By Farhana Uddin and the Sun Life team
Is it ever too early or too late to buy life insurance? See how it can benefit you at different stages of your life.
With life insurance tailored to your needs, you have peace of mind. How? ‘Or’ What? Knowing that those you love will have financial support after your death.
Of course, you don’t know when or how you will die. But you can prepare yourself and, at the same time, protect the people you care about.
- Do you need life insurance at age 20?
You’re young and healthy, but you probably already have some primary financial responsibilities. Here’s what Paula MacMillan, SunLife Financial Advisor, has to say: “You may have student loans or a credit card to pay, or a wedding planner. In any case, it is useful to have some protection in the event of death. » - What if you die with debts?
If your parents signed with you for your credit cards or loans, they would have to pay them back. And if you were to pay rent or a mortgage as a couple, your spouse will have to pay everything with his salary alone.
With life insurance, your family will have a death benefit* that they can use to pay for expenses you were paying.
(* The amount paid to your loved ones upon your death.)
“In general, people do not think about life insurance until they are in their thirties,” says Ms MacMillan. Still, if someone depends on you, it would be better to think about it sooner. You wouldn’t want to leave that person in bad financial shape later. »
- What type of life insurance can you consider in your twenties?
It’s never too early to protect your family with life insurance. But there’s another good reason to think about it in your twenties: it costs less.
Your premium — the monthly or annual cost of your life insurance — is based on:
your age;
the gender you were assigned at birth;
your lifestyle;
your medical history;
your current state of health.
“If you are healthy in your twenties, you fall into the low-risk category. So you pay a lower premium,” says MacMillan.
The two most common types of life insurance are:
term life insurance and
permanent life insurance.
Ms MacMillan advises young people in their twenties to start their careers to first opt for term life insurance. As the name suggests, this insurance provides temporary coverage. In addition, it can be renewed every 10, 15, 20 or even 30 years, depending on the contract.
“Term life insurance is much more affordable [than permanent life insurance] for young people just starting,” she says. You will be able to get good coverage at a low cost. »
You could also get a trim, reasonably priced permanent life insurance to supplement your term insurance. Here, your young age matters.
Permanent coverage costs you more. However, the younger you are, the lower the premium. Permanent life insurance protects you more than just term insurance (more on that later). Owning some in your twenties is a great way to establish a solid financial foundation for your future.
- What kind of life insurance should you consider in your 30s?
Your financial situation will undoubtedly change as you age. In your 30s, you may have:
dependent children;
a mortgage payable;
other costs to be covered.
“My advice remains pretty much the same, though,” says MacMillan. It would help if you bought as much life insurance as you could. »
However, consider changing your contract if you already have term life insurance. “Most contracts allow you to convert your term life insurance into permanent life insurance,” she explains. It costs more, but permanent insurance provides long-lasting financial protection in the event of death. »
It’s also more profitable in the long run. “The cost of permanent life insurance is usually fixed. By contrast, the premium for term life insurance increases—sometimes dramatically—with each renewal,” MacMillan adds. When buying permanent life insurance, the younger you are, the lower the premium.
Permanent life insurance is more expensive than term insurance initially. However, the premium does not generally increase over time. So it ends up costing you less — after a few term life insurance renewals.
Term or permanent life insurance? What you need to know to choose well
- Is your work life insurance sufficient?
Much 30-somethings work in jobs that provide benefits, including life insurance. “I incur
