Life is an ever-changing process. With the passage of time, as we grow older, our needs and priorities keep on changing. This is especially true for our financial needs which keep growing with the increase in our obligations viz. addition of life partner and then kids after marriage. To ensure the protection of us and our loved ones, it is essential that we plan properly as per the needs of our family. In the absence of a suitable plan, we may end up exposing our family to a financial disaster. Below is a description of varying types of insurance suitable for each stage of life.
Young and single
If you are young and single, you don’t have any dependent such as a spouse or a child who relies upon you for his/her living expenses. So, your demise won’t affect anybody financially thereby leaving you with little/ no need for life insurance. But, if you have dependent parent(s), purchasing life insurance coverage makes sense. However, it may be wise to ‘lock in your insurability’ since you are young and healthy and have the opportunity to benefit from insurance coverage at a lower rate of premiums, which becomes tougher with changes to your health as you grow old. At this stage, disability insurance and critical illness insurance deserve more consideration. In case of a long term disability, a disability insurance coverage will enable you to pay your bills and save for retirement. You can do so either through a ‘group plan at work’ or an ‘individual disability insurance policy’. But, if due to a critical illness you have to remain without work for a certain period of time while you recover, critical illness insurance will provide you a lump sum payment. You can use this money as per your needs such as income replacement, treatment and medication not covered by the provincial health plan, and even travel out of country for medical treatment. Thus, disability insurance along with critical illness insurance, provide you total protection from any kind of emergency arising due to a disability or a critical illness.
For married people, life insurance coverage is of vital importance. In order to save your spouse from any financial crisis if you pass away, it is important that you should have at least enough coverage to pay off your mortgage and other debts, final expenses and income for a few years. Though Term Insurance would be the most affordable option, before buying insurance, you must ensure that financial needs are taken care of. These include paying off the mortgage and financial stability of your children. Planning ahead not only helps you choose the right term for your needs, but also eases your decision at renewal time. But alongside this primary priority, you should give due consideration to disability and critical illness insurance which will protect you throughout your working years.
Married with children
During this stage, you need to protect your family completely with the valuable combination of life, disability and critical illness insurance. You need to review these regularly to make sure the coverage is adequate, since at this stage, you have to ensure a larger income protection to account for education funds of your children. With an increase in income, you may review your disability insurance to make sure the monthly benefit is sufficient.
As your children become independent and the mortgage is almost fully/fully paid off, your insurance needs will decrease. At this stage, you should consider keeping a smaller amount of life insurance in place to cover income replacement and final expenses. Besides, you may consider purchasing long-term care insurance. It pays you a weekly benefit if you are unable to perform two of the six activities of daily living (bathing, transferring, feeding, toileting, dressing and continence) or suffer a cognitive impairment. It is designed to pay for care in a nursing home or for professional at-home care. These expenses can end up rapidly depleting your nest egg, leaving you and STAGES OF LIFE & THE RELATED INSURANCE NEEDS Sandeep Ahuja your spouse in financial trouble during retirement.
With the regular inflow of income through your pension and savings, your death should not leave any financial burden on your spouse. You only need coverage to pay for final expenses, leave a legacy or for charity. To cater to these ‘permanent needs’, you can either convert a portion of your term insurance to permanent, or apply for a brand new policy. Depending on your net worth, you may also want to purchase a joint lastto-die policy with your spouse, which will cover the tax that is triggered on the death of the last surviving spouse. This will ensure that your estate passes on to your beneficiaries intact. By this time, since your disability insurance should also have expired due to the coverage of only working individuals till age 65 by most policies; you should replace it with long-term care insurance. Since there are more chances of a critical illness as you age, if you have a permanent critical illness insurance policy, it may be kept in force.
As is evident, our insurance needs undergo a constant change throughout our lives. Careful planning for these needs would save you from any financial crisis in case of an unforeseeable event. To protect yourself and your family from any of the life’s risks, you need to buy the right type of insurance at the right time. As an independent insurance advisor working through Punjab Insurance Agency, I deal with different insurance companies offering plans for different types of insurance. I can explain to you in detail, the insurance plan options and coverage that are suitable for your needs and resources. Besides, I can also help you to purchase mortgage insurance, super visa insurance, disability insurance, critical illness insurance, extended medical plans, group medical plans, RESP, RRSP, travel insurance, TFSA accounts, health and dental plans along with estate planning suitable for your needs and resources.
For a no obligation appointment, please call me at 604-996-6862 or email me at sandeepahuja@ punjabinsurance.ca
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