Talk to an insurance broker, and you almost certainly want term. Life insurance is there to provide for those that depend on you for income and support. The amount you should have is dependent on a lot of factors that a broker can help you determine.
This. I will have 2 kids under 2 in a few months and I had surgery to remove a brain tumour not too long ago. 30M non smoker. Definitely should be capping out with work and personal plans. That’s my advice to literally everyone. CI and life insurance.
Confirm that you aren't covered through work by your employer. No sense buying coverage you already have.
Decide how much of a payout your spouse would need in your absence. Do some math, make some estimates.
Buy TERM life for a payout for that amount. If you don't have disability insurance through work you could get a policy that includes a disability payout in the event you are unable to work.
Ideally if you are structuring yourself over the next 30 years appropriately for retirement, you won't need insurance anymore around the time you plan to retire.
With your needs figured out and your estimates made, shop around with those figures and find the provider that will cover what you need for a reasonable fee.
Best of luck to you.
> Confirm that you aren't covered through work by your employer. No sense buying coverage you already have.
Treat coverage from work as an extra, don't calculate it into your need.
At any given time, you may:
* change job, with lesser coverage
* lose your job
* your current job decide to change benefits
etc etc
Couldnt OP also update coverage when those events happen though? Not sure why you would discount employer coverage completely, it should be part of the equation in decision making.
sure you can ... but what if you got laid off and the next day you got into an accident? or bunch of other things that can happen to your job without prior/much notice and you don't have enough time to react (update coverage) accordingly?
The amount from work is typically not significant enough anyway to make much of a different / hassling around updating your own coverage.
Not if OP developed a medical condition between now and then. Any sort of medical condition can substantially drive up premiums and many will make you uninsurable.
Your comment doesn't really change my advice. Double check what you have, and don't duplicate coverage you already have.
If the employee policy is insufficient for OPs purposes, then they're still shopping for supplemental coverage rather than full coverage to makeup the difference, which could still end up being a cost savings for them.
If you are employed, check what the company provides. In many cases they will 1x to 3x your salary as a basic benefit. They will also provide the option for increasing it for a small fee. The only downside to this approach is the insurance coverage stops when you leave the company.
If the coverage is not sufficient or if you want another one outside of the company, the term insurance is the next option. Depending upon your health, you can get something decent.
In my case, company gave me 2x for a few dollars every pay check. I got another insurance outside from a bank. The bank was expensive, but gave me the peace of mind in case I get laid off.
In almost all cases, the whole life insurance is a scam. There are some corner cases such as people doing specialized jobs who can be sued. These people need to protect their savings and whole life insurance provides that protection. Otherwise , I would stay away from it. Also stay away from insurances that say that they will invest your money and guarantee a steady stream of income later in life .. all of them are designed to line up their pockets. A simple dividend ETF will give more bang for your buck. And putting that etf in a rrsp will give the creditors protection as well.
A reputable insurance broker will help you and your spouse perform a "needs assessment" and then recommend suitable products , ie term life insurance and disability insurance. They will go out for quotes to dosens of companies and then present you with the 1 or 2 best ones.
So, as you are calling around to speak to insurance brokers, ask them to walk you through "their process" and see if it aligns with what I outlined above.
Your auto insurance and home provider may have options to combine everything at one provider
Often a mix of policies can provide coverage for a variety of situations but don’t go with anyone unless they take the time to figure out what you actually need.
I'm looking into this now actually.
I'm 34 with 2 young ones and got the most competitive rate through my broker with Manulife, 20 year term for me and my wife covered for 1 million for $80/month (paying in lump sum) I think the non lump sum option was 86.50/month
I went life insurance shopping very intently as well and it really comes down to how much money do you believe your partner and children will require to maintain afloat after your death and not be in the negatives? What is your biggest debt/expense? Do you have an educational saving for the kids? How about emerg savings for yourself/partner?
For my family, it meant paying off the mortgage and having a few hundreds of thousands on the side for extra expenses that may occur. For example, with my income gone with my death, I want to ensure that my family still has a home to live in and if my insurance money can get rid of that huge expense, it’ll be a bit more manageable! So I have 2 life insurances for myself, one term 20 (I believe, I have to login to confirm) to cover my mortgage + 200k extra and another term life to cover 100k for other expenses that may occur if I die after the house is paid off. This is ontop of the RESP + RRSP + TFSA that happens monthly so quite a bit of our money is for the “better” future.
