Why Should I Buy Life Insurance?

Financial planning is an important part of laying out your future, but it’s not always “fun.” For many, financial planning is just another thing on the list to push off into the future and put away for a later date. Moreover, if that financial planning involves the “what if” question of us potentially passing earlier than expected and leaving our dependents behind – well, it’s a morbid topic for sure, but not one we should simply glance over because it’s uncomfortable to think about.

“Why should I buy life insurance?” is a question better rephrased as, “when should I buy life insurance?” And the answer is simply – as soon as it makes sense to do so. But what situations would qualify as “making sense?” There’s a lot of reasons people might purchase life insurance, and for a lot of reasons. Dependents aren’t always children. You could be someone in your early twenties who earns the prominent income for your sick or disabled parents, who would otherwise be left with nothing if you died unexpectedly. You could be someone who fosters children, you could have a partner who depends on your income – safe to say, there’s a lot of situations.

So, what are some reasons you should buy life insurance? In this article, we examine many of the popular “reasons” why someone might purchase insurance.

You are still paying off your student loans in your 20s, 30s, etc.

Getting a post-secondary education is a great way to propel yourself forward into your future career and gain the necessary skills and knowledge you need to succeed. As it stands, education is expensive. The average cost of university tuition in Canada per year is around $6,693. If you ended up taking out student loans to pay for your education, or you’ve encountered some credit card debt during your time as a student, that money owed could pass on to any of your co-signers in the event of your death – which means potentially your parents. To spare them from this burden, they can use your death benefit to cover expenses that they relied on you to pay for.

If you’re considering getting married.

This one is a big “if” for the future, but it’s important to consider, and especially important if you’re still young and in your 20s. If you have hopes of getting married in the future or are currently with a long-term partner that you might even be engaged to, purchasing life insurance young is a great way to secure lower rates and ensure that your partner is covered in the event you should pass unexpectedly. Sometimes, marriage also comes with other added things, like having children, buying a house, etc., which may all necessitate the purchase of life insurance.

If you have a mortgage or are planning to buy a home.

Home ownership is getting to be more and more difficult with each passing year, and many people are able to afford their home via the taking out of a loan – known as a mortgage. With a mortgage, homeowners may be able to put down a certain percentage of the home purchase in the form of a down payment and slowly pay off their mortgage through the years. Most Canadians nowadays choose a 25-year amortization period.

But, if you were to die during the paying off of that mortgage, the remaining money would still be owed, and it may fall to your dependents, your partner, or your co-singer to cough up the remaining payments. Life insurance can cover this amount. As an alternative to life insurance, mortgage insurance is also an option.

If your employer’s life insurance coverage is limited.

As a benefit, employers sometimes offer certain forms of life insurance, like health insurance, term life insurance, etc. This insurance can be a great way to ensure that your dependents and spouse would have protection in the event of your untimely passing, but it can also be limited in what it offers. There may be no medical questions/requirements for this coverage and so certain conditions or causes of death may not be covered, and ultimately it might just not be what you and your family need.

You can supplement this insurance with your own existing individual policy, or seek options to max out the policy that you have at work. Even with the latter option, you should still acquire your own separate insurance as there’s very little job security nowadays and leaving that job would mean leaving that life insurance policy behind as well.

You want to give a tax-free payment to your family after your passing.

Even as you get older, into your 40s, 50s, or 60s, you may have paid off your mortgage, your children may be adults and have grown up and left the home, and your spouse may have their own sizeable savings plan or pension plan – but you may still desire to leave a tax-free payment to your family in the event of your passing. Life insurance can help you to do this, and you may be able to convert your existing term policy to a permanent policy to cover you for the remainder of your lifetime.

You want to leave behind a charitable donation to your favourite organization.

Not everyone has dependents or needs to leave money behind to their family in the event of their passing. Instead, you might prefer to leave a donation behind to your favourite organization, to continuing upholding your values even after you’ve passed. Life insurance can leave behind a sizeable donation to whatever organization you choose. In fact, there are many things that can happen to a life insurance policy when you die – and where that money does go is your choice.

There are many reasons why someone might choose to purchase life insurance. Different types of life insurance may be better for your goals, depending on what your financial situation is like and what you want your coverage for. Either way, you can get your needs met easier with the helping hand of Excalibur Assurance. Look to us for answers on your life insurance coverage.