Debunking the Myths and Misconceptions surrounding life insurance
By Gabby Ortega · 26 August 2023
Confronting seven myths of Canadian life insurance
Life insurance can be an excellent financial tool for Canadians, like yourself, looking to secure their financial future in case of a life-altering event. The right insurance policy can help you feel confident that your family’s well-being is protected, but still many people feel confused by the concept of life insurance. As a result, these sentiments gave rise to several myths surrounding life insurance that need to be addressed.
Myth 1: Life insurance is unnecessary with employee benefits
Using the insurance provided by your employer gives you many advantages but supplementing them with additional policies will meet the rest of your needs, giving you peace of mind. While most employers provide insurance worth your annual salary, you may have to consider applying for additional individual life insurance, especially if you have dependants that rely on your insurance policy.
If you lose your job or switch employers, you’ll have to think about the effect it has on your insurance and health benefits. Fortunately, most insurance providers make the transition from employee benefits to personal insurance policies straightforward. For you and your family’s best interests, do consider supplementary life insurance so that you and your family are covered in case of any changes in employment.
Myth 2: Life insurance is too expensive
Each Canadian may be paying a different amount depending on their age and individual healthiness. Even if the amount that you’re paying for insurance may be different from another’s, insurance providers ensure that your payments are affordable. This is particularly true for those who start life insurance younger, but those with a relatively lower life expectancy due to age or health will likely pay more than a younger and healthier individual.
For those who have more demanding health, the cost of insurance premiums will likely be higher than that of a healthy individual. Factors involved in determining a person’s health include body mass index (BMI), any prescribed medications you may be taking for a preexisting medical condition and lifestyle choices like smoking, drinking and recreational drug use. Each person has their own specific health situation, but regardless of your age or wellbeing, you’ll find an insurance provider who will find a reasonable price for you. Once you start paying for your insurance, that cost will not change, even if your health does.
Myth 3: Life Insurance is just for breadwinners
Regardless of your income or employment status, you will find a life insurance policy that is suited for you. Not all major contributions to the household can be measured using monetary value; stay at home parents provide childcare, a clean house, and good home-cooked food. They have a special skillset that would be difficult to replace if a life-altering event were to occur, which is why you and your family would benefit from applying for life insurance just as the main income earner would.
Myth 4: Life insurance is only meant for older individuals
You don’t have to wait until you’ve passed your 30s to benefit from a life insurance policy. Young adults in Canada may experience a lot of significant life changes like getting married, buying a house, or having children. Amidst all this change, having a financial safety net in case of an emergency can be reassuring.
Even if you are single or have no dependents, you can have peace of mind knowing that your assets and other family members have coverage in case of sudden events. Not only that, but insurance policies can also provide protection for student loans or startup business loans. If you’re on the younger demographic of Canadians, purchasing life insurance can be just as significant than you might believe.
Myth 5: Life insurance is unnecessary with grown children
Whether your children have grown up or you never had any to begin with, having life insurance can still benefit you. If you’re married, your spouse could use the financial support from your life insurance to fund funeral and final expenses or reimburse outstanding credit charges. For those who are not married, the money from your insurance policies can be used to make a charitable contribution which has both charitable and philanthropic benefits to it.
Myth 6: Life insurance policies are all the same
Despite how similar types of insurance seem on the surface, insurance providers offer a variety of policies to accommodate Canadians of different situations and backgrounds. There’s Term Life insurance also known as Term Life which is a temporary type of life insurance which provides coverage for a specific period. The other kinds are Universal Life and Whole Life which are permanent types of life insurance which may last until any age as long as the policy owner lives.
Term Life insurance — Among the two types of insurance policies, Term Life usually is what people think of first when someone mentions life insurance. One of the key characteristics of Term Life insurance is its flexibility. You can choose from 10-year to 30-year coverage, allowing you to transition into permanent life insurance smoothly.
Permanent Life insurance — in contrast with Term Life insurance, permanent life insurance is a more comprehensive option. It provides you with lifelong coverage to protect your loved ones, you also have the freedom to choose from a list of different options and pick the policy that aligns best with your current circumstances.
Whole Life insurance
Universal Life insurance
Participating Whole Life insurance
Myth 7: Life insurance is just for the funeral
The purpose of life insurance policies goes beyond supporting memorial costs. They not only exist to support relatives after the passing of a loved one, but they can also be used for investments and making charitable donations to a noble cause. By investing in your life insurance earlier, you’ll have more money for your family to feel financially secure while giving back to the community, if that’s what you prefer. Putting a limit on what life insurance can do is contradictory to its nature because its entire purpose is to continue contributing towards what was important to you.
Conclusion: the truth about life insurance
Ultimately, life insurance is an important financial tool; you can treat it like an investment in your family’s wellbeing and future. No matter what age you are, there’s an insurance policy that’s for you. It’s a much more important concept than many Canadians give it credit for. So then, do the research and review all the policy types so that you and your loved ones can feel assured no matter what happens in life.
You can also consider collaborating with AmurLife, who will be happy to help you navigate the mysteries of life insurance. Contacting AmurLife will connect you with an expert insurance broker who will understand your situation and walk you through the variety of insurance options. It’s never too late to start investing in your life insurance. With insurance from AmurLife, you’ll find the insurance policy that breaks your misconceptions and fits your needs.
What topics are covered in our FAQs ?
Frequently asked questions
Is it good to have life insurance in Canada?
Life insurance provides a financial safety net for your family in case of a premature death. The providers can offer Canadians like yourself with a wide array of policies, some of which even have cash values assigned to them. Moreover, if you have dependents in the form of children and immediate family members that rely on you for financial support, a life insurance policy could be very useful. It can also bring you peace of mind knowing that the financial future of you and your family are protected.
What are some reasons as to why people don't have life insurance?
Procrastination, confusion, and lack of interest all contribute to the reasons people don’t have life insurance. However, life insurance is a significant financial tool that can profit everyone.
What is the best age to take out life insurance?
Experts recommend that the best age to take out life insurance would be before you reach your mid-30s. As your health starts to become more demanding, your insurance premiums will also be on the rise. The earlier you take out a policy, the more affordable your payments will be. Additionally, one of the main attributes of insurance premiums is that they do not change, regardless of your health or financial circumstance. If you purchase insurance sooner, the monthly premiums would be comparatively more affordable than getting them later.
Is it better to rely on my savings or to have life insurance?
How you would like to manage your finances is completely up to you, but you may profit more from choosing life insurance. Regardless of your life circumstances, you should always be saving money, but life insurance may be more useful in life-altering situations. With life insurance, you can find affordable coverage and more earnings from interest.