Life-stage benefits of insurance
The death of a loved one takes an enormous emotional toll. And unfortunately it may also come with significant financial consequences. That’s why any time there’s a change in your financial situation is a good time to visit or revisit your insurance needs:
- Just graduated from university/college: “A common reason to purchase life insurance is to ensure that any debt you have when you die isn’t passed on to your family,” says Mr. Minor. “At this age, you may have debt that’s shared with your parents — like if they co-signed a student or bank loan for you — that a life insurance policy can pay off should you die.” He also notes that insurance premiums are at their lowest when you’re young so payments will fit easily into your budget.
- Just married or just moved in together: At this stage, you probably share a collective income and have shared everyday expenses (like rent, food, and utilities). You may also have combined debt, such as a car loan or mortgage. “At this time, life insurance will guard against the sudden loss of one of those incomes,” he explains. “A life insurance payout could ensure the surviving spouse or partner can meet their financial obligations. That’s a real comfort, especially if you’ve bought a home — probably the biggest purchase you’ll make in your lifetime.”
- Just starting a family: Without doubt, the death of a parent is emotionally devastating; but it can be financially devastating as well. According to the Canadian Council on Social Development, in 2004, the cost of raising a child in Canada was just less than $167,000. “The loss of one income could put a strain on the family finances, and there may also be new expenses including household and child-care help,” says Mr. Minor. “The last thing you want is for your family to struggle to make ends meet or have to make drastic cutbacks, such as losing the family home.”