Life Insurance Policy For Parents
Most Canadians are enthusiastic about getting home and auto insurance policies set up and scratched off their list. But what about life insurance? Getting life insurance is important when it comes to the crunch, but not always for everybody. Because let’s face it, life is just so busy!
People with loved ones depending on your income should understand how getting life insurance can protect them in case of your demise. Here you can find out everything you need to know about life insurance – how it is done, how much it costs, and what is the right type for you.
What Is Life Insurance?
Life insurance is an agreement between two parties, the insurance provider and you. You need to make monthly payments to the insurance provider so that the insurer pays a sum of money to your family or relatives in the event of your demise. Nobody likes to think about their death. But more importantly, you buy life insurance because your loved ones are going to live after you have passed away and the resources you leave behind for them will matter.
So how does life insurance help? Life insurance can help cover funeral expenses, debt, loss of income, and other important expenses that can arise after your death. You can buy peace of mind by signing on the dotted line. Peace of mind that you will be able to provide for your loved ones even after you are no longer in this world.
How Life Insurance Works?
Going through a life insurance agreement can feel like a tedious and depressing process, right? Understanding how life insurance works is much easier if you understand the following terminology:
- Policy: a contract between you and the insurer
- Policyholder: the person that owns the policy, in most cases this refers to you; sometimes also known as the one insured;
- Premiums: the payments you make monthly or annually to own the insurance policy
- Death Benefit: the life insurance payment, or the compensation processed at the time of death of the policyholder
- Beneficiary: the persons you select to acquire the death benefit of your policy (for example, wife, children, relatives, or anyone else you choose)
- Claim: an official demand to the life insurance company to collect the death benefit
In other words, as you (the policyholder) begin to pay premiums on the policy, the insurance company promises to pay your beneficiaries the death benefit if you die.
Types Of Life Insurance
Let’s start with the basic foundation of life insurance. There are two main types of life insurance. A term life insurance plan is valid for a prespecified period. A permanent life insurance plan is valid for as long as you live.
Term Life Insurance
Term life insurance plans provide coverage for a specified period of time. The beneficiaries receive a death benefit if the policyholder dies while the policy is active.
A term life plan is an affordable option for most people because it maintains the single goal of providing a death benefit to the beneficiaries. A term life insurance plan has affordable premiums because it does not provide any investment opportunities.
Permanent Life Insurance
Permanent life insurance provides coverage for your entire life. Permanent life insurance plans can be subdivided into two different types. Whole life and universal life insurance policies both add a cash value to your life insurance policy. The insurance company maintains the cash value of your policy by taking a significant portion of the premiums and depositing them into a high-interest investment account.
Permanent life insurance plans offer a customized investment opportunity but they usually come with a higher cost of premiums. Permanent life insurance plans offer the opportunity to increase death benefits for the beneficiaries based on the consistency of premium payments.
When Do You Need Life Insurance?
Having life insurance will feel like a blessing as you get older. Life insurance plays an important role to maintain valuable reserves in some stages of life more than others. Let’s take a look at the impact of getting life insurance in all the different stages of life.
Young Members Of The Workforce:
The average worker that steps into the employment market for the first time can have some student loans that need to be paid. The only thing young members of the workforce with no dependents and no student loans need to be worried about is the burial costs. There is no urgency in getting life insurance at this stage in life if you are covered with a group life insurance policy by your employer.
Newly Married Couples
You have just said your I do’s and started a new life together, with a promise to be at each other’s side for better or for worse. As a new family is one of the best times to purchase life insurance plans that can add value to your relationship especially if you are debt-free. You can rest assured that your spouse has their budget planned in the uneventful case of your demise. This is the best time to purchase a customized life insurance plan.
Both you and your spouse should have life insurance coverage once you have children. Parents that stay at home perform activities that maintain the family budget to a minimum. Without their involvement, the entire family might have to pay higher costs for childcare and education. You can be confident that your spouse and children will be able to manage their expenses in the event of your death.
You and your spouse should have life insurance by now, do it for your children and spouse.
Senior citizens with hefty retirement savings might not need life insurance to help their spouses because they already have the necessary funds. But not all senior citizens have the privilege to retire with an abundant amount of retirement savings.
Some senior citizens might still be making payments on their houses and receiving income from their assets and property. Will your spouse be able to manage themselves with just your retirement savings without the added income from your assets and property? Getting life insurance now might be an expensive option but it will be worth it to maintain the economic stability of your spouse in case of your death.
Getting Professional Advice
Insurance advisors recommend customizing the life insurance policy to meet your specific insurance needs. One of the main reasons for that is that only you can understand the intricacies of your family’s budget. A life insurance expert from McIver Insurance can design a customized life insurance plan based on your specific insurance requirements. They have experienced and qualified insurance brokers who have been working in the Canadian insurance market for well over a decade.