Life insurance is an important part of planning for your financial future. While it may not be as exciting as your other investments – finding the right policy and determining how much insurance you need is vital for the financial security of your family. Depending on the life insurance coverage you choose, your policy could help your family to cover your funeral expenses, pay off their mortgage, or even send your children to college. Just like other financial investments, such as your RRSP for example, life insurance is best purchased when you’re young (and in relatively good health) in order to reap the full benefits.
After selecting a life insurance policy, the next step is to choose the amount of coverage you need. Canada Protection Plan offers life insurance coverage from $1,000 to $5,000,000. However, the amount that’s best for you ultimately depends on your existing and projected finances and those of your beneficiary. Canada Protection Plan has an insurance needs calculator in order to help determine the amount of life insurance that you need. Generally, the following four factors have the most impact on the amount of life insurance that an individual should purchase:
Debt
The last thing you want is your family to be faced with paying off your debts should you suddenly pass on. Before choosing a life insurance policy, make a note of all of your debts – from outstanding student loans to your mortgage – and ensure that your policy will cover the entire amount. Don’t forget to include credit card balances or automobile loans, too.
Family Income
Whether or not your significant other also works outside the home, it’s likely that both of your income is needed in order to maintain your family’s lifestyle. That means, you’ll want to invest in a life insurance policy that covers at least 3 years of your income to prevent any additional strain on your family should you pass on. If you have other dependents, such as children, or elderly parents who also rely on your earnings, you may want to consider using your insurance policy to potentially replace up to 5 years of your income.
Funeral Expenses
In addition to being a stressful time for loved ones, funerals are also expensive. The average funeral in Canada costs $6,583, with rates being the highest in Ontario. You’ll also want to account for any potential medical expenses, such as ambulances or medical treatments that may not be covered under your province’s insurance plan.
Education/Goals
If you have children, it’s likely that you and your partner had been planning for their post-secondary education. You’ll want to be sure that you’ve got enough to cover their tuition and living expenses, should they decide to go to college or university away from home. If your kids are currently enrolled in private school, you’ll want to choose insurance coverage that will help to offset those costs as well.
Life insurance gives you peace of mind that your family will be financially cared for after you pass on. Choosing the correct policy – and the appropriate amount of insurance coverage – helps you to provide for your family in the event of your death. It’s never too early to invest in life insurance. Contact Canada Protection Plan today toll free at 1-877-851-9090. You’re under no obligation to purchase, and the information is free.
