March 11, 2022
By Sun Life Staff
Read time: 2 minutes
March 11, 2022
By Sun Life Staff
Read time: 2 minutes
Life insurance is something you don’t buy for yourself. You buy it for the benefit of others.
When should you think about buying it? Certainly, when you have someone who is dependent on your income. Then the question is: How much life insurance do you need?
The amount of life insurance you need depends on your unique situation. But there are some guidelines to help you figure it out.
Watch time: 2 minutes
So how much do you need? An advisor can help you to fill out a needs analysis questionnaire to determine the appropriate amount. During this process, they’ll consider things like your:
A general rule is you should be covered for at least 10 times your annual income. So if you earn $70,000, you’d be looking at $700,000 in coverage. But every individual situation is different and should be examined as such.
An analysis will help determine what you need the money for, how much you need each month and how long you need it to last.
Life insurance can protect the financial security of the people you love.
Let’s look at an example. Jackie is a 33-year-old married mother of two. She has three goals for her life insurance. She wants money left to her family to:
Based on these goals, Jackie is looking at a $1-million policy. If she died her family could spend the money from her insurance payout by:
In this example, a $1-million, 30-year term policy for a non-smoking woman in her early 30s, like Jackie, could cost about $80 per month. For a man of the same age, it’s closer to $107 per month.
For a younger person, or a couple with debt and a mortgage, a 30-year policy may be suitable.
Or, for someone in their 40s with little debt and a small mortgage, a 10-year policy might be right.
Your employer may offer life insurance through your employee benefits. But, it may not be enough. You may want to consider more life insurance. In which case, you have four types to choose from:
The right life insurance for you depends on your unique situation. So it’s best to talk to a professional, like an advisor, for guidance. Don’t have an advisor? Find one now.
Need help figuring out what’s right for you?
An advisor can help put together a solid plan that suits your goals.
This article is meant to provide general information only. Sun Life Assurance Company of Canada does not provide legal, accounting, taxation, or other professional advice. Please seek advice from a qualified professional, including a thorough examination of your specific legal, accounting and tax situation.
We acknowledge that Sun Life operates in many Territories and Treaties across Canada. Our Canadian headquarters in Waterloo are on the traditional territory of the Anishnaabeg, Haudenosaunee Confederacy and the Mississaugas of the Credit First Nations.
Today, Canada is still the home to many Indigenous, First Nations, Inuit, and Metis peoples from all across Turtle Island. We are grateful to have the opportunity to work in this territory. We offer this acknowledgment as a stepping stone towards honouring the original occupants, as a testimony to the oppression faced by Indigenous peoples, and our commitment to Indigenous communities and employees of Sun Life.
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