Life Insurance

Yes, term life insurance can be used to pay off debt, but not directly.

While the policy’s value can not be touched while you’re still alive, your beneficiaries can use the death benefit to pay off any outstanding debts after you pass away.

So, if you’re juggling debt and wondering if your term life insurance policy could give you some breathing room, the answer is, sadly, no. 

However, your policy could still play a major role in securing your family’s financial future. The death benefit paid out to your beneficiaries can help pay off debt, such as mortgages, auto and business loans, and even credit card bills. 

Still concerned? Let’s clear up any confusion and explain what’s possible, what’s not, and how to make the most of your policy.

Key Takeaways:

• You can’t borrow from term life insurance or use it to pay down debt while you’re alive.
• Beneficiaries can use the death benefit to pay off credit cards, mortgages, student loans, and other debts.
• Some term policies offer a conversion option that allows you to switch to permanent insurance, which does offer access to borrow money during your lifetime.

Term Life Insurance and Debt Relief

Term life insurance is the most common form of life insurance in Canada, as it is affordable, offers flexibility, and can be bought for a specific, pre-set period, usually 10, 20, or 30-year terms. 

This type of life insurance policy is best suited for Canadians who require temporary coverage as they move through life stages. 

While term life insurance doesn’t provide any living benefits, in the event of a death, the benefit paid out can be used for a variety of purposes, including paying off debt, paying for final expenses, replacing monthly income, or covering future expenses for your children, such as university fees and lodging. 

Term life insurance is also easy to understand, as both premium payments and the death benefit are fixed and remain the same until the end of the term. 

However, it does have drawbacks. Depending on your current financial situation and future goals, other policy options, such as permanent life insurance, may be more suited to your needs. 

What Does Term Life Insurance Cover

Term life insurance is what you would call a “just in case” policy. You buy it for peace of mind and hope that you never have to use it.

Term life insurance covers your loved ones from financial burdens in case of your untimely demise within the policy term. It often only covers “natural death”, unless you opt for additional riders such as critical illness, disability, and accidental death. These riders can increase premium costs but help provide a greater net of protection.

In most cases, term life insurance is simple and affordable. But there’s no investment side to it. Unlike permanent policies, like whole life or universal life insurance, term life doesn’t build any cash value. 

That means you can’t borrow using your policy as collateral, you can’t cash out your policy, and you can’t get any money from it while you’re still alive.

It simply provides financial protection for a set term. When the term ends, the policy ends, and you don’t get any payout or cash value.

Using the Death Benefit to Pay Off Debt

In the event of a policyholder’s death, designated beneficiaries get a tax-free payout. This lump sum payment can be used for anything, including wiping out debts.

It can help loved ones pay off mortgage balances, credit cards, private student loans (not all loans are forgiven at death), car loans, and even personal lines of credit.

For example, let’s say you pass away unexpectedly while still owing $300,000 on your Halifax home. If your policy is for $500,000, your family can pay off the mortgage and still have money left over for living expenses, education, or future planning. 

Now, imagine what would happen if you didn’t have insurance. Without that payout, your loved ones would find themselves buried in a mountain of debt and with no income to pay any of it.

The payout can help solve many problems and offer peace of mind when it matters most.

Limitations of Term Life Insurance for Living Policyholders

If you’re still alive and thinking, “Can this term policy help me out right now?”, the answer is no. You can’t pull money you have paid into it, there’s no “loan” feature, and no saving components.

This is different from permanent insurance, where policies build cash value over time. This cash value can be used to secure loans or cashed out to pay for emergency expenses or cover debt.

Permanent life insurance is a lifetime policy, with no expiry date, and as such, it is more expensive. It offers a guaranteed payout and investment features that make it a must-have policy for high-net-worth individuals.

Can I Convert My Term Life Insurance to Permanent Life Insurance?

Certain term life insurance policies do offer a conversion option. This means that you can switch your term policy to a permanent one, often without a medical exam, as you come to the end of your term. 

Why is this beneficial, and why should you consider it? 

If you do have this option, exercising it can provide several benefits. For one, your insurance continues on for as long as you want it to, and secondly, you get access to cash value, an investment feature that allows you to build wealth and borrow against it when needed.

