What Is The Main Purpose Of Life Insurance?

There comes a point in every person’s life when they wonder, “do I need life insurance?” After all, the idea of leaving behind your loved ones some form of financial security after you die is certainly appealing. 

Thinking of our family’s future in case we pass away is something that is innate in all of us. Whether you are an affluent individual or trying to make ends meet for your family, having life insurance is but a necessity.

In this article, we look at some possible real-life scenarios where the consequences of having or not having life insurance can make all the difference. We hope that this information can help you make a more informed judgment when it comes to purchasing life insurance.

Circumstances Of People In Various Stages Of Life

As we grow our needs and wants change. For someone who is young and healthy getting life insurance might not be a priority. However, for someone who is settled and in their 30s or 40s getting life insurance may as well be a priority. 

Hence, let’s look at some practical scenarios and what is the main purpose of life insurance in these circumstances.

A Couple Living Together With Shared Income

You and your partner live together and both of you share the responsibility of supporting each other. Sometimes you share your salary with your partner and sometimes it is the other way around. Once you have been together long enough, you will both be in one way or the other dependent on each other’s income. 

Without life insurance, you will be left with a void in your heart and your income that might not be easy to recover if your partner passes away. Life insurance can help you fill the void on the financial front, and allow you the time you need to get back on your feet. Although your partner will not be there physically, the life insurance policy will help uplift your circumstances to ease your loss.

A Couple With Young Children

Raising a child in Canada is not cheap. Children need the proper care, clothing, food, education, and shelter before they can set out on their own. If one or both parents were to face a tragic accident a child can be left with potentially nothing to his or her name.

How do you give your children the security and protection they need if either one of you passes away?

A life insurance policy ensures that legal heirs get their rightful benefits in the event of the demise of either of their parents. These funds will be allotted to them when they attain legal age or can be claimed by the guardian or remaining parent to help with the child’s upbringing.

Potential Homeowners Paying Mortgage With Children In College

Paying off a mortgage is not easy for most Canadians. A family budget becomes difficult to maintain for parents that have children studying in college. People want the security of knowing that their child will make it through college and that their spouse can pay off the mortgage in case one of them passes away. How does your family manage such enormous expenses if one of the main breadwinners of the household dies?

A household mortgage and college tuition expenses are both relatively predictable expenses. A life insurance policy can cover these expenses if either one of the parents dies. Compared to the expenses, the life insurance policy is affordable by design, so the family can pay off the mortgage and educational expenses. Without a definitive life insurance policy, the family might have to choose between one of the two expenses.

Difficulty Paying For Funeral Expenses For A Family Member

The average cost of a funeral in Canada is $8,500, with prices starting from $1,500 all the way up to $20,000. Most families can’t afford this expense on short notice. This leaves grieving family members distraught for cash to pay for the funeral. Do you want to afford to give your family member an eminent burial after their demise?

Most life insurance policies cover funeral expenses for the deceased. The family can focus on easing the loss of their loved one instead of worrying about how family members can afford the funeral. Can your family pay for a funeral with no outside help?

Leaving Significant Debt To Family Members After Your Demise

According to the June 30 Canada Day Debt Report 2021, each Canadian owes approximately $57,500 in debt. Each person’s debt might be different, but the fact remains that somebody will be responsible to pay it off. With an individual’s death, the debt can pass on to your spouse or joint account holders. Who wants to pass on their debt to their spouse or family members when they die?

By purchasing a life insurance policy early and punctually paying premiums, you can protect your loved ones from incurring your debt. Your family members and joint account holders do not have to worry about paying off your debts because you have insurance coverage for that.

Entrepreneurs With Business Partners Depending On Them

After the COVID-19 financial crisis, a lot of people have started a business with their friends, colleagues, or family members. Some of these entrepreneurs have been extremely successful overnight. But to say that there are no struggling entrepreneurs is an understatement. For the struggling entrepreneurs, each sale counts and no one wants to pay for more than their share.

Business partners want the surety that they can conduct business as usual if one partner dies. Customized life insurance policies can factor in the responsibility of a business partner in business, without the business having to suffer. With a life insurance policy in place, you may pass away, but you’ll have the security of knowing that your business partners can continue business as usual.

How To Choose The Right Life Insurance Policy?

McIver Insurance is a trusted life insurance provider with an established reputation not only in Nova Scotia but all across Canada. Consulting with qualified insurance brokers that understand the life insurance market and the purpose of life insurance is the first step towards making the correct decision for your and your family’s future. 

McIver Insurance experts will inform you of all the options you have with a life insurance policy and how each stipulation can serve your customized requirements. They can address each one of your specific concerns for purchasing a life insurance policy and design a policy that meets those needs. What are you waiting for? Give us a call today to learn more!