Pat McIver

Congratulations on your recent marriage and kudos for considering securing your financial future together as a couple!

By searching “life insurance for newlyweds” or “why life insurance is important for newlyweds” you have taken the most practical first step you can take to ensure long-term financial security and much-needed peace of mind. 

Life insurance has always been the cornerstone of smart financial planning for couples and here is everything you need to know to get started.

Life Insurance Basics for Newlyweds

Marriage is the start of a new adventure, one that you won’t be on solo. 

Planning for two and possibly more (if you decide to have children) can bring with it new responsibilities, challenges, and goals. 

Getting life insurance early as newlyweds can provide a strong foundation to help you both grow and can provide a safety net for unforeseen events or curveballs that life might throw your way.

In Canada, as a married couple, you can opt for either a separate or joint life insurance policy. Each policy has its own set of benefits and drawbacks which we will get into shortly.

But, before we do, let’s look at the two most common types of life insurance policies in Canada:

Term Life Insurance 

By far, it is the most popular, affordable, and straightforward policy available to newlyweds. 

This policy provides coverage for a set period, usually 10 or 20 years and automatically renews at the end of the term until finally expiring on your 80th birthday. 

Premiums for this type of policy are locked in for the term. However, during renewal, you can expect an increase in premiums based on age and other factors. 

Term life insurance is often perfect for couples who have shorter-term financial responsibilities, and are looking for a mixture of affordability and flexibility.

Permanent Life Insurance 

As the name suggests this type of policy offers lifetime coverage. There are no renewals or changes in premium costs as coverage never expires and premiums are guaranteed never to change.

While more expensive than term policies, this type of life insurance coverage can act as a long-term investment as it allows the policyholder to build cash value over time. 

This cash value can be used as collateral to acquire low-interest loans or cashed out to cover expenses for emergencies. 

Essentially this type of policy offers a living benefit along with a death benefit which can be hugely advantageous depending on your financial goals and long-term objectives. 

The Right Time to Consider Financial Planning for Newlyweds

In most instances, the earlier a couple can buy life insurance the more beneficial it tends to be. 

Life insurance can be a whole lot cheaper in your 20s and 30s as compared to your 40s and 50s. 

There is a lot less paperwork involved when you are younger as you are likely healthy and don’t have a complex medical history. 

As such, there is often no need for any medical exams or detailed paperwork to secure a policy.

Planning early not only secures your future but also locks in lower premiums while you’re young and healthy.

Benefits of Joint Life Insurance Policies

Joint life insurance covers both spouses under one policy. This way, if either spouse were to pass away unexpectedly a death benefit would be paid out to the other.  

Having a joint life insurance policy can be comparatively cheaper than having two separate policies (one for each spouse).

Having just one policy would also mean less paperwork and hassle.

So, while having separate life insurance policies can be beneficial if the income, financial obligations, and coverage needs of each partner are significantly different, joint life insurance policies can be perfect for couples without dependents or those focused on leaving a financial legacy.

Life Insurance Premiums and Coverage

The cost of life insurance can depend on several factors, like age, health, sex, medical history, lifestyle and coverage amount. 

In most cases, the younger and healthier you are the more affordable coverage options you are likely to find. 

The real challenge is determining how much coverage you really need. 

To get a quick idea or ballpark estimate, the rule of thumb is to 10-12x your annual income.

However, remember that your current financial situation, debt, mortgage, and future financial planning objectives can all impact the coverage amount you may need. 

Opting for a policy with too high of a coverage amount would mean having to pay more in premiums while a policy with too low of a coverage amount may leave your spouse financially vulnerable.

So, for a more accurate figure, it is always advisable to speak to a reputed advisor or to use a life insurance calculator. 

The Role of Life Insurance in Estate Planning

Life insurance isn’t just for peace of mind and financial security; it’s also a vital part of estate planning.

Having a policy in place can ensure your spouse or dependents receive benefits without legal hiccups.

Death benefits are also tax-free and with clearly mentioned beneficiaries life insurance can ensure a smooth wealth transition process and continued family stability.

Policy Riders and Additional Benefits

Life insurance also offers couples the luxury to add riders such as Accidental Death, Disability Waiver, and Child Care to maximize protection without having to buy additional policies. 

Life insurance can also be bundled with other forms of insurance such as auto, home, and business insurance to further lower costs.

Choosing the Right Type of Life Insurance

As newlyweds, life insurance ensures your partner isn’t left shouldering financial burdens alone. 

Whether it’s protecting your home, paying off student loans, or securing future plans, having the right policy can make all the difference.

So, how do you choose the right type of life insurance?

