When To Buy Life Insurance: A Quick Guide
Published: January 09, 2020
Much like the decision you make to create a will, the timing around when to get life insurance is not exactly a science. We’d love to tell you that some arbitrary timeline – like 100 days after your twenty-fourth birthday – is the precise date you need to start shopping around for life insurance quotes. It would certainly make our jobs easier! But just as our careers, lives, and relationships are so different and unique, so too are our life insurance needs.
Before we get into specific timelines and needs, we should briefly mention how age affects the price of life insurance premiums. Simply put, life insurance premiums rise as you get older. Taking on the risk of insuring your life gets more expensive as the likelihood of medical issues and ailments rises..
Keep this in mind once you’ve made the decision to get life insurance. Putting off actual act of applying for a life insurance policy to next year – or even next month – can potentially cost you thousands of dollars over the life of the policy.
We’re not suggesting you must get coverage the moment you turn 18 or 28 – or any age for that matter. But when you’ve established there is a need for life insurance coverage in your life, act quickly to secure yourself the best rate you can as it typically only gets more expensive.
Starting a new career or changing jobs is often the introduction to life insurance for many Canadians. If you receive workplace benefits, they commonly include a group life insurance policy (typically around twice your annual salary). So why would this trigger your need for life insurance?
If you change jobs or your employer changes their benefit program, you can suddenly be without the coverage you once had. This is a time when many opt to explore their own private life insurance options to eliminate any worries or shortfalls in coverage, and afford themselves a more generous coverage, should they or their financial situation so require.
Many Canadians tie up a lot of their savings and net worth in purchasing a home – on average one-third of a Canadian family’s assets are bound to the property they own. Chances are you don’t purchase a new house with a few neatly placed stacks of Bordens.
With home ownership comes mortgages and the major source for most Canadian families’ debt; taking on such a large debt is another major trigger point for life insurance. While many lenders offer their own form of mortgage insurance for financial protection, protecting a mortgage through simple term life insurance can offer the same coverage for less money, and cover some other life events we’ll get into below.
Getting married, or even simply moving in with your partner is an exciting step in a relationship. The fun parts like renos, decorating, and building scandinavian flat-packed furniture are also accompanied by some boring parts – like shared financial responsibilities. Beyond the day-to-day hydro-bill paying and grocery runs, you may want to ensure your partner is financially-equipped to live the life you both intended, should something unfortunate happen to you.
Whether that be making sure they can afford the mortgage you entered together (see above), travelling the world, retiring early, or taking care of something else you created together (see below) - looking out for one’s partner and their finances once they are living together, signals a need for the protection that life insurance can provide.
Parental responsibility is closely related to shared domestic finances. If you’re raising a family - you are on the hook from ages zero to 18, and unofficially the age limit usually extends much further. While you are installing baby bumpers, stair guards, and drawer locks, there is another long-term protection item most parents choose to explore at this time.
Raising children and providing them financial protection, should something happen to a parent, is the most commonly cited reason people explore their life insurance options.
Whether you are raising children alone or have a partner to depend on should something happen to you, the financial implications require some planning. You may have savings that your family can dip into should the worst-case-scenario occur, but for most, life insurance is the easiest way to provide a financial cushion and the future you had always planned on providing.
Much like with your will, estate planning goes a long way with life insurance and ensuring how your insurance payout is distributed. Whether it be the situations above, or something different like caring for an older relative or donating to charity - keeping your wishes up to date as life events change your intentions is an additional important step when starting and modifying your life insurance coverage.
PolicyAdvisor.com is an Canadian online insurance broker providing a digital solution to an archaic industry. We combine technology, intuitive design, and real-world expertise to make insurance buying simpler, straightforward, and stress-free. Visit www.policyadvisor.com to access our free online insurance calculators and find out how you can save money when comparing and buying insurance online.