Manulife, Canada Life, Sun Life, and several other renowned insurance providers offer conversion options, upgrades, and flexible conversion windows for those seeking continued coverage, often with no medical exams required. 

While permanent policies cost more, they come with long-term benefits, both living and dead. Click here to learn more about the differences between term and permanent life insurance.

Alternatives and Misconceptions

Many Canadians confuse term life with whole life, or are under the impression that they can pull money from their policy if needed. However, this isn’t true. Term life insurance has no cash value.

You may have also heard about accelerated death benefits. These let you access a portion of the payout if you’re diagnosed with a terminal illness. However, this feature isn’t common and often comes with strict conditions.

Remember, term life insurance isn’t an emergency fund or a savings account. It’s insurance, and as such, it’s meant only for when the worst happens.

Consult with Nova Scotia’s most Trusted Insurance Broker!

Need help reviewing your term policy or talking through your conversion options? Reach out or click here to book a free, no-obligation 30-minute meeting with Pat, the owner of McIver Insurance Inc.

Unlike other insurance brokers, we don’t charge any fees or commissions for our services. We get paid by the insurance companies, so you don’t have to worry about any hidden costs or conflicts of interest.

What are you waiting for? Let’s protect what matters most, together! 

FAQs

Q1) Can I borrow against my term life insurance policy?

No, you can’t. Term life is simply insurance. There’s nothing to borrow from.

Q2) Is it worth converting my term policy to whole life just to pay off debt?

It depends. If your health is stable and your financial goals include long-term borrowing or estate planning, conversion could make sense. But keep in mind, it comes with higher premiums.

Q3) Does life insurance cover federal student loan debt?

Federal student loans are usually discharged at death. But private loans may not be — life insurance can help cover those.

Key Takeaways

• Life insurance premiums typically increase by 8 to 10 percent every year you wait to apply.
• Young adults benefit from low rates and flexible coverage terms.
• Seniors have fewer options but can still find meaningful coverage, even without a medical exam.
• Term life works best for younger people; seniors tend to lean toward permanent or whole life insurance.
• Living benefits and cash value options can serve both age groups in different ways.
• The reason for coverage often differs: young adults protect income and dependents; seniors aim for legacy and final expense planning.

Age Isn’t Just a Number When It Comes to Life Insurance

If you’re thinking about life insurance for the first time, your age has a lot to do with what’s available to you. 

The older you get, the fewer options you have and the harder it is to get the coverage you want. Harder, but not impossible.

At McIver Insurance Inc., we help families and businesses across Nova Scotia find the right life insurance policy that fits their stage in life, their budget, family needs, and long-term financial goals. 

So, whether you’re in your 20s and buying your first policy, or your 60s planning for your retirement or estate, this is what you need to know.

How Age Impacts Premium Costs

The bottom line: Life insurance gets more expensive the older you get.

According to Ted Bernstein, Director, Life Insurance Concepts Inc., premiums rise about 8% to 10% each year you wait to apply.

This is because life insurance premiums are calculated based on actuarial life tables that assess the risk of death for active policies. 

The older you get, the higher the likelihood of that day coming. Thus, higher premiums.

Let’s assume you are a healthy, non-smoking 30-year-old male. If you were to look for a $500,000 coverage life insurance policy today, you would likely pay around $30/month for a 10-year term policy and about $45/month for a 20-year term policy. 

However, let’s say you are a healthy, non-smoking 50-year-old male. This same policy would now cost you over $100 per month for a 10-year term and approximately $180 per month for a 20-year term. 

Thus, buying younger can often be highly beneficial as it means locking in lower rates for decades and potentially saving thousands in premium payments.

Best Policy Types for Seniors vs Young Adults

Younger people tend to favor term policies that align with major financial milestones, such as paying off student loans, buying a home, and raising children. 

On the other hand, seniors often require more specialized policies, such as permanent life insurance or guaranteed issue plans. This is especially true if they have health issues.

To learn more, check out our blog: What life insurance coverage is most appropriate at various life milestones?