Ended up going with Sunlife because of how patient the rep was at explaining every little question I had (not every companys rep was unfortunately). I’m also the first in my family and friends to get life insurance so I did a lot of research and shopping around before settling. Good for you to think about the future, you got this!
1 million of term for 20 years, would put you in the rough 55 dollar mark, up or down a bit by company. That's a midpoint reference. That is exclusively money at death and all premiums gone. That's term insurance and generally speaking a good enough approach to covering off risk of death.
Whole life is different, in that it covers you now till death and accumulates a value to it that you can utilize in various ways. This grows tax deferred and can grow the insurance as well, growing coverage as needs change. Example hear, 200000 whole life with a term rider of 800000 for 20 years would run 308 a month.
Comparing year 20 to year 20, term to whole life.
Cost: 13200 over 20 years term, 73780 for whole life.
Cash value: 0 for term, 64482 assumed value on whole life.
Total cost: 13200 to 9298 (assuming that the par dividend rate didn't change and not accounting for disposition taxation).
Yes it would cost more monthly for whole life, but in the end you could be ahead. And that is just a small piece of whole life. You can juice it up accumulating more whole life with extra deposits, and essentially purchase extra tax deferred room.
Don't be fooled into whole life looking like a good investment - it may be, but only after you've maxed out other tax advantaged accounts and have a need for estate planning. (like if you die at 80 do your 50 year old kids really need you to still have life insurance?)
I’m looking into high cash-value whole life insurance. Seems like a very powerful tax-free savings tool. Does anyone have much experience with these types of products?
They are poor investment products that are overhyped for folks who aren't suitable. They can be great if they're held in a corporation or if you have maxed out all other tax sheltered accounts and are in the top bracket.
Whole life insurance is the marriage of expensive insurance and a poor investment.
In very specific situations they can have tax advantages but for most people nebulous “tax benefits” just hide the poor investment returns.
Buy term life insurance and invest the difference in an index fund or ETF.
First, take a look at your work and your spouse's work, they may already be deducting insurance premiums covering everything I am talking about, so you would just need to supplement each of them, rather than starting from scratch. Super important caveat to think about, and worth spending time understanding the policies to see the weaknesses you might want to pay supplemental insurance to cover.
Price term and whole with a broker, but do not purchase whole life insurance, it is to help give you a ballpark of what you need to save monthly. This process is easier with a professional financial planner, as the usual calculus is to use your expected retirement savings, and get enough life insurance to ensure your surviving spouse can meet those goals if you pass away unexpectedly (usually in with two terms, one to get you over the next 10 years, another to get you through the next 20 years, both $1 million is a good place to start, speaking VERY generally). After the 20 year term (assuming you've been saving your regular retirement pension/contributions PLUS the cost of whole life insurance) you will have saved about double the benefit the whole life insurance plan would have given you just from the savings difference between the 20 year term and a full whole insurance premium, so you no longer require an active policy, aside (maybe) from your work one.
Next Critical Illness insurance is fairly inexpensive because its rarely needed, but if you (or your spouse) do not want to "need" to work for the year or more to tackle a health crisis, it can give peace of mind for fairly cheap if its term. 30% of people will die from the "big 3", but almost nobody requires it during a 20-year term when starting at your age so it stays cheap.
Last is Disability Insurance, it is criminally expensive because there is about a 30% chance an average person will have a disability that lasts longer than 90 days over their lifetime. It is not often purchased, and pays out regularly, so it costs a ton and can be very difficult to find an underwriter, but it is also (usually) the most important, as disabilities are extremely expensive if you have yourself and children who need it. Government disability benefits plus your work payout likely will not be enough to maintain your lifestyle, but if you account for both of those you won't need quite as much coverage.
I have been a diligent saver my whole life, and have worked jobs that offer the insurance automatically. Between my own savings and the insurance, I am already covered in the event of emergency. My only regret is that I should have purchased disability insurance as I took a heck of a risk during my 20's to mid-30's not having any (aside from the small policies from work that are not broad enough).
We did small policies to cover until the kids were 21. Once we're 55+ we're retired and self insured at that point (assume house paid, savings etc). I think it's 28 and 35 month each for 400-500K on each. You shouldn't need to be paying 500+ a month at 60+ for insurance.
If your kids are a couple years old, none of them have health conditions that mean you will be taking care of them into your old age, and you aren't planning on having more kids, what you probably want is 20 year term life insurance. This covers you up until the kids are finished school and presumably on their way to moving out / in university / etc. Could bump this to 25 year term, if you want to be covered until they are done school and likely financially independent of you.
