Personal Finance

Life Insurance - Explained and Debunked ?

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  • May 13th, 2016 3:21 pm
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Newbie
Oct 20, 2005
62 posts

Life Insurance - Explained and Debunked ?

Hello,

I'm looking for life insurance advice and would like to understand your point of view between Term vs. Universal vs. Whole life insurance. Term insurance is fairly straight forward to understand, and Universal vs. Whole life is the one that I'm trying to wrap my head around, and understand the PROs and CONs of each.

What's your take?

Here's my profile:
- Mid 30s, married and with a newborn child
- Own several properties (home and condos)
- Have RRSP and TFSA savings

Thank you!
9 replies
Deal Fanatic
User avatar
Jan 27, 2007
5116 posts
984 upvotes
T.
Term and invest the difference in whole life on index funds.

Whole life from ins. cos. is very expensive with a high equivalent mer.
[QUOTE]I know you are, but what am I.... ;) [/QUOTE]
Penalty Box
Apr 16, 2012
3565 posts
688 upvotes
Greely
My question, why do you need insurance?
Sr. Member
Sep 23, 2013
521 posts
305 upvotes
Windsor, Ontario
spookykl wrote: Hello,

I'm looking for life insurance advice and would like to understand your point of view between Term vs. Universal vs. Whole life insurance. Term insurance is fairly straight forward to understand, and Universal vs. Whole life is the one that I'm trying to wrap my head around, and understand the PROs and CONs of each.

What's your take?

Here's my profile:
- Mid 30s, married and with a newborn child
- Own several properties (home and condos)
- Have RRSP and TFSA savings

Thank you!
It's impossible to make any kind of recommendation on how much life insurance you should have or what type. Here are some bits of information that you can use though:

-Term insurance is great for covering a span of time. Ex: Jack makes $50,000 a year and has 3 kids. If Jack dies, those kids won't have that $50,000 a year for the next 20 years.
-Whole life and Universal Life serve a very specific purpose, estate planning.
-Whole life and Universal Life are great tools, but can put serious constraints on your monthly cash flow
-RRSPs and TFSAs should be maxed before considering a Permanent insurance plan
-Get a Financial Needs Analysis done before buying a life insurance.
Deal Addict
Jul 8, 2009
2028 posts
482 upvotes
Edmonton
techcrium wrote: My question, why do you need insurance?
Because this.

- Mid 30s, married and with a newborn child
Deal Fanatic
User avatar
Apr 11, 2008
5754 posts
475 upvotes
Wing Nut wrote: Because this.

- Mid 30s, married and with a newborn child
So? If the several properties are paid off and can generate enough passive income, what's the point of the insurance?
Deal Addict
Jul 8, 2009
2028 posts
482 upvotes
Edmonton
Archanfel wrote: So? If the several properties are paid off and can generate enough passive income, what's the point of the insurance?
Well, neither of us knows enough about his situation to determine if insurance is required. "IF" the properties are paid off and generate enough passive income, as you say, then maybe insurance isn't needed. What if the resources don't exist to pay off those mortgages? What if there are more kids in a few years and his wife can't earn enough to support the family?

I think that insurance is probably needed and the OP thinks so as well, but without full information neither of us can make that determination.
Deal Fanatic
User avatar
Apr 11, 2008
5754 posts
475 upvotes
Wing Nut wrote: Well, neither of us knows enough about his situation to determine if insurance is required. "IF" the properties are paid off and generate enough passive income, as you say, then maybe insurance isn't needed. What if the resources don't exist to pay off those mortgages? What if there are more kids in a few years and his wife can't earn enough to support the family?

I think that insurance is probably needed and the OP thinks so as well, but without full information neither of us can make that determination.
So the original question stands "why do you need insurance?". Until that's answered, I am not sure any answer would be meaningful to the OP.

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