Our advice would be to consult with a trusted insurance broker who can help you pick a policy that fits your unique situation and future plans.

Nova Scotia’s Trusted Insurance Brokerage Firm – McIver Insurance Inc.

At McIver Insurance Inc., we specialize in helping Nova Scotian couples secure their future with tailored life insurance solutions. 

We are an insurance company that always puts you first and have helped hundreds of Nova Scotian families get the peace of mind they deserve! 

What are you waiting for? 

Contact us today or book a free meeting with one of our trusted advisors!

FAQ Section

Q1) What is the best time for newlyweds to buy life insurance?

Right after marriage. The earlier you buy, the cheaper the premiums.

Q2) How do we decide how much coverage we need?

Multiply your income by 10–12 years and factor in debts, future expenses, and savings.

Q3) Can life insurance policies be adjusted if our financial situation changes?

Yes, you can increase coverage or add riders as needed.

Q4) What happens to my life insurance policy if I get divorced?

Ownership and beneficiary designations may need adjustment. Seek professional advice.

Q5) Are there any life insurance policies that also contribute to retirement savings?

Yes. Permanent life insurance policies build cash value, which can supplement retirement income.

When you’re running a business, the hustle never ends. 

Managing employees, deadlines, and chasing growth are likely always on your daily priority list. 

But what about planning for the unexpected? 

Just like your family needs financial security, so does your business. 

Key Person Life Insurance can help safeguard your business, secure its future, and help you reap financial benefits that foster growth and sustainability. 

Here is a list of key life insurance benefits that many Canadian business owners often overlook during their decision-making process and why you shouldn’t make the same mistake.

6 Key Life Insurance Benefits Business Owners Overlook

1. Key Person Insurance: A Safety Net for Your Business

What happens if you unexpectedly lose a critical team member? Say, a top sales executive, or a lead technician? Will this impact your business’s bottom line? 

If so, you need to consider key person life insurance. 

This life insurance policy provides a financial cushion to keep your business afloat should an essential employee pass away or become incapacitated. 

The policy can cover recruiting and training replacement costs, offset lost revenue, and help stabilize operations. 

2. Business Continuity and Succession Planning

Life insurance ensures your business survives and thrives during a transition. 

It can be beneficial in situations such as:

• Buy-Sell Agreements: Life insurance funds can be used to purchase shares of an outgoing partner in case of death, ensuring the business remains with existing owners.
• Family Business Continuity: Policies can provide liquidity to cover taxes or debts, preventing families from selling their business prematurely.

Take the case of a family-run fishery in Halifax. When the founder passed, a life insurance policy helped pay estate taxes and funded the transition to the next generation without disrupting operations.

3. Tax Benefits and Implications for Business Owners

Life insurance doesn’t just protect – it can save you money, too. 

Here’s how:

• Tax-Free Death Benefits: Payouts from life insurance policies are typically tax-free, providing clean liquidity for your business.
• Deductions in Certain Cases: Premiums for policies used as collateral or employee benefits may offer tax deductions (consult a tax advisor for specifics).

Canadian tax laws often favour life insurance, making it a smart move for small businesses looking to minimize liabilities when securing their future.

4. Collateral for Business Loans: An Untapped Resource

Many business owners fail to realize that life insurance can be used as collateral for loans. 

Banks and lenders view it as a secure way to reduce risk. 

Here’s how it works:

• Assign your policy to the lender as collateral.
• If the loan isn’t repaid, the lender gets the payout from the policy.

This is especially useful for startups and small businesses in Nova Scotia, that often struggle to raise funds through traditional financing. 

A well-negotiated life insurance-backed loan can be extremely useful to fund expansions or cover cash flow gaps.

5. Enhancing Employee Benefits with Life Insurance

Including life insurance in employee packages can boost morale and retention rates. 

Employees value security, and group life insurance offers just that.

It is also beneficial for the employer. 

Life insurance can often be more cost-effective for the employer than raises or bonuses and delivers greater perceived value to employees. 

We recently saw the power of adding life insurance to employee benefits when we set up a group plan for a Dartmouth-based manufacturing company struggling with employee retention. 

After introducing group life insurance as part of their benefits package they saw a 20% reduction in turnover and a noticeable improvement in employee morale; showcasing just how valuable life insurance can be.

6. Protecting Personal and Family Interests

Business-owner life insurance isn’t just for the company—it protects your loved ones too. 

Policies can:

• Provide income replacement for your family if you’re no longer around.
• Cover personal debts tied to the business, ensuring they aren’t passed on to family members.

By integrating business and personal financial planning, you can ensure stability for both your company and your loved ones.

