Advice from Our Advisors: Decoding the Myths about Life Insurance

While Licensed Life Insurance Advisor Shubhra Swaroop acknowledges that employer life insurance is a nice perk, she also noted some issues.

• First, you’re usually only covered up to one or two times your annual income. Yet it’s recommended to buy seven to 10 times your annual salary to cover things like mortgages, loans, estate taxes, education and provide for dependents.
• Second, in most cases you don’t own the insurance, your company does. A private insurance plan gives you more control and stability over your coverage.
• Finally, you are only covered on your work plan while you remain with that employer. That leaves you uncovered between jobs or if your new employer doesn’t offer group life insurance.

Licensed Life Insurance Advisor Shawna Burke had some words of wisdom on this. Actually, she had some questions: Do you have a mortgage or outstanding debts? Are they insured? Do you have dependents? If people rely on you financially, then getting insurance to cover just your final expenses may not be enough. Also, if you have significant assets you want to leave to loved ones, you may need more insurance for capital gain taxes, probate fees and other payments owing.

Both of our advisors agreed that even if you don’t have any dependents, you should consider what personal debts, medical bills, taxes and funeral expenses you might be leaving for others to pay. A good life insurance policy could help cover those costs. Shubhra also suggests that while you may not have any dependents because you are still in your 20s or 30s, this is actually the best time to get a small amount of permanent life insurance. If you’re young and healthy, you can lock in a very low rate that will never go up in the future.

We often overlook the cost of taking care of children and running the household. If something were to happen to the parent responsible for these jobs, how would you manage childcare, cleaning or cooking? You may need to pay for these now. There will also be final expenses and taxes to pay for. A life insurance policy could help cover these, plus help put a little aside for your children.

Life insurance has evolved. Today, most people can get coverage by answering a few health questions over the phone. You can even get life insurance without a medical exam if you have a history of cancer, heart disease or a stroke, or are living with diabetes or high blood pressure. Ask a Licensed Insurance Advisor to tell you about Guaranteed Issue Life Insurance plans available for Canadian residents aged 40 to 75.

Hopefully, our CAA advisors have helped debunk a few of the misconceptions you may have had about life insurance. Remember, life insurance is not one size fits all. Book an appointment with a Licensed Insurance Advisor here at CAA to learn more about what would make the most sense for you. We’re always here to help.