Times In Your Life Will Remind You That You Should Have Life Insurance

Simon Huften

Simon Huften is the President of Life Insurance Canada.com Inc.

Always.  You should always have life insurance.

That was an easy list to put together. You should always have life insurance. I am a firm believer in the idea that parents should set up insurance plans for their children, and coverage should be maintained throughout their lives. The point of life insurance is to protect the people who rely on your support from potential financial ruin in the event that something unexpected happens. This belief comes from a different space for me, though; I have been exposed to the insurance industry for much of my life. Life insurance tends to be something that people often don’t think about. The idea of life insurance requires people to have unpleasant conversations and thoughts. No one likes to think about what happens when they die, so they avoid the conversations that go along with getting life insurance. What is it that spurs people on to finally get life insurance? Here are some of the common events that we see that motivate people to get life insurance. I am going to preface all of the items on the list here with the idea that these aren’t the only times in your life when you should think about life insurance.   This just saves me from saying this in each category. If you die before you do any of the items on this list, it is still a good idea to have insurance in place. In fact, use the reading of this article as motivation to click on this link and get a quote for term life insurance from LifeInsuranceCanada.com.

In this article: 

• Getting Married or Having a Child
• The Unexpected Death of a Peer
• Borrowing Money
• Changing Jobs
• Becoming a Stay-at-Home Parent
• Conclusion

Getting Married or Having a Child

These are two events where you often see a fundamental shift in how you perceive their life. Getting married or having a child is often the first time you realize that if something happened to you, it would affect others. It is the idea that there is someone else who financially depends on you that will make you think of taking out life insurance. Before you are married or a parent, there would still be a funeral to pay for and maybe some estate bills to look after; hopefully, whatever you own is enough to generate the cash to pay for it when it is all sold. You will probably get a really nice funeral from the cash you get for selling a 2009 Toyota Camry with 350,000 km on it, right? When you have a family, that is when it really hits home; if something happens to you, someone else is impacted. The ability of your family to continue with a lifestyle that they are used to, save for the future and adjust to you being gone without financial pressure will often motivate someone to get a life insurance plan established.  

The Unexpected Death of a Peer

I get that everyone feels like passing away unexpectedly is something that happens to someone else. Ideally, you die at a ripe old age after you’ve enjoyed a full life and are surrounded by friends and family. We also all know at our core that this isn’t the way it goes for everyone. Sometimes, someone your age has something happen out of the blue, and they’re gone. Life is random, and it is indiscriminate as to who bad things happen to. How often have you seen something on social media about how someone with a young family has passed away, and now there is a GoFundMe page being started with the goal being to help pay for a funeral and support the family that was left behind? It is often this type of event that will motivate people to seek out life insurance. After you’ve seen that it can, in fact, happen to someone who is similar to you and you’ve seen the outcome, you are far more likely to want to make sure that your family doesn’t need to rely on donations from others for their financial security going forward. Just be hopeful that it isn’t something happening to you that motivates your friends to make the decision to get insurance.

Borrowing Money

This can come in a couple of forms. The big one that people think about is when they take out a mortgage, but there are others. If you buy a car, open a line of credit or take out a loan, you will often think of life insurance at that time. This may be because when you apply for these types of credit products, typically, the financial institution will offer you ‘loan protection’ life insurance at the time. While we’ve covered why we don’t recommend mortgage life insurance from the institution that lent you the money before, it doesn’t mean we don’t think that you should have insurance to cover the repayment of that debt if you were to pass away. The idea of your estate being diminished or someone close to you being required to pay for a loan that you took out before you died is often a motivating factor to someone looking to buy life insurance for the first time.

Changing Jobs

Many Canadians rely on the benefit plans provided by their employer to provide them with life insurance. Group life insurance is a great supplement to your overall financial security, but it shouldn’t be the only coverage you have. You need to remember that group life insurance is tied to your employment, so if you are relying on this coverage and you decide to leave the employer that provides you with the benefits, you need to no longer have that insurance. If you are looking to simply change employers or are striking out on your own and starting a business, this is often a time when you will find yourself without life insurance. This is easy for people to equate in their minds. The one that surprises me more often is that people rarely consider the idea that when they retire, they will also lose their benefits and the life insurance it provides. In fact, most group life insurance contracts contain a clause that at age 65, your death benefit is reduced by 50% and at age 71, it disappears. The other thing that you need to remember is that everyone dies (at least, the last time we checked, this was still true) and that as you age, the odds that it will happen to you are higher each and every year. So don’t wait until you have turned 65 and are excited about retirement to realize that you are in need of insurance; do it when you are young, and your bank account will thank you.

Becoming a Stay-at-Home Parent

Early in my career, I had the opportunity to do a needs analysis with a family where the wife was a stay-at-home parent. The husband was convinced that since she had no income to bring into the home, she wouldn’t need life insurance. Did you know that in 2019, it was estimated that if you tried to pay someone to do everything that a stay-at-home parent did, they would cost about $160,000 a year? And that was an estimate in US dollars. So you tell me, if something happened to the parent who stays home to manage a household, would you be able to fill those roles easily with your current earnings? Going back to the family I was doing the needs analysis with, the answer was clearly a no, and the mom (who was the stay-at-home parent in this case) was quite happy to have me pointing out just how valuable a stay-at-home parent was to their house. Again, here we get to a situation where if you are making a choice to become a stay-at-home parent, you should seriously consider life insurance if you don’t have it because the impact of losing your contribution to your household has potentially devastating financial consequences.  

Conclusion

Here’s the big takeaway from all of this. If I go back to the very first word I wrote here, the answer remains the same. Always is when I think that people should have life insurance. The problem is that because people don’t often think about the end of their lives, the idea of getting life insurance becomes something that gets pushed aside. We have all seen news stories about a tragic accident that led to a crowdfunding website being used to help provide for someone’s funeral or to help support their family financially during a worst-case scenario. No one knows when they are going to die. This is the reality of the situation. What we do know is that almost everyone is eligible to get some type of life insurance. While the events in this article may prompt you to seek out insurance, don’t wait until one of the events listed to get coverage. Connect with the experts at lifeinsurancecanada.com to discuss setting up your insurance plan today.