Underwriting and Health Considerations for Seniors vs Young Adults

Young adults usually pass medical underwriting easily, as generally, the younger you are, the healthier you are. That means cheaper premiums and more choices for young adults.

Seniors, on the other hand, may have more trouble when it comes to passing medical underwriting. 

Seniors may be required to take extensive medical exams, face more questions about medications or chronic conditions, and have fewer policy options with strict health criteria to begin with.

Some Canadian insurers offer no-medical-exam or simplified-issue life insurance for older applicants. However, these options usually come with much higher premiums and lower coverage amounts. 

While they can still be practical choices for many, it is always best to consult with a licensed insurance broker to help you find the best policy for your needs.

Coverage Needs Across Life Stages: Seniors vs Young Adults

Depending on your life stage, your coverage needs may be drastically different. 

For example, if you are in your 20s or 30s, you are likely considering a life insurance policy to cover student loans or a mortgage, support young children or a partner, or replace lost income.

However, if you are in your 60s or 70s, life insurance is generally a means to: 

• Cover final expenses like funeral costs 
• Leave behind a financial gift or legacy 
• Support estate planning or charitable donations.

The goals may be different, but they are all equally valid. What’s important is to ensure your policy always matches your reasons for buying it.

Permanent Life Insurance Policy Features: Living Benefits and Cash Value

Permanent life insurance policies come with living benefits and cash value features that work while you’re still alive.

Young adults can use policies to:

• Build cash value for future borrowing or retirement support
• Tap into living benefits if diagnosed with a critical illness

Seniors can use their built-up cash value to:

• Cover long-term care needs
• Pay for home upgrades to support aging in place

Affordability and Accessibility

If you are just starting your career, budgets can be tight. Thus, young adults usually look for policies that are low-cost and easy to scale as income grows, while offering optional add-ons or riders like critical illness or disability riders for added short-term financial protection.

For seniors, costs are usually higher, and accessibility can be limited. 

Seniors will generally need to accept higher premiums for smaller coverage amounts to benefit from policies that guarantee acceptance.

Digital Trends and Buying Behaviour

The rise and popularity of no-medical-exam options and digital life insurance platforms have made securing life insurance a lot easier for both groups.

Online tools have changed how Canadians buy insurance.

Younger Canadians usually compare quotes using online calculators or trust financial influencers and social media gurus for advice.

Even seniors are turning to online application tools, as these usually come with fewer forms and faster processing times. 

However, while digitization has made getting life insurance easier, it is always in your best interest to speak to a broker who can explain things clearly and answer questions fast.

They can guide you on how to tackle specific concerns and can broker policies that offer better coverage and lower premiums than what you would be able to find on your own.

Long-Term Value and Financial Strategy

Young adults see life insurance as part of a bigger financial picture. They see it as a tool for wealth building, retirement security, and income protection for their loved ones.

Seniors see life insurance as a means of protecting what they have already built. Life insurance can be a useful tool for passing down assets or clearing debts, succession planning, and as a means for covering health-care or other long-term costs.

Comparison Chart: Seniors vs. Young Adults

Conclusion: Life Insurance Looks Different at Every Age

Whether you’re starting your first job in your 20s or reviewing your estate plan in your 70s, life insurance plays an important role in your financial journey. 

At McIver Insurance Inc., we believe in making insurance simple, personal, and local. We help Nova Scotians of all ages find coverage that makes sense and feels good. No pressure. Just smart, personal advice. Let’s help you protect what matters most.

Call Pat McIver now at 1-902-220-3279 or schedule a no-obligation 30-minute meeting by clicking here.

FAQs

Q1) What happens if I buy life insurance and my health changes later?

If your policy is active, your rate and coverage usually stay the same, even if your health changes.

Q2) Can seniors still get life insurance if they’re in poor health?

Yes. Guaranteed issue and no-medical-exam policies are designed for this exact situation, though they come with limitations.

Q3) Should I buy life insurance if I don’t have kids?

Yes. Even without dependents, you might want to cover debts, final expenses, or leave a gift to someone or a cause you care about.

Q4) How do I know how much coverage to buy?

