March 17, 2022
By Farhana Uddin and Sun Life Staff
Read time: 7 minutes
March 17, 2022
By Farhana Uddin and Sun Life Staff
Read time: 7 minutes
Are you a recent grad in your 20s? Married with a mortgage in your 30s? Planning your estate in your 50s? Whatever your age, you likely have two things in common with people in every age group:
That’s where life insurance comes in.
You can’t tell exactly when or how your life will end. But you can prepare for the possibility and help protect the people you love in the process. Having the right life insurance can give you peace of mind. It’s the feeling that comes with knowing the people you care about can have financial support after you die.
In this article we’ll show you why you need life insurance. And answer 10 questions about how life insurance can help at different times of your life.
Article content:
Watch time: 52 seconds
You’re young and healthy, but chances are you already have some serious financial responsibilities. “Maybe you have student loans to pay off. Maybe you’ve got some credit card debt. Or you’re thinking of getting married,” says Paula MacMillan, Sun Life advisor. “In any of these situations, it helps to have some coverage in the event of your death.”
Did your parents co-sign any of your credit cards or loans? If so, it’s on them to pay them off if you die. Do you own or rent a house with your spouse? They’ll have to pay rent or mortgage on one salary.
With life insurance, your family can use the death benefit* to help cover expenses they relied on you to pay.
(*The money paid to your loved ones when you die.)
“A lot of people don’t begin to think about life insurance until they’re in their 30s,” notes MacMillan. “But if you have someone who depends on you, it’s best to start considering it earlier on. You don’t want to leave them in a financially challenging situation later.”
There’s another reason to buy life insurance at a young age: it can be more affordable.
Your life insurance premium – which is your monthly or annual fee – depends on your:
“If you’re a healthy individual in your 20s, you would fall under a low health-risk category. This means your premiums will be lower,” MacMillan explains.
Two of the most common kinds of life insurance are:
For 20-somethings who just started their careers, MacMillan recommends starting with term life. This can provide temporary coverage and can be renewable. This could be every 10, 15, 20 or even 30 years, depending on the policy.
“Term life is much more affordable [than permanent] for young Canadians who are just starting out,” she says. “You’ll be able to buy a large amount of coverage at the lowest price.”
You could also get a small amount of permanent life insurance to go with your term policy. This is where your youth pays off.
While having some permanent coverage will cost you more, the younger you are the lower your premium will be. Permanent life insurance can offer more protection than term alone (more on this later). And, having some of it can help set up a financial foundation while you’re in your 20s.
As you get older, your financial situation will most likely change. When you reach your 30s, you may have:
“The advice is more or less the same, though,” MacMillan says. “You still want to purchase as much life insurance coverage as you can afford.”
But, if you already have term life insurance, this is the time to consider changing your policy. “Most term life policies allow you to convert to permanent life insurance,” she says. “It’s more expensive, but permanent life offers lifelong protection from the financial impact of death.”
It also pays off. “A permanent life policy is set in terms of cost. Whereas with term life, your premium increases – sometimes drastically – every time you renew it,” MacMillan adds. The younger you are when you buy permanent life insurance, the lower the premium you’ll pay.
Permanent life insurance is more expensive than term when you first buy it. But the premium cost doesn’t typically increase as you get older. So, after a few term renewals, permanent insurance will end up costing you less.
Read more: Term life vs. permanent life insurance
Many Canadians in their 30s have settled into a job with benefits, which may include life insurance. “I often encourage people to max out the insurance they have at work,” MacMillan advises. “Because up to a certain point there are no medical questions or requirements. And it’s less expensive because it’s in a group.”
“Having workplace insurance is great. But I always caution about how there’s less job security nowadays,” MacMillan says. “When you move from an employer, you leave behind the insurance they gave you. And hopefully the next one will have equal, similar or better coverage.”
Plus, there’s no law stating a Canadian employer must give you life insurance. “That’s why it’s best to think of your workplace insurance as a top-up to your own policy,” MacMillan suggests. “So, no matter what happens at work you’ll have your own insurance to fall back on.”
Are you leaving your job with Sun Life benefits?
This depends on your insurance company and the policy you want to buy. Some insurers have policies with age limits that can range from 60 to 85. “The pricing won’t always be in your favour. If your health doesn’t impede your ability to buy life insurance, it may still be available if you need it,” MacMillan says.
At this stage of your life, you may be paying more attention to retirement or estate planning. So, you most likely need more financial stability and protection.
MacMillan recommends looking into permanent life insurance for these reasons:
Insuring your life is a good idea at any age. And leaving your family with financial protection may be the most generous thing you could do for them. But how do you get started? When purchasing a policy, you need to look at:
“There are other types of life insurance that might be better for your goals” says MacMillan.
Another option to explore is to combine term and permanent life insurance. For example, you could buy a 30-year term policy. It would help protect your family over the life of your mortgage. You could also buy permanent insurance to keep you covered when the term policy expires. Death benefits from life insurance policies:
This could help reduce the tax burden on your heirs.
(*As long as you name a beneficiary rather than letting the death benefit default to your estate).
Consider one of these 3 easy options:
If you’re leaving a workplace insurance plan with any Canadian insurance company, you can apply*** for Sun Life Choices insurance within 60 days.
This article is meant to only provide general information. 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.