Buying life insurance can be super confusing sometimes especially if you’re not familiar with financial lingo. There are a few things you should know that will help make your buying decision much easier and simpler.
1.) Understand What You’re Buying
There are plenty of different types of life insurance products, from term to whole life and universal life. What determines the differences in these is the time length you will be covered for, cost and any type of investment money making you might get with the life insurance policy.
Term – being the cheapest type of life insurance available only lasts for a certain number of years, typically 10, 20 and 30 year term life insurance policies are the most popular ones.
Universal Life – A more complex type of life insurance that is permanent which provides investments as an add on to the policy. Also much more expensive than a term policy.
Whole Life – The middle ground of complexity between universal and term. There is growth in a whole life policy that can build up cash over time and provide a financial buffer for you.
2.) Get a Quote
There are plenty of different life insurers available in Canada and all of the top companies like Manulife And Sun Life have all that you need. In addition, you shouldn’t be afraid to shop around the other life insurance companies you may have never heard from.
Prices will all vary and products may sound different, but realistically they’re all the same type. You might hear someone from RBC introduce the super fantastic life term plus-minus whatever. But, it just means its a term life insurance product that every other insurer sells.
3.) Figure Out How Much You Need
Determining your needs can be difficult and generally relies on 3 different aspects.
1.) How much can you afford? If you’re only able to spare $100/month of life insurance you can’t be purchasing the most expensive product available to insure $50,000,000 on your death. Just won’t work
2.) Think about the cost of all your debts you might have to cover if you were to suddenly disappear. Both short term and long term debts.
3.) Lastly, once you covered all the necessities. Think if you would want to leave any money left behind if you have children or family members that could use extra cash if you were gone.
4.) Buy From A Good Advisor
If you have a good insurance advisor, they can help you understand why products would fit your position better than yourself if you don’t have a clue what’s going on. Not only that, they can provide perspectives and ideas that you might have left out, like insuring your spouse or having a different type of insurance for yourself or other family members.
Also if you have health issues, a good advisor will know which companies will accept you or not and whether you can save money from a company you’ve never heard of.
Life insurance isn’t too hard, adulting can be a bit difficult when you’re just starting a family or purchased a property with your spouse. The important part is to make sure you have all your bases covered so that when the unthinkable happens, your loved ones will be protected.