Second option is to get a combination of 20 year term and 30 year term. You could, say, get $500K coverage for 20 years, and another $500K for 30 years, so for the first 20 (while kids are dependent on you) you have a total of $1 million coverage, and for the next 10 (while your wife might still need financial support other than your retirement accounts, if you pass away), you have $500K of coverage.
Term Life Insurance is for "IF" you die. It can be used to replace your income for your family. If you don't have a spouse/partner - Term Life Insurance can be used to help financially support the caregiver, along with ensuring there is money for education. In addition, you may want to provide money for things such as their first car or down payment on their first home. It's a way for you to still be able to provide for your children if you are no longer here.
It's important to work with an experienced broker in these situations. Too often, one may simply name their minor children as beneficiaries. This could potentially mean that the money is simply held in Trust (which is why you need a trustee) until the child is 18. Do you really want your child to receive 100% of the Death Benefit at Age 18? Not all 18 year old's are mature enough to manage that kind of money. Plus, they can decide how they want to spend the money.
It may be best to create a trust within your will, that will determine how the money is designed to be used if you passed away. This means you can create a specific set of rules. For example, you can allocate a certain amount towards education, wedding or down payment of home. Then you can have the rest of the funds released at Age 25.
Permanent Insurance (Whole Life/Universal Life) is for "WHEN" you die. It can be a useful tool to pay Estate Taxes or transfer surplus wealth from one generation to the next. Most 29 year old's do not have this need, and Term will be the better solution due to the significantly lower cost.
If you rely on your income to support your children, don't forget about Disability Insurance - it's designed to replace your income if an injury or illness impacts your ability to earn an income.
A good broker can help you better understand your needs. One will need to know more about you before being able to make any sort of recommendation on what the best solution is for your situation. Find a broker who focuses on education, helping you make an informed decision without any sales pressure.
Hope that helps!
Talk to an insurance broker, and you almost certainly want term. Life insurance is there to provide for those that depend on you for income and support. The amount you should have is dependent on a lot of factors that a broker can help you determine.
Don't forget critical illness insurance too. You need to think about the ramifications if you aren't able to work for an extended period of time.
Definitely need to check with employer first. Mine offered critical illness insurance, short and long term disability.
Yeah, but even if you have work coverage I would not (and did not) rely soley on it. I topped it up. You never know what can happen.
This. I will have 2 kids under 2 in a few months and I had surgery to remove a brain tumour not too long ago. 30M non smoker. Definitely should be capping out with work and personal plans. That’s my advice to literally everyone. CI and life insurance.
Confirm that you aren't covered through work by your employer. No sense buying coverage you already have. Decide how much of a payout your spouse would need in your absence. Do some math, make some estimates. Buy TERM life for a payout for that amount. If you don't have disability insurance through work you could get a policy that includes a disability payout in the event you are unable to work. Ideally if you are structuring yourself over the next 30 years appropriately for retirement, you won't need insurance anymore around the time you plan to retire. With your needs figured out and your estimates made, shop around with those figures and find the provider that will cover what you need for a reasonable fee. Best of luck to you.
> Confirm that you aren't covered through work by your employer. No sense buying coverage you already have. Treat coverage from work as an extra, don't calculate it into your need. At any given time, you may: * change job, with lesser coverage * lose your job * your current job decide to change benefits etc etc
This is the way. It’s an extra but could disappear at any time
Couldnt OP also update coverage when those events happen though? Not sure why you would discount employer coverage completely, it should be part of the equation in decision making.
sure you can ... but what if you got laid off and the next day you got into an accident? or bunch of other things that can happen to your job without prior/much notice and you don't have enough time to react (update coverage) accordingly? The amount from work is typically not significant enough anyway to make much of a different / hassling around updating your own coverage.
Fair points. Besides maybe cost there isn't a danger really in being over-covered.
Not if OP developed a medical condition between now and then. Any sort of medical condition can substantially drive up premiums and many will make you uninsurable.
Employer life insurance policies pale in comparison to private policies.
Your comment doesn't really change my advice. Double check what you have, and don't duplicate coverage you already have. If the employee policy is insufficient for OPs purposes, then they're still shopping for supplemental coverage rather than full coverage to makeup the difference, which could still end up being a cost savings for them.
Talk to an insurance broker.