A good rule is to add up your debts, final expenses, and income replacement needs, then subtract your current assets. We can help you fine-tune the numbers.

Life insurance isn’t always the easiest thing to talk about, but it’s one of the most powerful ways to protect the people you love. 

Whether you’re a new parent, caring for aging parents, or starting to build a future with your partner, choosing the right life insurance plan can bring real peace of mind.

Let’s explore what life insurance means, how to pick the right type for your life stage, and the questions you should ask yourself to make smart, confident decisions for your family.

Key Takeaways

• Life insurance needs analysis determines how much coverage your family requires.
• Term life insurance is affordable and ideal for short- to medium-term needs.
• Whole life insurance builds cash value and offers lifetime coverage.
• Coverage estimate depends on your age, debt level, dependents, and future goals.
• Many policy options are available, tailored to unique family needs.
• Learn about policy riders, policy types, and coverage estimate methods like Income Multiplication, DIME Formula, and Human Life Value Approach. 
• Always consult with a licensed and trusted insurance advisor.

What Is Life Insurance and Why Does It Matter?

Life insurance is a legally binding contract with an insurance company whereby the insurer pays designated beneficiaries a tax-free amount or death benefit should the insured pass away while their policy is still active.

Having a life insurance plan in place ensures your loved ones can keep going financially even if you’re no longer there to provide.

The death benefit can help dependents pay off mortgages and outstanding debts, cover childcare, education, or elder care costs, protect retirement plans or business income, and help leave a legacy for future generations.

Know Your Family’s Needs, First!

Questions to Ask Before Buying Life Insurance

Before diving into the specifics, first ask yourself, do you need life insurance at all? 

If you don’t have dependents and don’t plan on starting a family soon, life insurance might just add up to an unwanted expense.

Before diving into policy types, take a good look at what your family would need if you weren’t around.

Ask yourself:

• Do I want to protect income, cover debts, or leave an inheritance?
• What does my monthly budget look like? Can I afford the premiums without it being a financial burden?
• How long would I need this coverage?
• What riders should I consider adding based on my profession and lifestyle?
• Do I want to have the flexibility to change my plan later?
• Who are my beneficiaries?
• Do I want life insurance to be temporary or permanent?

Jotting down the answers will provide the insight you need and help shape both the type of insurance and the coverage amount your family needs.

Term vs. Whole Life Insurance

Here’s a breakdown of the two most common types:

When to Choose Term Life Insurance

Term life is perfect if you’re raising young kids, paying off a mortgage or student loans, or you want the security of affordable protection during high-expense years.

For example, a 35-year-old in Halifax with two small kids might choose a 20-year term to cover the cost of their children’s upbringing should something happen to the policyholder. 

Costs like child care, the family home, and income replacement will all have to be accounted for when determining coverage amount, and you will likely want a policy that is affordable and flexible.

When Whole Life Might Make Sense

A whole life insurance policy can be a better option if you want lifelong coverage, want to leave a guaranteed inheritance, or if you’re building a financial safety net beyond insurance.

These policies can also be used for estate planning or if you have a dependent with lifelong special needs.

In Canada, whole life policies are often paired with investment features, such as cash savings, that grow tax-deferred. You can learn more about this by clicking here.

Other Options to Consider

In Canada, you have other life insurance options as well, such as Universal Life Insurance, which combines the flexibility of term insurance with long-term protection, and Joint Life Insurance, which covers two people, usually spouses, under one policy. 

However, while choosing the right type of policy is one thing, making sure it is customized to your family’s needs is another ball game altogether. 

Most life insurance policies come with plenty of add-ons or additional riders that can be added for increased protection for your loved ones.

These riders include critical illness, guaranteed insurability, accidental death, long-term care, waiver of premium, and more. 

These riders are explained in detail in the following article: Types of Life Insurance Riders to Be Aware of in Canada.

You can also always pick up the phone and call Pat at 1-902-220-3279 for more information.

How Much Coverage Is Enough?

When it comes to life insurance, there’s no one-size-fits-all magic coverage amount. 

How much coverage is enough all depends on your current and future financial outlook.

However, a common starting point is to simply multiply your gross annual income by 7 to 10 times. 

