Do Younger Canadians Need Insurance?
June 14, 2023
How early in life should you consider buying insurance? The answer depends on your unique situation. However, there are compelling reasons to consider purchasing insurance early in life. Whether you're starting a family, buying a home, or simply seeking to secure your financial future, insurance offers peace of mind. By acquiring coverage, at any age, you can ensure that you and your family are protected against unexpected events. Let’s review some of the factors that might affect your decision.
When you apply for insurance, the insurer will evaluate your health and lifestyle to determine if you are healthy enough to be eligible for coverage. This eligibility is referred to as insurability. One of the benefits of buying insurance early in life is that, once the insurance carrier approves your application and you pay the initial premium, the terms of your contract cannot be changed by anyone other than you. This means that you lock in your insurability for that term. Additionally, acquiring insurance at a young age increases the likelihood that you will be eligible for coverage at more favourable standard rates.
Acquiring life insurance to cover your mortgage is a smart choice to ensure that your family can keep your home, and have some financial stability, if something happens to you. With this type of insurance, if you pass away, your beneficiary will receive a lump sum of money that can be used to pay off the remaining balance on your mortgage. This means that your family won't have to worry about losing their home or struggle to make mortgage payments during an already difficult time. You may also want to consider acquiring insurance for this purpose independent of your mortgage lender. Check out this video on Mortgage Protection to learn about the benefits of this arrangement.
Income and Earning
Your earning power is perhaps your greatest asset. What would you do if you couldn’t rely on your income to cover a mortgage, rent, car payments, daycare, groceries, etc.? Having life insurance, critical illness coverage or disability insurance in place can offset a potential loss of income when you, and perhaps your family, are going through a challenging period. Even if you have coverage through your employer, it may fall short of your needs. Take a few minutes to assess the importance of your earning power, and why you should protect it, with this interactive tool Insuring Your Greatest Asset.
A recent poll suggests that 25% of Canadians aged 30+ are caring for aging loved ones (1). Having insurance in place to ensure your aging parents receive the care they need, if you were absent, may be important to you. Without proper provisions in place their care may fall solely on government programs.
At a young age you may have accumulated some debt. You may even have had a parent or family member co-sign for a loan or mortgage. If you pass prematurely, they would be responsible for your outstanding payments. Life insurance can guarantee that your loved ones will not carry the unexpected burden of additional payments or debt.
The average cost of a funeral in Canada varies by province, and can be quite substantial, sometimes reaching as high as $20,000 (2). By investing in life insurance, you can ensure the financial responsibility of your funeral does not fall to your loved ones. This alleviates a potential burden on those closest to you during an already trying time.
When it comes to insurance, the biggest misconception of all is about cost. A 2021 study found that more than half of consumers overestimated the cost of life insurance by 300% or more (3). Fortunately, life insurance is relatively inexpensive for a healthy young Canadian. For example, a 28-year-old Female non-smoker could pay as low as $20 a month for $1,000,000 in coverage with a Term 10 policy (4).
Everyone benefits from making wise financial decisions early in life and, as your life circumstances change, insurance can provide you and your family with peace of mind and financial security as a safeguard against the harsh circumstances that accompany unforeseen events. We invite you to contact our office to discuss a diverse range of insurance options available to you.
1. Angus Reid Institute. Caregiving in Canada: As population ages, one-in-four Canadians over 30 are looking after loved ones. Angus Reid Institute. April 12, 2019.
2. Specialty Life Insurance. How Much Does the Average Funeral Cost in Canada? 2022. Speciality Life Insurance. July 15, 2022.
3. Currey, Tom and Rack, William A. Jr. 5 Things That Cot the Same (or More) as Life Insurance. Life Happens and LIMRA. August 26, 2021.
4. Compulife Quotation System June 12, 2023.