for investment. An insurance policy that builds cash value (whole or universal life insurance) could serve as an investment.
A cash value policy is generally considered to be another way to save up money for retirement. It helps you build up capital that gains interest.
This interest accrues when you leave it for many years because the insurance company invests the money for its benefit like banks do. In return, insurance companies pay you a certain percentage for using your money.
Do I Need Life Insurance When I’m Young?
Buying life insurance at a young and tender age will help you secure insurance policies with the lowest possible premiums. Risks increases with age, and so does premiums for insurance.
Many insurers will allow you to renew your policies without asking for additional medical exams whenever you want to renew your policies.
The good part is that your coverage is guaranteed, and as long as the required premiums are paid, your insurance policy is valid.
Do I Need Life Insurance If I’m Single with No Dependents?
Many Canadians think buying life insurance while you are single with no dependents is not worth it. However, getting life insurance when you are young saves you a lot of money.
If you expect an insurable need in the future, you should lock in coverage while you are younger and preferably healthier.
For each year that you delay buying a life insurance policy, the average premium cost goes up by 4.5% to 9%.
Are young and have no dependents? Ask yourself, can your loved ones afford your funeral or medical expenses if you die? Did you co-sign a loan for a house or car with someone else, and will your death affect them? Do you plan to have children soon?
If your answer to these questions is YES, you should take out a life insurance policy.
Even if they don’t use the total payout for your final expenses or to cover your debts, the balance can provide financial security for your loved ones or donate to a charity.
Do I Need Life Insurance after Age 60?
While most people buy a life insurance policy to secure the financial future of their young children, you can still purchase an insurance policy if you only have grown-ups.
Several reasons, aside from an economic loss, can make you buy an insurance policy after age 60. You might want to give an inheritance to your children, establish a trust, or contribute to a charity organization.
If you have an older individual as a key person in your business or a business partner, you might want to take out an insurance policy on them, should they meet their end.
While some insurance companies in Canada only offer insurance policies for individuals between the ages of 18 to 65, others still give you coverage at age 80, depending on the type of policy you want.
However, you should know that life insurance premiums increase with age. The older you are, the more premiums you will have to pay.
Final Thoughts on Do I Need Life Insurance?
Unlike car insurance, life insurance is not required by law in Canada.
Consider the points above, and see if you have any reason to get life insurance. If you do, you can choose the type of life insurance you want and which insurer you would use.
I am here to guide you if you need any professional insurance advice.
Hi, I'm Adeola Adegoke. I am a licensed Insurance Broker in Manitoba, and I hold a master’s degree in Mathematical Sciences (with a major in Financial Modeling) from the African Institute for Mathematical Sciences (AIMS), Tanzania.
Also, I have a second master's degree in Statistics from the University of Regina, and I am currently pursuing my Ph.D. in Statistics at the University of Manitoba.
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