Insurance is typically used to protect oneself against various risks such as accidents, disasters, or injuries. However, in the case of life insurance, it is your loved ones (children, spouse, family) who will be financially protected.
Do you feel you’re too young to get life insurance? The younger you are, the lower your premium will be, as it is determined based on factors such as your age, gender, lifestyle habits, and health condition. The duration of the policy is also considered when calculating the cost of payments.
Prevent Financial Hardship for Your Family
With life insurance, a predetermined, tax-free amount will be paid to your spouse and children, for example, in the event of your passing. During what would already be an emotionally difficult time for your loved ones, life insurance can help ease the financial burden caused by a loss of income.
Additionally, it can relieve your family from financial strain or potential debts, such as a mortgage, student loans, car loans, or credit card balances. Everyday expenses—like daycare, groceries, and electricity bills—would also be covered by the surviving spouse.
Life insurance can also provide your family with the financial means to take time off work to grieve. It can help cover funeral expenses if your estate does not fully account for them. Moreover, if a trusted individual has been designated to care for your family pet, the insurance could provide funds for veterinary care, food, and other expenses.
Some people even use their life insurance policy to make a planned donation to a cause close to their hearts. In such cases, the designated beneficiary organization receives the funds directly. Additionally, this approach offers the insured individual a tax benefit, either on their current or final tax return.
Lastly, certain life insurance policies combine insurance coverage with a savings component. This allows you to accumulate surplus funds in a tax-sheltered capitalization fund until you decide to withdraw them.
Tailored Coverage to Fit Your Needs
Of course, you can designate one or multiple beneficiaries for your life insurance policy—those who will receive the payout. You can even choose someone who does not yet exist, such as a future child. Since insurers require an "insurable interest," you must demonstrate through a needs analysis that coverage is necessary and what impact your passing would have.
Another option is temporary coverage. More affordable than permanent insurance, it allows you to secure the right coverage amount at a lower premium while maintaining the flexibility to renew your policy or convert it to permanent life insurance—without medical proof—until the age of 100.
The more coverage you choose, the higher your monthly premiums will be. If you are on a tight budget, you can opt for a lower, more affordable coverage amount.
To determine the necessary coverage for your family, your advisor will assess your financial needs by considering key questions, such as:
- Are you the primary or sole provider for your family?
- How many people are financially dependent on you?
- Is your home mortgage-free?
- If not, how much remains on the loan?
- What is the total amount of your family’s debt?
Permanent or Temporary Insurance?
If you choose permanent life insurance, your loved ones will be protected throughout your lifetime, as long as you continue paying your premiums. You can pay them monthly, quarterly, semi-annually, or annually whichever best suits your financial situation and preferences.
One key advantage is that premiums generally remain stable over the years. On the other hand, temporary life insurance provides coverage for a set period, such as until your children become financially independent. However, if you wish to leave an inheritance or cover final expenses without the risk of your coverage expiring, permanent life insurance would be a better choice.
If you would like to learn more about the benefits of life insurance or have any questions, contact our specialists at 1-855-LUSSIER or submit an online request.
