What Kind of Life Insurance Should You Get?
You want to get life insurance to help your family, but you’re not sure whether to get term insurance or permanent life insurance.
Here’s what could help you decide: Term life insurance is cheaper and lasts for a set number of years. Permanent life insurance is more expensive and does not expire.
How do you choose? You may need to base your decision on how long you want coverage to last and how much you can afford to pay for life insurance.
Western Financial Group, a 100% Canadian company, can help you navigate life insurance, car, home, and business insurance in Saskatchewan during this period of economic uncertainty.
What is term life insurance?
Term life insurance is designed for flexibility. A term insurance policy expires after a pre-determined number of years, usually 10, 15, 20 or 30.
You will choose the length of your policy and you’ll also select the amount of your death benefit, which is the tax-free amount your beneficiary, or beneficiaries, will receive when you pass away.
Why is term life insurance more affordable?
Term insurance lasts for a set period of time and that makes it more affordable than permanent life insurance.
If you’re choosing term insurance, you want to make sure your debts are covered to avoid leaving behind major expenses for your loved ones.
Do you need a medical exam for term life insurance?
Not always. Medical exams can be common for term life insurance, but many insurers offer policies with no medical exams, especially for lower coverage amounts and healthy applicants.
Your age, health, and amount of coverage can influence whether a medical exam is needed for term life insurance.
What’s the shortest term life insurance?
The shortest term life insurance policies are usually between one to five years. You may decide to get a policy like this for peace of mind if you are starting a business, going back to school, or between jobs.
Reasons for getting term life insurance
- Term life insurance is for a set period of years. It’s affordable coverage that protects your loved ones when it matters most.
- Term life insurance can be appropriate when starting a family, buying a home, or starting a business.
- It can cover your funeral expenses.
- When your term insurance ends, in most cases, your coverage can renew automatically. Or you may be able to convert it permanent insurance, depending on your insurer.
- Monthly premiums are more affordable than permanent life insurance, but typically go up each time your term insurance policy renews.
- Once the term ends, the coverage also ends. Your beneficiaries don't receive any payout.
- Term life doesn't build any cash value, which means it doesn't include a savings account to borrow from, withdraw against, or grow.
- As you age and your life changes, term insurance may no longer be suitable for your situation.
- Once you reach 60 or older it usually becomes more difficult to buy term insurance and you may be limited to buying a 10, 15 or 20-year term policy.
- Term insurance does not help you provide for income or the capital needs of your family while you are living.
- Term insurance premiums typically increase when you renew term life insurance.
Reasons not to consider term life insurance
What is permanent life insurance?
Permanent life insurance covers you for your entire life. In most cases, your premiums are guaranteed to stay the same during your life and don’t go up.
You don’t need to renew your permanent life insurance because it doesn’t expire. Your coverage is lifelong.
It offers a tax-free death benefit along with a savings account. If you choose permanent life insurance, you are agreeing to pay a certain amount in premiums on a regular basis for a specific death benefit.
Why you should consider permanent life insurance
- Permanent life insurance, which includes whole life and universal life, is designed for lifelong financial protection as long as the policy is in force.
- You don’t need to renew your policy.
- With most permanent insurance, there is a savings component known as cash value. The longer you pay into your policy, the more its cash value grows.
- You can choose to cash in or borrow against your permanent life policy and use the funds as needed.
- In most cases, your permanent life insurance premiums are guaranteed to stay the same throughout your life.
- Permanent life insurance policies can pay out dividends.
- You don’t always have to get a medical exam
Why you shouldn’t consider permanent life insurance
- Permanent life insurance premiums are higher in cost and may be difficult to maintain over the years.
- The cash value can have a low rate of return.
- The cash value is separate from the death benefit of a permanent life insurance policy and when you pass away, your beneficiaries will typically not receive any of the cash value and only receive the death benefit.
- Permanent insurance is inappropriate for short-term expenses, such as funeral expenses or mortgage debt.
- You'll earn interest on the cash value of your permanent life insurance policy, but this amount will usually be lower than what you'd get if you invested your money in other ways.
- If you don't expect to have dependents like children or ageing parents, or you don’t expect to have debt such as your mortgage into the future, you may not need to get permanent insurance.
Plan how life insurance can meet your family’s needs
Life insurance is about protecting your family for the future. As your circumstances change over the years, it’s a good idea to reassess how your life insurance can protect your family.
Your Western Financial Group life insurance expert can speak to you about how life insurance can help protect your family over the years.
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