First Time Buying Life Insurance?

Scott McEachern |


First Time Buying Life Insurance?

Here’s What You Need to Know

We all eventually get to that point in life, some sooner than others. The time when someone relies on you, financially. It could be a spouse, it could be a newborn child, or it could even be an aging parent. Life insurance was designed to financially protect your loved ones in the event you are no longer here to do so yourself. If you are considering purchasing life insurance for the first time, this blog is for you. 


How much coverage should you have? 


Calculating how much life insurance you need is the first step. I assist in this process using what’s called a Needs Analysis. As already mentioned, life insurance protects your family financially. If you pass away, your family loses access to your income. The bills, however, do not stop. Each person has different preferences, but you’ll likely want to replace your income for 5-10 years. You’ll also want to pay off all of your debts with the life insurance proceeds including your mortgage, car loans, credit card bills, etc. You may have other final wishes like donating to charity, funding RESPs for children’s education. Finally, you’ll want to cover final expenses like probate, taxes, and a funeral or celebration of life. 


How long should it last? 


The thing with life insurance is that it needs to be in force when you pass away in order to pay out. Many young families think that in 25 years they’ll have paid off their mortgage, the kids will be fully educated and they’ll have plenty of money stashed away for retirement. However, in the majority of cases, life interferes! Other expenses come up, emergencies you weren’t prepared for occur, etc. While term insurance (think of it like rent) is the cheapest insurance, it’s important to consider some permanent insurance (think of it as a mortgage), so that you have some life insurance in force when you pass away - hopefully at age 102.


How’s your health?


One of the biggest factors in qualifying for life insurance is your health. For this reason, we recommend getting some insurance as soon as possible, before facing a health scare. We’ve seen children under age 16 diagnosed with diabetes, had a 27 year old client diagnosed with cancer, we just never know when our health will take a turn. Poor health could lead to increased monthly premiums or a straight decline all together. Some carriers underwrite various conditions differently, so that’s where using an insurance broker who has access to many different companies can come in handy.


What’s your budget? 


Ultimately, it all boils down to your budget. We can help insure you against cancer, disability, and death (and you can get insurance for car accidents, house fires, breaking an arm, and more!). All these risks are real, but you’ll be limited to your budget and tolerance for risk. The risks of a car accident are much more than that of dying, but that’s one of the reasons the premiums can be more. On the flipside, the cost of replacing a vehicle ($30,000) is much cheaper than replacing your income for 10 years! 


Bringing it all together, I help determine how much insurance you need, shop the companies to find a product within your price point, and then help you complete the application. I’ve yet to meet prospects who are actually excited to talk about life insurance, but they all agree it’s one of the most important conversations and purchases you can make.