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Helpful tips for first-time life insurance buyers

Buying life insurance doesn’t have to be difficult

Buying life insurance for the first time can seem daunting. It’s a big decision, there are many options to consider and it can be stressful to think about what might happen if you’re no longer there to support your loved ones.

Getting insurance coverage that’s right for you is one of the most important ways you can financially protect those you care for from the unexpected. Buying life insurance is essential at any age and there are key advantages to starting early.

Here are some helpful tips to make the whole process easier for you.

Remember why you need insurance

Insurance can help financially protect those you care about when you’re no longer there to support them. It means there could be money available when it’s needed the most, so your loved ones can spend more time helping each other through a difficult time, and less time focused on how to pay the bills.

Life insurance can help:

  • Cover everyday living expenses
  • Settle debts
  • Keep the family home
  • Continue plans you’ve made for your loved ones, like an education fund

Once you know what type of life insurance you want, you’ll then want to determine how much your family will need to continue their lifestyle after you’re gone.

Life insurance that’s right for your needs and budget

There are two kinds of life insurance:

Term life insurance – temporary, lower-cost insurance coverage (at least initially) which you buy for a set period of time. When that time’s up, your coverage can be renewed or you can convert to permanent, lifelong, coverage without having to answer further health questions.

Permanent life insurance – typically costs more, but lasts a lifetime and includes features that can grow money inside your policy over time (called cash value). You can access this money while you’re still alive or leave a larger legacy for those you care about.

Once you know what type of life insurance you want, you’ll then want to determine how much your family will need to continue their lifestyle after you’re gone.

To start, calculate:

  • Monthly household expenses – groceries, bills, mortgage, loan payments, etc
  • Planned expenses – RRSP or contributions to your children’s education, for example
  • Expected one-time costs – for instance, funeral expenses

You should figure out how much these expenses will cost for a full year, then how many years your loved ones would need to rely on this income. It’s a good starting point, so you have an idea of your insurance needs, which you can finalize with the help of your financial security advisor.

Don’t forget to insure your health

Did you know you’re much more likely to experience a serious illness or injury before you retire than you are to die? Ask yourself: if you were too sick or injured and couldn’t work for a month, six months or even a year, would you need an income source (that’s not your own) to support yourself and your family? If your answer is yes, critical illness and disability insurance may be valuable additions to your financial security plan that can protect what you’ve planned for and help ensure your loved ones are taken care of.

Consult a financial professional

A financial security advisor can help you create a plan – including life, critical illness and disability insurance - to help protect yourself and your family from any financial or non-financial issues that might come up.

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The information provided is based on current laws, regulations and other rules applicable to Canadian residents. It is accurate to the best of our knowledge as of the date of publication. Rules and their interpretation may change, affecting the accuracy of the information. The information provided is general in nature, and should not be relied upon as a substitute for advice in any specific situation. For specific situations, advice should be obtained from the appropriate legal, accounting, tax or other professional advisors.