For example, if you earn CAD 50,000 annually, you will ideally want a policy that pays out anywhere from $350,000 to $500,000. 

You can also use the DIME formula to calculate coverage. 

Coverage Amount = Total Debt + (Income x no. of supporting years) + Mortgage + Education

Simply add any outstanding debt, the income your dependents would need to replace for the number of years they would require support, the remaining balance of your mortgage, and the estimated cost of your child’s college or university education.

You can also use free online insurance coverage calculators to give you a quick ballpark estimate of how much you need.

No matter what method you use, it is always best to speak to a trusted insurance advisor, as they can give you a much clearer picture of what coverage your family truly needs.

Coverage amounts can also vary depending on life stages. Here is a table that breaks it all down:

Tips for Choosing the Right Life Insurance Based on Your Family’s Needs

• Compare quotes from different insurers
• Speak to at least a couple of insurance advisors or brokers
• Read the fine print, especially for exclusions or waiting periods
• Ask if your workplace offers group life coverage as a starting point
• Review your policy every few years or after big life changes (marriage, kids, etc.)
  

FAQs

Q1) Can I get life insurance if I have a pre-existing condition?

Yes, but options may be limited. Simplified or guaranteed issue plans can help. Consult with a licensed insurance advisor.

Q2) Do stay-at-home parents need life insurance?

Absolutely. The cost of childcare, meal prep, and household management can add up quickly. A death benefit can help cover those added expenses. 

Q3) Does life insurance pay out immediately after death?

Usually yes, but the claim must be submitted with all required documents. Most insurers pay within 30 days of approval.

Q4) What happens if I miss a payment?

Some policies have a grace period. If payment isn’t made in time, the policy could lapse.

The Right Life Insurance Plan for Your Family

The right insurance plan should reflect who you are, what you value, and how you want to support your loved ones if the unthinkable happens.

If you’re just starting or need help reassessing your coverage, book a FREE no-obligation 30-minute meeting with Pat McIver, BRM, CEBS, today! 

Pat specializes in employee benefits, life insurance, and health insurance and has 10+ years of experience in the life insurance industry. 

Born and raised in Nova Scotia, he knows the ins and outs of the Canadian health care system and understands first-hand the need for life insurance for growing Nova Scotian families and businesses.

Unlike permanent life insurance, term life insurance only lasts for a pre-set period, usually 10, 20 or 30 years.

If you die within that period, your beneficiaries receive a death benefit. 

However, if you outlive your term life insurance policy, the policy expires, and you receive nothing. That is, unless you had opted for specific riders, such as a return of premium rider or a conversion rider.

Let’s explore these insurance riders and more to help you decide your best course of action.

Understanding Term Life Insurance

Nearly 90%, or over 22 million Canadians, have some type of life insurance policy, with term life insurance being the most popular type in Canada.

This is because term life insurance is affordable, straightforward, and tailored to financially protect your beneficiaries during the years of your life when financial protection matters most.

Term life insurance is ideal for young families with kids, mortgages, or other big expenses, who need insurance only for a limited time (usually until they are close to retiring or their kids have grown up).

But what happens if your term life insurance policy expires or is close to expiring? What options do you have if you require further coverage? And are there ways to still get money back even if you outlive your term?

What Happens if You Reach the End of Your Term Life Insurance?

When your term life insurance reaches the end of its 10, 20, or 30-year term, the policy automatically expires unless you take steps to renew or convert it (which should be done at least a year before expiration). 

To find the exact end date of your life insurance term, contact your insurance provider or look at your policy documentation. 

Your coverage will end on the specified date, at which point you and your loved ones will no longer be protected under that policy.

Insurers will usually send a notice a year before your term is set to end, offering options like:

• Renewing the policy annually (often at a much higher rate)
• Converting to a permanent life policy (if your original policy included a conversion rider)

If no action is taken, the policy simply ends, and that’s it. No payout is received, and you don’t need to do anything from your end.

However, if you feel you still require coverage because of lingering debts or dependents who rely on your income, you can explore the following options:

1. Extend Coverage Annually

Many term life insurance policies offer a guaranteed renewability provision that allows you to automatically extend your coverage annually for as long as you want on adjusted premium rates. 