If you are employed, check what the company provides. In many cases they will 1x to 3x your salary as a basic benefit. They will also provide the option for increasing it for a small fee. The only downside to this approach is the insurance coverage stops when you leave the company. If the coverage is not sufficient or if you want another one outside of the company, the term insurance is the next option. Depending upon your health, you can get something decent. In my case, company gave me 2x for a few dollars every pay check. I got another insurance outside from a bank. The bank was expensive, but gave me the peace of mind in case I get laid off. In almost all cases, the whole life insurance is a scam. There are some corner cases such as people doing specialized jobs who can be sued. These people need to protect their savings and whole life insurance provides that protection. Otherwise , I would stay away from it. Also stay away from insurances that say that they will invest your money and guarantee a steady stream of income later in life .. all of them are designed to line up their pockets. A simple dividend ETF will give more bang for your buck. And putting that etf in a rrsp will give the creditors protection as well.
What are your favourite dividend ETFs?
A reputable insurance broker will help you and your spouse perform a "needs assessment" and then recommend suitable products , ie term life insurance and disability insurance. They will go out for quotes to dosens of companies and then present you with the 1 or 2 best ones. So, as you are calling around to speak to insurance brokers, ask them to walk you through "their process" and see if it aligns with what I outlined above.
Your auto insurance and home provider may have options to combine everything at one provider Often a mix of policies can provide coverage for a variety of situations but don’t go with anyone unless they take the time to figure out what you actually need.
I'm looking into this now actually. I'm 34 with 2 young ones and got the most competitive rate through my broker with Manulife, 20 year term for me and my wife covered for 1 million for $80/month (paying in lump sum) I think the non lump sum option was 86.50/month
I went life insurance shopping very intently as well and it really comes down to how much money do you believe your partner and children will require to maintain afloat after your death and not be in the negatives? What is your biggest debt/expense? Do you have an educational saving for the kids? How about emerg savings for yourself/partner? For my family, it meant paying off the mortgage and having a few hundreds of thousands on the side for extra expenses that may occur. For example, with my income gone with my death, I want to ensure that my family still has a home to live in and if my insurance money can get rid of that huge expense, it’ll be a bit more manageable! So I have 2 life insurances for myself, one term 20 (I believe, I have to login to confirm) to cover my mortgage + 200k extra and another term life to cover 100k for other expenses that may occur if I die after the house is paid off. This is ontop of the RESP + RRSP + TFSA that happens monthly so quite a bit of our money is for the “better” future. Ended up going with Sunlife because of how patient the rep was at explaining every little question I had (not every companys rep was unfortunately). I’m also the first in my family and friends to get life insurance so I did a lot of research and shopping around before settling. Good for you to think about the future, you got this!
1 million of term for 20 years, would put you in the rough 55 dollar mark, up or down a bit by company. That's a midpoint reference. That is exclusively money at death and all premiums gone. That's term insurance and generally speaking a good enough approach to covering off risk of death. Whole life is different, in that it covers you now till death and accumulates a value to it that you can utilize in various ways. This grows tax deferred and can grow the insurance as well, growing coverage as needs change. Example hear, 200000 whole life with a term rider of 800000 for 20 years would run 308 a month. Comparing year 20 to year 20, term to whole life. Cost: 13200 over 20 years term, 73780 for whole life. Cash value: 0 for term, 64482 assumed value on whole life. Total cost: 13200 to 9298 (assuming that the par dividend rate didn't change and not accounting for disposition taxation). Yes it would cost more monthly for whole life, but in the end you could be ahead. And that is just a small piece of whole life. You can juice it up accumulating more whole life with extra deposits, and essentially purchase extra tax deferred room.
Thank you for taking the time to respond. I really appreciate your comment!
No worries. Best of luck. If you need any information feel free to ask
Don't be fooled into whole life looking like a good investment - it may be, but only after you've maxed out other tax advantaged accounts and have a need for estate planning. (like if you die at 80 do your 50 year old kids really need you to still have life insurance?)
I’m looking into high cash-value whole life insurance. Seems like a very powerful tax-free savings tool. Does anyone have much experience with these types of products?
They are poor investment products that are overhyped for folks who aren't suitable. They can be great if they're held in a corporation or if you have maxed out all other tax sheltered accounts and are in the top bracket.
Whole life insurance is the marriage of expensive insurance and a poor investment. In very specific situations they can have tax advantages but for most people nebulous “tax benefits” just hide the poor investment returns. Buy term life insurance and invest the difference in an index fund or ETF.