Navigating the Legal Landscape of Life Insurance in Business

Life insurance comes with its share of legal complexities, from ownership structures to policy assignments and more. 

As a business owner, it’s crucial to:

• Understand policy terms and legal obligations.
• Consult a lawyer to avoid common pitfalls, like unclear beneficiary designations or improper tax handling.

In Nova Scotia, provincial regulations may add additional considerations, so working with local experts is highly recommended. 

We at McIver Insurance Inc. ensure compliance and optimized planning to help you best navigate insurance’s complex legal landscape.

Your Business Life Insurance Partner

At McIver Insurance Inc., we understand the unique needs of Nova Scotian business owners and support them by helping them navigate health and dental plans, close insurance gaps, and provide group benefits to their employees. 

As Nova Scotia’s most trusted insurance brokerage firm our team specializes in crafting life insurance strategies for small businesses with 2-10 employees. 

These policies are cost-effective and designed to protect your business, optimize your finances, and ensure business continuity. 

To learn more call now or click here to book a free no-obligation meeting with our trusted advisors!

FAQ Section

Q1) What is key person insurance and why is it crucial for my business?

Key person insurance protects your business financially by covering losses related to the death or incapacitation of critical team members.

Q2) How does life insurance facilitate business continuity planning?

Life insurance can fund buy-sell agreements, pay estate taxes, and provide liquidity for smooth ownership transitions.

Q3) What are the tax benefits of incorporating life insurance into my business strategy?

Death benefits are tax-free, and premiums may be deductible for certain business purposes.

Q4) Can life insurance be used as collateral for business loans?

Yes, policies can secure loans, making it easier to access financing while offering lenders added security.

Q5) How does offering life insurance as an employee benefit help my business?

A group plan that includes life insurance can help improve employee retention and satisfaction while being a cost-effective alternative to other benefits such as bonuses and raises.

Why is life insurance so much more expensive for smokers or those who drink heavily? 

The answer lies in the underwriting process. 

When you apply for life insurance, insurance providers assess your health risks based on lifestyle choices, including smoking and alcohol consumption. 

These habits are proven to increase the likelihood of serious health issues, which means higher premiums for those who partake. 

But how much of an increase in premiums are we looking at? Also, is there a way to reduce the premium cost if you quit smoking or drinking? And what happens if you don’t disclose you are a smoker or a drinker?

For answers to these questions and more, read on!

How Smoking Impacts Life Insurance Rates

While smoking was considered “cool” and “harmless” in the early 20th century, that time has passed.

According to the World Health Organization, tobacco kills up to 50% of its consumers if they don’t quit in time.  

As such, smokers pay significantly more for life insurance than non-smokers.

Smoking Habits

Insurers look at how much and how often you smoke. 

Whether it’s a daily pack or the occasional cigarette, you’ll be categorized as a smoker during underwriting. Even vaping or using nicotine patches can sometimes count.

Health Risks

Smoking is linked to a host of health problems, from lung cancer to heart disease. 

These risks lead to a higher likelihood of claims, which is why insurers raise premiums for smokers.

Comparison of Premiums

The numbers are stark: a 40-year-old non-smoker in Nova Scotia might pay $50/month for a term life insurance policy, while a smoker could pay over $120/month for the same coverage. 

Over time, that difference adds up to thousands of dollars.

How Alcohol Impacts Life Insurance Rates

If you are an occasional drinker your premiums won’t be impacted as much as if you were an occasional smoker.

However, if you have a history of alcoholism, this can greatly impact the underwriting process. If alcohol consumption is heavy, frequent, or considered “risky” it can significantly increase life insurance rates.

For insurers, “risky drinking” often means consuming more than 3-4 drinks a day or binge drinking which can cause liver disease, heart problems, and mental health issues. 

These health risks translate to higher premiums. 

Moderate drinkers may also face higher premiums if their medical history raises concerns.

During the life insurance application process, you will be asked about your drinking habits and require medical tests that check for liver and heart damage. 

The Impact of Smoking & Drinking on Insurance Costs

When both smoking and heavy drinking are part of your lifestyle, the premium quotes on life insurance can often be astronomical. 

The health risks of smoking and drinking don’t just add up—they multiply. The chances of heart disease, cancer, and other life-threatening conditions skyrocket when these habits are combined.

To compensate for the added risk insurers often double or triple premiums for individuals with both habits. 

In some cases, policies may even exclude coverage for conditions caused by smoking or drinking. 

So, for example, if you are a smoker and heavy drinker not only will you pay higher premiums but there may be an exclusion in your policy that prevents your beneficiaries from being able to make a death benefit claim if you were to pass away as a result of lung cancer, liver failure, or other related illnesses. 