Premiums increase year over year as you age, which can become expensive. However, as you already have an existing policy, you won’t need to submit a medical exam or any further documentation for continued coverage for as long as you need it.

You could also shop around for a new policy, especially if you are in good health. You never know, you could always find a policy with better terms than those offered by your current provider.

2. Convert to a Permanent Life Insurance Policy

If you opted for a conversion rider at the start of your term life insurance policy, you would be eligible to convert your current term life insurance to a permanent or whole life insurance policy without the need for a medical exam.

Permanent life insurance offers lifetime coverage with no expiry date. However, this coverage has higher premiums compared to term life insurance, as payouts are guaranteed. 

Top Tip:
To get around the premium hike, you can ask to lower the coverage amount or the death benefit of your new permanent life insurance policy. This way, your premiums remain about the same, and your beneficiaries are guaranteed a payout (be it a smaller amount).

Permanent life insurance policies offer additional benefits as well, including a cash value component, which acts as tax-deferred savings which can come in handy during retirement, used as collateral for loans, or withdrawn to pay for emergencies should they arise. 

This type of policy can also play an instrumental role in wealth transfer and estate planning. The payout can help cover estate taxes, leave a legacy for your children, or fund a trust or charitable organization.

3. Opt for a Return of Premium Rider

Insurance providers usually offer a range of riders that can be added to your policy. Some of the most common and popular riders include:

• Accidental death benefit: This rider allows your beneficiaries to get an additional payout on top of the existing death benefit were you to die in an accident. 
• Waiver of premium rider: If you were to become disabled, this rider allows you to stop paying your premiums while keeping your policy active.
• Return of premium rider: If you outlive your term, this rider allows you to get back all the premiums you paid tax-free.
• Critical illness rider: This rider allows for a lump sum payout should you be diagnosed with a serious or chronic illness.
• Conversion rider: Lets you convert from a term life insurance to a permanent life insurance policy later on without the need for a medical exam.
• Child term rider: Lets you add life insurance for your current and future children. 
• Guaranteed insurability rider: Allows you to increase your coverage amount at a future date without the need for health checks or medical exams.

The inclusion of riders or optional features can provide added protection for those with specific needs. 

The return of premium rider, for example, allows you to get 50%-100% of the premiums you paid, if you’re still alive when the policy ends. This “refund” is also tax-free. While the total amount will be far lower than the death benefit, at least all of those premium payments you made won’t seem like a waste.

A return of premium rider can only be added to a term life insurance policy when you first purchase it. This is why it pays to consult with a trusted and reputable insurance broker before making a buying decision or before your policy ends.

Halifax’s Most Trusted Insurance Broker Near Me

Everyone’s financial needs are unique. Thus, making sure you get the right policy for you, with the right coverage, and at the right price, requires the help of professionals.

At McIver Insurance Inc., we specialize in group benefits, life insurance, and health insurance for Nova Scotian families and businesses. We have a 5-star Google Rating and incredible testimonials from clients we have served in the past.

Call Pat Now at 1-902-220-3279 or click here to book a free, no-obligation meeting with Pat McIver, BRM, CEBS.

FAQs

Q1) What are the benefits of converting term life to permanent insurance?

Benefits include lifetime coverage, a tax-free savings component, and smoother wealth transfer and estate planning.

Q2) How do I calculate the cost-effectiveness of renewing term life insurance?

Compare the renewal cost of your current policy to the cost and value of other available options, like buying a new term policy or switching to permanent life insurance.

Q3) Can I buy a new term life insurance policy after my current one expires?

Yes, you can. As long as you meet age and health requirements and are comfortable taking a medical exam, you can apply for a new term life insurance policy once your current one expires.

Q4) What should I consider when my term life insurance is nearing its end?

This is the perfect time for you to reassess your financial needs and ask yourself whether you still need insurance or not. If you do, then you should consider options like renewing your current policy, buying a new policy, converting your term policy to a permanent one (if applicable), or talking to a licensed and trusted insurance advisor.

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.