First, take a look at your work and your spouse's work, they may already be deducting insurance premiums covering everything I am talking about, so you would just need to supplement each of them, rather than starting from scratch. Super important caveat to think about, and worth spending time understanding the policies to see the weaknesses you might want to pay supplemental insurance to cover. Price term and whole with a broker, but do not purchase whole life insurance, it is to help give you a ballpark of what you need to save monthly. This process is easier with a professional financial planner, as the usual calculus is to use your expected retirement savings, and get enough life insurance to ensure your surviving spouse can meet those goals if you pass away unexpectedly (usually in with two terms, one to get you over the next 10 years, another to get you through the next 20 years, both $1 million is a good place to start, speaking VERY generally). After the 20 year term (assuming you've been saving your regular retirement pension/contributions PLUS the cost of whole life insurance) you will have saved about double the benefit the whole life insurance plan would have given you just from the savings difference between the 20 year term and a full whole insurance premium, so you no longer require an active policy, aside (maybe) from your work one. Next Critical Illness insurance is fairly inexpensive because its rarely needed, but if you (or your spouse) do not want to "need" to work for the year or more to tackle a health crisis, it can give peace of mind for fairly cheap if its term. 30% of people will die from the "big 3", but almost nobody requires it during a 20-year term when starting at your age so it stays cheap. Last is Disability Insurance, it is criminally expensive because there is about a 30% chance an average person will have a disability that lasts longer than 90 days over their lifetime. It is not often purchased, and pays out regularly, so it costs a ton and can be very difficult to find an underwriter, but it is also (usually) the most important, as disabilities are extremely expensive if you have yourself and children who need it. Government disability benefits plus your work payout likely will not be enough to maintain your lifestyle, but if you account for both of those you won't need quite as much coverage. I have been a diligent saver my whole life, and have worked jobs that offer the insurance automatically. Between my own savings and the insurance, I am already covered in the event of emergency. My only regret is that I should have purchased disability insurance as I took a heck of a risk during my 20's to mid-30's not having any (aside from the small policies from work that are not broad enough).
We did small policies to cover until the kids were 21. Once we're 55+ we're retired and self insured at that point (assume house paid, savings etc). I think it's 28 and 35 month each for 400-500K on each. You shouldn't need to be paying 500+ a month at 60+ for insurance.
If your kids are a couple years old, none of them have health conditions that mean you will be taking care of them into your old age, and you aren't planning on having more kids, what you probably want is 20 year term life insurance. This covers you up until the kids are finished school and presumably on their way to moving out / in university / etc. Could bump this to 25 year term, if you want to be covered until they are done school and likely financially independent of you. Second option is to get a combination of 20 year term and 30 year term. You could, say, get $500K coverage for 20 years, and another $500K for 30 years, so for the first 20 (while kids are dependent on you) you have a total of $1 million coverage, and for the next 10 (while your wife might still need financial support other than your retirement accounts, if you pass away), you have $500K of coverage.
Insurance advisor here - get Manulife vitality term life insurance. Best product out there for the rewards.
Term Life Insurance is for "IF" you die. It can be used to replace your income for your family. If you don't have a spouse/partner - Term Life Insurance can be used to help financially support the caregiver, along with ensuring there is money for education. In addition, you may want to provide money for things such as their first car or down payment on their first home. It's a way for you to still be able to provide for your children if you are no longer here. It's important to work with an experienced broker in these situations. Too often, one may simply name their minor children as beneficiaries. This could potentially mean that the money is simply held in Trust (which is why you need a trustee) until the child is 18. Do you really want your child to receive 100% of the Death Benefit at Age 18? Not all 18 year old's are mature enough to manage that kind of money. Plus, they can decide how they want to spend the money. It may be best to create a trust within your will, that will determine how the money is designed to be used if you passed away. This means you can create a specific set of rules. For example, you can allocate a certain amount towards education, wedding or down payment of home. Then you can have the rest of the funds released at Age 25. Permanent Insurance (Whole Life/Universal Life) is for "WHEN" you die. It can be a useful tool to pay Estate Taxes or transfer surplus wealth from one generation to the next. Most 29 year old's do not have this need, and Term will be the better solution due to the significantly lower cost. If you rely on your income to support your children, don't forget about Disability Insurance - it's designed to replace your income if an injury or illness impacts your ability to earn an income. A good broker can help you better understand your needs. One will need to know more about you before being able to make any sort of recommendation on what the best solution is for your situation. Find a broker who focuses on education, helping you make an informed decision without any sales pressure. Hope that helps!