The Underwriting Process for Smokers and Heavy Drinkers

Here is a breakdown of the underwriting process that insurers use to evaluate the risks posed by smoking and alcohol consumption.

Medical Evaluations

If you are a smoker or heavy drinker expect to undergo a medical exam, which might include blood and urine tests. 

These tests can reveal nicotine use or elevated liver enzymes linked to alcohol.

Premium Calculation Methods

Insurers use actuarial tables to determine how your lifestyle affects your life expectancy. The more risks you pose, the higher your premium.

Even if you’re young, smoking or drinking heavily can make your premiums resemble those of someone twice your age.

Financial and Health Implications for Policyholders

The costs of smoking and drinking go beyond just higher premiums—they also affect your overall financial and physical well-being.

The cost of higher premiums is often nothing compared to what you are actually spending on cigarettes, alcohol, and healthcare. 

By quitting these unhealthy habits you can save a lot of money, improve your health, and possibly increase your lifespan. 

Qualifying for Lower Premiums

To qualify for lower premiums you will need to quit smoking and/or drinking for at least 12 months. 

Once a year has passed you can sign a declaration stating you have quit and undergo a medical test to prove you are nicotine and alcohol-free.

The longer you quit, the more favorable your life insurance rates become. 

After three years, your insurance rates can be as low as that of an individual who has never smoked or drank in their lifetime. 

Legal and Ethical Considerations

Lying during the application process is only going to result in a denied claim. 

When applying for life insurance transparency, full disclosure, and honesty are key. 

There is no point paying premiums all your life only for the claim to be denied due to an unstated lifestyle choice.

The same is the case for insurers. 

In Canada, insurers must adhere to laws that prevent discrimination while fairly assessing risks. They are responsible for treating all applicants fairly ensuring no one is overcharged or unfairly excluded.

While they’re allowed to charge higher premiums for high-risk lifestyles, this has to be based on clear evidence. 

Get Insured Today by Nova Scotia’s most Trusted Life Insurance Broker

At McIver Insurance Inc., we understand that lifestyle choices can make life insurance more expensive, but that doesn’t mean you shouldn’t opt for a policy. 

Quitting smoking, drinking responsibly, and maintaining a healthy lifestyle can go a long way toward lowering your premiums and our expert guidance can help you get there. 

For personalized advice and competitive rates in Nova Scotia, call today!

FAQ Section

Q1) How does smoking cessation affect my life insurance rates?

If you quit smoking and remain smoke-free for at least a year, your premiums will lower. After three years, you may qualify for significantly lower non-smoker rates.

Q2) Can occasional drinking affect my life insurance premiums?

Occasional drinking typically doesn’t impact premiums, but excessive or binge drinking might.

Q3) What are the potential benefits of disclosing my smoking and drinking habits during the insurance application process?

Honesty ensures your policy won’t be voided later. Plus, many insurers offer options to re-evaluate premiums if you improve your habits.

Q4) Are there insurance providers that specialize in policies for individuals with high-risk lifestyles?

Yes, some providers focus on offering coverage tailored to smokers and heavy drinkers, but premiums will still reflect the associated risks.

Retiring can be exciting for many Canadians but also nerve-wracking. It marks the beginning of a new chapter and can bring significant lifestyle changes.

But what about life insurance? What happens to your life insurance policy when you retire? Do you cash out your policy or does it just lapse? And do you even need life insurance during retirement?

The answer, as is the case with most personal finance questions, is “It depends”. On what? Let’s find out!

Understanding Life Insurance & Its Types

Life insurance is a financial tool that provides a financial safety net for family members in the event of a policyholder’s death. 

There are two types of life insurance policies in Canada, term life insurance and permanent life insurance. 

Permanent Life Insurance

Permanent life insurance options, like whole and universal life, offer coverage until death. These policies also accumulate cash value over time, which can be accessed during retirement. 

This makes this type of policy a popular choice for Canadians seeking both coverage and an additional source of income during retirement. However, permanent life insurance policies have higher premiums than term policies, but they’re often worth it. 

Term Life Insurance

With term life insurance, coverage lasts only for a set period, like 10, 20, or 30 years. This means if your policy expires before or during retirement, you might find yourself without coverage at a time when you may need it most.

However, many term policies do offer conversion options that allow you to shift to a permanent policy if you’re nearing the end of your term or are close to retiring. It’s always advisable to review these options by consulting with an insurance broker. 

What Happens to My Life Insurance Policy When I Retire?

When you retire your life insurance can change depending on what policy type you have, your financial situation, and your personal needs. 

If you have a permanent or whole life insurance policy, nothing changes. As long as you continue making premium payments your policy will remain active till you die.

