Protecting Your Wealth With the Right Life Coverage Policy

Posted on 18. Mar, 2013 by in Wealth Essentials

Protecting your wealth

This is a guest post

A common question that individuals ask when buying life insurance involves how much insurance they need. Life insurance provides your loved ones with financial benefits in the event of your death, and some policies can be used as a financial investment, to fund an inheritance for the kids and for various other purposes.

For individuals in Canada, researching and comparing Canadian life coverage online is a great alternative to making a bunch of phone calls. Once you figure out the level of coverage you’ll need, getting comparisons is simple.

Because of how important insurance is, it is understandable that you would not want to buy too much or too little. However, the answer to how much insurance you need is not clear-cut. In fact, coverage needs can vary by your age or stage of life:

For Younger Adults

Many younger adults are still single or may have only recently gotten married. Some may have started a family, but many others may be waiting a few years before thinking about having kids. If you are single and without kids, you may simply want to purchase a small policy that will pay off your debts in the event of your death.

If you are married, have kids or both, you should consider how your loss of income would affect their lifestyle and plans for the future. Because life insurance is so affordable in your younger years, you may also consider thinking ahead and locking in a lower rate on a policy that can remain in place for the next few decades. If you are thinking long-term, you may consider purchasing an affordable whole life policy that can remain in place throughout your life and that can provide a decent inheritance to your children or grandchildren decades from now.

For Middle-Aged Adults

Many middle-aged adults have greater needs for life insurance than they did in their younger years. For example, many will have kids who are financially dependent on them, and the family may have accrued additional debts that may need to be paid off in the event of a death.

In addition, if one spouse dies, the surviving spouse may need financial assistance so that plans for retirement are not derailed. For those who purchased a long-term life insurance policy in their younger adult years, a supplemental policy may be needed to provide additional benefits.

For Older Adults

Older adults may have decreased needs for life insurance, but many will benefit from at least some coverage. In many cases, retirement funds will be mostly or fully funded, debts from their younger years may be mostly or entirely paid off and the kids may now be financially independent.

However, life insurance can continue to provide added peace of mind by ensuring that loved ones are financially secure after your death. Policies purchased now may also be used to fund an inheritance. It should be noted, however, that life insurance policies can be costly for older adults. If you have health issues, you may not be approved for a policy. As a result, it is best to plan ahead and purchase a policy while you are still relatively young and healthy.

It can be challenging to determine how much coverage you need to buy. Many factors, such as your family’s financial needs, your debt balances and your income level, fluctuate from year to year. Furthermore, with life insurance rates increasing as you age, it makes sense to plan ahead and purchase a policy sooner rather than later. While you should keep these factors in mind as you shop for a policy, you may want to consider obtaining customized advice specific for your needs from a life insurance agent.

Image by Rajesh_India

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4 Responses to “Protecting Your Wealth With the Right Life Coverage Policy”

  1. krantcents

    19. Mar, 2013

    As an older (66 y.o.) adult, I use life insurance as income replacement. I have lower needs as I am older, but I have not retired yet.

    Reply to this comment
    • Money Cactus

      19. Mar, 2013

      It is definitely something to keep in mind through different life stages isn’t it? I’ve got a young family and we rely on my income, so having sufficient income protection is pretty important for our peace of mind right now.

      Reply to this comment
  2. I must confess that I always just rely on whatever life insurance is provided by my employer. Because I don’t have kids, I never really considered it that important to get life insurance. I don’t want to make my hubby rich if I die, but I should think about making sure he has enough to cover funeral expenses. Food for thought for sure. Good post.

    Reply to this comment
    • Money Cactus

      21. Mar, 2013

      I knew a guy who used to say that he didn’t have life insurance because he didn’t want to make life easier for the guy his wife marries if he died… fair enough I guess, but I agree with you that it is good to ensure all the expenses have been covered at the very least.

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