If you have a term life insurance policy or a group plan you may lose coverage upon retirement or have to cash out your policy. However, most life insurance plans can be maintained, adjusted, or converted to ensure continued coverage during your golden years. 

You may have to pay slightly higher premiums but you can convert your term policy to a permanent policy or change your group plan to a personal plan without having to undergo a medical exam or paying any unnecessary costs.  

Do I Need Life Insurance in Retirement?

Again, “it depends”. 

Ask yourself, what do you need life insurance for? Do you have a spouse or children who can benefit from keeping the policy? Do you have a small business or business partner that your policy can protect? What are the sources of your retirement income? Do you have enough to pay for premiums?

If you aren’t making an income, or don’t have dependents, you may not need life insurance when retiring. 

However, if you do have dependents, and you feel that your family would benefit from a life insurance payout, opting for a permanent life insurance policy, particularly one with a cash value component, can be in your best interest. 

You can borrow against this cash value or even use it to cover unexpected expenses without having to rely on your primary retirement savings.

Adjusting Life Insurance Upon Retirement

When you retire, it’s wise to reassess your coverage needs to ensure your policy matches your new lifestyle and financial situation. 

Without dependents or a mortgage, your coverage needs may be lower than during your working years. Lowering your coverage amount or even switching to a different type of policy could potentially help you save on premiums.

Another option, if you’re holding a term policy nearing expiration, is policy conversion. Many term policies let you switch to a permanent policy, which is helpful if you still want coverage but without the time constraints. 

Tax Implications of Life Insurance for Retirees

Life insurance has some unique tax benefits that retirees can use to their advantage. 

Proceeds from life insurance are generally tax-free, meaning beneficiaries won’t owe taxes on the payout. This is especially helpful when estate planning because it allows you to pass on wealth without significant tax deductions.

Therefore, life insurance also acts as a valuable estate planning tool. By designating policy proceeds to cover any estate taxes or final expenses, you can preserve assets for heirs. 

This financial planning approach can lower the tax burden on your estate and ensure that more of what you’ve worked for is passed on without loss to taxes.

Life Insurance as Part of a Comprehensive Retirement Plan

Your life insurance should coordinate with other financial plans like pensions, RRSPs, TFSAs, and savings accounts. 

By making life insurance part of a broader retirement strategy, you can support your goals for long-term financial security, ensuring that all your assets complement each other.

Consulting with a financial advisor or insurance broker can also be incredibly beneficial here. 

These experts can help you decide how life insurance fits within your broader goals, whether as a source of income, emergency fund, or asset for legacy planning. Advisors can also help identify the best type of policy for retirees, making sure you’re not over- or under-insured.

Challenges & Considerations of Life Insurance for Retirees

Retirees face unique age and health factors when it comes to life insurance. As you age, premium rates can increase, and certain health conditions can make getting coverage harder or more expensive. 

Therefore, if you’re looking at policy changes or upgrades, it’s good to consider this sooner rather than later to avoid any unnecessary complications. 

Another top tip is to pick a policy that aligns with your future needs rather than your current ones and to find the right balance of coverage and cost, especially when working with a fixed retirement income.

Future Trends in Life Insurance for Retirees

With Canada’s aging population more and more life insurance products come with features like long-term care riders and flexible death benefits. These options provide added coverage for medical or long-term care expenses, allowing you to use your life insurance if you need ongoing care. 

In Canada, these types of policies are helping seniors maintain coverage without facing prohibitive costs or restrictions and there are certain providers that are even specializing in life insurance for seniors.

Life Insurance for Nova Scotian Retirees

Life insurance in retirement can be much more than a safety net—it’s a versatile tool that, when managed well, can help support a secure, comfortable retirement that provides peace of mind to retirees and their families alike.

Have more questions? Book a free no-obligation meeting with Nova Scotia’s most trusted life insurance brokerage – McIver Insurance Inc.

FAQs

What happens to my term life insurance when I retire?

Upon retirement or expiration, your term life insurance policy will end without a payout. However,  most policies do allow you to convert your term policy to a permanent policy without taking a medical exam. 

How can I use the cash value of my life insurance in retirement?

You can tap into the cash value of your permanent life insurance policy in several ways. The most common way is to withdraw directly from the cash value or borrow against it through policy loans. Some policies even allow for cash value to be converted into an annuity or pay out dividends to help supplement retirement income. 

Should I keep my life insurance policy after I retire?

Speaking to a financial advisor or insurance expert is the best way to determine whether you should keep your policy or not after you retire. Experts will determine your financial goals, your dependents’ needs, and the type of policy you hold to help you make an informed decision.